Peter Watts (1), Yueshu Li (1), Jessica Yu (2); (1) Canadian Malting Barley Technical Centre, Winnipeg, MB, Canada; (2) Tsingtao Brewery Co. Ltd., Qingdao, China

Malt and Grains

Rapid changes in the worldwide brewing industry, including the boom in craft brewing, diversification in beer brand/style, as well as changing ownership present both challenges and opportunities for the malting barley industry. In this presentation, trends in global malting and brewing sectors, specifically in China and the United States, and changing quality requirements for malting barley and malt are reviewed in the context of the current environment and expected future developments. Due to rapidly increasing disposable income and growing drinking age population, China has become the world’s largest beer market by volume, while the United States remains the world’s largest beer market in terms of value. In addition to international brewing groups such as Carlsberg and AB-InBev, China Resources Snow Breweries, Tsingtao Brewery, and Beijing Yangjing Beer are the dominant players in China. They are strengthening their brand positioning. In 2014 China Resources Snow Breweries produced 107 million hectoliters of Snow beer, making it the world’s largest beer brand at 5.4% of the global market. Its total volume is higher than the combined volume of Budweiser (4.6 billion liters) and Bud Light (5.0 billion liters). Together with Tsingtao Brewery and Beijing Yangjing Beer, these three Chinese brewers produced 10.1% of world beer production. The top five breweries in China are Snow, Tsingtao, AB-InBev, Yianjing and Carlsberg, and together they control over 80% of the Chinese beer market. In contrast to the consolidation in China, the craft brewing sector continues its rapid expansion in the United States. Today there are over 4,000 craft brewers in operation and more than 1,800 breweries in various stages of planning and development. Rising beer production in China and the rapid development of craft brewing in the United States have had a profound impact on demand for malting barley and barley quality requirements. In China, brewers are demanding barley with higher grain protein and very high enzyme potential to compensate for large adjunct incorporation. In contrast craft brewers, which typically are all-malt brewers, are demanding barley/malt with lower protein and low enzyme potential. The craft sector has also sparked an interest in heirloom barley varieties that may offer distinct flavors to some traditional beer styles, although these varieties are generally lower yielding and have poor resistance to diseases, making them less attractive to farmers. Winning strategies in the barley industry will see players strengthening their variety positioning: new varieties not only have better yield and disease resistance but enzyme packages and distinct flavor attributes that will satisfy different quality requirements from both the high-adjunct brewing and craft brewing sectors.

Peter Watts is the managing director of the CMBTC. In this position he oversees daily operations, including program management, strategic planning, and financial oversight, as well as communications and marketing. With 18 years of experience in international agriculture, Peter brings skills in agribusiness, marketing, research and strategic planning. Peter graduated with a M.A. degree in international relations from Laval University.