China and craft beer brewers have become major customers of Canadian barley, but their requirements can be very different
The rising North American craft beer sector and strong demand out of China are both good news stories for Canada’s malt barley sector, but those two customers have different needs that can also create challenges, said industry officials speaking at the annual Grain World conference in Winnipeg Nov. 13.
Lorelle Selinger, North American supply chain manager with Cargill Malt, and Peter Watts, managing director of the Canadian Malting Barley Technical Centre, gave a joint presentation on the industry that highlighted two key trends.
China, the world’s largest beer maker, is seeing a shift from low quality beer to higher quality beer, which also necessitates a shift to higher quality barley, which is good for Canada. At the same time, North America is seeing an explosion in the craft beer sector. While craft beer still only represents a small portion of the total beer sold in North America, the beer uses three to four times more malt per unit.
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“Our single largest export market for malt barley is China,” said Watts, noting that the country imported about 1.3 million tonnes of Canadian malt barley in 2017-18 and was seen as likely to increase that level in the future.
“(China is) seeing a shift to more premium beers,” said Watts, noting that also means a need for higher quality barley.
“China is a very important customer, and we have to keep them happy and make sure our varieties meet their needs,” Selinger said.
The ideal protein levels for most North American maltsters are in the 11 to 11.5 percent range, according to Selinger. However, China is looking for protein in the 12.8 to 13 percent range.
“For farmers, that’s a good thing,” said Selinger, “because it allows selections of malt barley in a much wider range of protein increments and allows us to adapt on a year-to-year basis.”
“Adversely, the craft industry is pushing for lower protein,” Selinger said. With a vast growing region, Canada can supply both markets and deliver specifications to meet both demands, but newer varieties face challenges to gain acceptance from end users.
“Brewers can be pretty conservative,” said Watts, noting that it can take a while to transition to new varieties.
Looking ahead to 2020, Watts showed data forecasting relatively steady beer production in the United States compared to 2015, with craft beer rising from 29.1 million hectolitres to 39.0 million, while non-craft beer declines from 194.5 million to 183.9 million hectolitres. However, due to the increased malt use in craft beer production, the total U.S. malt demand will grow from 2.014 million tonnes in 2015 to 2.211 million tonnes in 2020.
While North Americans may not be drinking any more beer, “the value of the industry continues to rise,” said Watts.
“Even though the total beer consumption in North America hasn’t been increasing, the total amount of malting barley needed has,” said Selinger.
However, acres seeded to barley are in a downtrend, which also makes it important to have improved higher-yielding varieties.
