E-Malt.com newsletter 27b. July 07

Chile: CCU sales increased by 10.2% in the second quarter 2005

The largest Chilean beer maker, Compania Cervecerias Unidas SA (CCU), announced on July 06 that its total sales volumes for the second quarter of the year increased by 10.3% year-on-year.

Total sales (in Chile and Argentina) reached 2,349,482 hectolitres in the quarter and 5,806,978hls for the first six months, up 10.2% on the first half last year.

On the domestic market sales, were up 10.6% in the second quarter. First quarter sales had jumped 10.5%, when they were reported earlier in the year. Sales of the company’s products in Argentina were up 8.3% in the quarter, following a strong first quarter of 8% growth.

On July 7 Compania Cervecerias Unidas (CCU) was upgraded from neutral to overweight by JP Morgan. On July 8 its shares increased by 1.48% to $24.66.

Compania Cervecerias Unidas, or CCU, is investing $90 million this year to expand production capacity and increase output of beer, soft drinks, juices and mineral water. Over three years, the company plans to invest $250 million.

When Chileans say "mas cerveza, por favor," they're usually asking for Cristal, Escudo, or another beer from Compañía Cervecerías Unidas (CCU). The firm also brews Cordoba, Dorada, and Rosario beers in Argentina and produces or distributes foreign beers, including those of Anheuser-Busch , Diageo (Guinness), Heineken, and Paulaner. CCU also bottles wine, mineral water, and soft drinks; it is Chile's bottler of PepsiCo drinks, Crush, Seven Up, and Squirt, and Watt's nectars. The brewer owns interest in the Croatian brewer Karlovacka Pivovara. Inversiones y Rentas, half owned by Chile's Luksic family, owns about 60% of CCU. Anheuser-Busch owns about 20%.

Australia: Coopers installs two new fermenters

Two giant fermenter tanks, each capable of holding more than 130,000 litres of beer, were installed by crane at Coopers Brewery on July 3 to help the company meet growing demand for its ales.

Each stainless steel tank is 15 metres tall, weights 10.5 tonnes and holds 130,000 litres of ale – the equivalent of almost 15,000 cartons. The tanks, which cost about $700,000 each, were manufactured and designed in Queensland by the company APV, and trucked from Brisbane to the Adelaide site.

Coopers Managing Director, Dr Tim Cooper, said that the new tanks would take the total number of fermenters to 16. “When we first moved to Regency Park in 2001, we had eight tanks and have added two per year since to cope with demand,” he said. “Coopers has been enjoying growth of about 17% a year since its move at a time when total beer sales in Australia have been falling.”Dr Cooper said further capital expansion was planned with a new bottling line and packing machine expected to be installed in coming months.

Earlier this year, Coopers imported an additional 20,000 kegs from Belgium to keep up with interstate demand for its ales.

Coopers is the third largest brewery in Australia and the only one that is entirely family owned. It has about 25% of the South Australian beer market and about 2.5% of the national market, with interstate sales growing at up to 30% in some areas.

China: Formaldehyde illegally used in 95% of Chinese beer

Formaldehyde, a cancer-causing agent, is used in 95 % of Chinese beer, Globe Times published on July 7. In China, the Food Safety Law bans use of formaldehyde in beer for any purpose. Only 5 % of Chinese beer, mostly premium beer, is free of artificial formaldehyde.

According to the story, formaldehyde is used in beer to eliminate the precipitates, which form during storage. European countries ban use of formaldehyde in beer because of its toxicity. A level of more than 0.2 mg per liter may stress the liver and long term consumption of such beer could affect the reproductive system, according to the story.

Professor Gu GuoXian, Deputy Director of the Chinese Brewery Industry Society Division of Beer Brewery, was cited by Globe Times as saying that the residue of formaldehyde in beer is low enough not to cause any harm. But he pointed out that formaldehyde should not be added to beer for any purpose because the Food Safety Law bans its use. Also, addition of formaldehyde destroys the natural flavor of beer.

Professor Gu was further cited as saying that the limit of natural formaldehyde in beer is 0.2 parts per million (ppm) or 0.2 mg per liter, but the formaldehyde content in Chinese beer can be commonly found at a level of up to 1.2 ppm.

In the U.S., the Food and Drug Administration approved the use of formaldehyde solution (37 percent) in chicken to inhibit salmonella growth for up to 14 days. The use limit is set at 5.4 pounds per ton or 2.5 kilograms per ton, which is equivalent to 925 ppm.

The U.S. Department of Health and Human Services listed formaldehyde in gas as a carcinogen.

Russia: Baltika shareholders waive away merger with Pikra

The shareholders of the Russia’s largest beer maker, Baltika Brewery, have not approved the transaction whereby the brewery had proposed to purchase 70.3 % in Pikra from BBH (Baltic Beverages Holding), the brewery's press service has reported after the extraordinary shareholders' meeting convened to consider the transaction, RosBusinessConsulting (RBC) News posted on July 7.

