Mexico & United States: Mexico’s largest brewer looking to establish cooperation with Idaho malting barley growers

Mexican brewer Grupo Modelo has set its sights on south-central Idaho's booming barley crops, The Beverage World cited sources familiar with the situation on January, 4.

The brewer of Corona beer is expected to set up operations into western Twin Falls County later this year. This means that Modelo will rely on Magic Valley barley growers for the key ingredient in their beer, sources said.

Despite the national recession, revenue generated by the malting barley industry in Idaho grew 62 percent in 2008 compared to the previous year - making it the state's fastest growing agricultural industry.

Alfredo Avila, finance executive for Modelo in Idaho Falls, said the company visited areas near Twin Falls and Buhl. He said the company is interested in signing barley contracts with regional growers and setting up a grain elevator "in the near future."

"It's still too early to say what we will do, but the (Magic) Valley is a very good area for malt barley and something we have been looking at for a while," Avila said. "What we are looking for is quality and consistency, and we think that area can provide it."

Modelo had been eyeing Magic Valley barley after building a malting facility in Idaho Falls in 2003. But it wasn't until a group of lawmakers and barley growers organized an informal meeting, that the company began pursuing its interest in the valley.

State Reps. Steve Hartgen, R-Twin Falls, and Jim Patrick, R-Twin Falls, initiated discussions with Avila and other Modelo executives in September. But they quickly brought in Ron Elkin, a regional barley grower and chairman of the Idaho Barley Commission, as well as the Southern Idaho Economic Development Organization for help because of the complexity of the discussion.

The key to connecting the Mexico-based brewery with regional farmers hinged on the success of a barley variety known as Charles - a strain of barley that can grow through the winter and be harvest in early spring.

The variety is ideal for south-central Idaho, where winters are shorter and less severe than in other regions of the state where the young sprouts can be killed by prolonged freezing. The breakthrough, which was discovered almost two years ago in a University of Idaho lab in Aberdeen, allows maltsters to supply breweries with barley all year long.

"That what Modelo was looking at, so that's what we really promoted," said Hartgen.

In late November, Modelo executives met with regional barley growers, lawmakers and economic development officials at the Clear lake Country Club near Buhl. Don Deitrich, director of Idaho Department of Commerce and Celia Gould, director of Idaho State Department of Agriculture also joined in the meeting.

The discussion was about logistics, it is reported.

"Freight is our biggest concern," Avila said.

Before making it into a bottle, the barley had to be harvested and shipped to Idaho Falls more than two and half hours away. From there, the barley would be malted and then shipped by rail to a brewery in Sonora - or one of six other breweries in Mexico.
Economic development officials hope to place Modelo in one of two or three vacant grain elevators in western Twin Falls County.

Modelo controls about 64 percent of the beer market in Mexico, according to Hoovers, an industry analyst firm. It also exports about a third of its product to the United States, United Kingdom and Canada.

The Modelo facility in Idaho Falls can handle up to 100,000 metric tons of barley.

MillerCoors is currently the largest buyer of barley from south-central Idaho, with Anheuser-Busch InBev and Great Western Malting Co. coming in second. Together they have contracts from almost 300 growers in southern Idaho.

Both regional economic development officials and barley growers hope to add Modelo into the mix.

"There are a lot of pluses to bring in Modelo," Hartgen said. "The price to farmers is very attractive and over the long-term we could eventually see a malting facility or even a brewery in our area."

06 January, 2010