According to the company's press service, two thirds (66 %) of minority shareholders who voted the issue upheld the board of directors' recommendations concerning the merger. To ratify the transaction, a majority of votes "for" from shareholders entitled to vote is required. The number of people who did not vote was considerable, and the requirement was not met. All in all, votes in favor accounted for 49.3 percent of the total of shareholders, and 32 % did not vote.

Thailand: Thai Beer giant plans to list in October - source

Thai Beverage PCL, the country's top liquor and beer maker with popular brands such as Chang beer, is expected to list shares on the Thai bourse in October, a source close to the deal said on Friday, July 8, according to Reuters.

Shareholders approved the listing plan at a special meeting on Friday, more than 3 months after the IPO was temporarily shelved following protests by social activists. Details of the listing would be filed to Thailand's Securities and Exchange Commission (SEC) next month, said the source, who works for a financial adviser on the deal and declined to be identified.

"We expect to submit the filing in August. After the SEC approves the plan, the public share offer is expected to be launched in October," the source said, adding that the exact timeframe would depend on market conditions.

The financial advisers for the initial public offering (IPO) are Phatra Securities and SCB Securities.

The company plans to issue 7 billion new shares with a par value of 1 baht ($0.24) each to raise capital. Analysts expect the IPO to raise 40-50 billion baht. ...more info

Malt News

Russia & EU: New phytosanitary certificates are needed to export malt to Russia

From July 1st 2005, EU deliveries of agricultural production of plant origin, including malt and barley, are allowed only in the presence of standard EU phytosanitary certificates. Just 15 EU countries can export its production of plant origin to Russia, as they have presented in time the samples of standard EU phytosanitary certificates. The rest of 10 EU countries have not presented the certificates or have presented them with requirements violated.

Thus the following EU countries can deliver agricultural production of plant origin to Russia: Czech Republic, Slovakia, Poland, Slovenia, Lithuania, Latvia, Estonia, France, Denmark, Netherlands, Hungary, Belgium, Germany, Finland and United Kingdom, Russian authorities communicated.

Standard EU phytosanitary certificates with a higher level of protection were implemented by Russia since April 1 2005. Old certificates were available till July 1 2005. However the deliveries can be realised in the next 14 days till July 14, according to Itar-Tass.

EU: Malt prices in EU

It is not only the price of malting barley, which has gone up by almost EUR 10,- in one month time due to reduced crop expectations, but also the cost of energy. In Germany oil and gas cost about EUR 20,- per ton of malt, electricity EUR 8,-, those are increases of 40 and 15 %, respectively, from a year ago. The calculation for all EU maltsters has become a nightmare, malting margins are somewhere between EUR 35,- and 45,- per ton, while the cost is between EUR 60,- and 70,- per ton.

Barley News

USA: Barley stocks increased by 7%

On the Quarterly Grain Stocks report posted on June 27, USDA reported barley stocks at 129 million bushels (2.81 million metric tonnes), up 7 % from June 1, 2004. However, recent disappearance of barley stocks has been impressive as USDA reported the March-May 2005 time period indicated disappearance of 62 million bushels (1.35 million metric tonnes), 90 % above the same period a year earlier. The Acreage report showed barley acres totalling 3.97 million acres, which is a decrease in acres of 557,000 acres from 2004.

Crop conditions declined 4 % with declines present in the states of Washington (-13 %), North Dakota (-6 %), and Montana (-1 %). Minnesota reported a 20 % increase, as a reaction to the hot/dry weather, which finally began to reverse the soggy conditions. The crop report estimated percent headed at 28 %, even with the five-year average, although slow, considering the quick, early planting pace.

Feed grain supplies are still quite large, even with the declining corn yields. Malting barley bids continue to be posted at $2.50, while feed barley prices have been unable to regain any ground and continue to be posted at $1.60.

Hops News

New Zealand: 2005 HOP CROP

The 2005 New Zealand hop harvest was completed in March. The 2004/05 growing season was characterised by a mild Spring followed by a cold and wet early Summer period. From mid January onwards the weather improved and plenty of sunshine ensured a good looking crop. There was an abundance of cones on the vine, with less than the usual number of leaves.

The 2005 yield is an improvement on the previous crop year, and the quality is excellent. Alpha levels were expected to be above average, but on harvest analysis showed closer to average level for the various varieties, which we attribute to the cold and wet early Summer weather.

The crop is currently being processed into pellets and a large portion will be further processed into CO2 hop extract by our JV super-critical extraction company Extract Solutions Ltd.

The majority of the crop is presold, with some surplus hops still available in New Zealand Hallertau Aroma variety and various high alpha hops.