Tsingtao Brewery Co. Ltd., China's number two beer maker, said it would focus on reducing costs to maintain profit margins as there was little room to raise product prices as market growth slows, Reuters reported on August 6.

According to Chairman Jin Zhi Guo, the company’s focus will be on cost reduction (in addition to the earlier announced cuts of investments).

"We will make some adjustment in prices of our premium brands, but I can tell you the extent will not be large," he said.

ABN AMRO said Tsingtao's average barley price could increase this year by 50 percent in China, the world's largest beer market by volume.

One of the sponsors of the forthcoming Beijing Olympics, Tsingtao in April posted an 18 percent slide in 2007 second-half earnings as strong sales failed to offset higher tax rates and barley prices.

Jin said rising cost of production was a challenge for many companies but for firms like Tsingtao it was an opportunity to upgrade their operations, reduce costs and become more efficient.

"This pressure from rising costs is a good opportunity for Chinese industry to become more efficient, weed out the weak and let the strongest survive," he said.

The maker of China's most famous beer brand ...More Info

The construction of international brewer Heineken’s first South African brewery would be accelerated, building contractor Grinaker-LTA was quoted as saying by Engineering News on August 7.

The company, which formed part of the JSE-listed Aveng group, has been awarded the R549-million contract to build the brewery South East of Johannesburg.

According to a media statement, the building contractor Grinaker-LTA is working on a “fast-track construction programme” and the new brewery will be completed by June next year.

Heineken’s new 70 000 m2 brewery is designed to brew a range of Heineken and Diageo brands. Initially it completion was planned for the end of 2009.

Amm said that Grinaker-LTA’s building and civil engineering business units were undertaking the project in a 50:50 joint venture.

“The programme is very tight as process contractors are required to be given access to each building and sections of each building on sectional completion dates,” he stated.

The brewery would comprise production buildings and cool cellars, as well as a bottling and distribution warehouse for Heineken SupplyCo, the brewing and distribution company for beer brand Amstel.

Baltika Breweries, the leader on the Russian beer market, announced financial results for H1 2008, the company’s official site reported on August 5.

In H1 2008, Baltika’s operating profit increased by 11.9 % (€286.7 mln to €256.1 mln in 2007). Total sales volume amounted to 23.2 mln hl (+6.1% compared to H1 2007), of which 22.8 mln hl was beer sold — 6.0% more than last year.

The company’s net profit grew by 13.5% (€213.6 mln against €188.2 mln last year).

Sales revenue in 2008 amounted to €1246.8 mln from €1067.3 mln in 2007 (+16.8%).

Gross profit: €611.9 mln compared to €552.9 mln last year give a10.7% increase.

EBITDA grew by 13.0% (€359.0 mln against €317.8 mln last year).

In July 2008, the Financial Times 500 ranking for the second time in a row listed Baltika Breweries as the largest FMCG company in Eastern Europe in terms of market capital.

Baltika’s success on the Russian beer market and abroad

According to Company estimates, the Russian beer market grew by 2.4% in H1 2008. Growth was especially strong for the licensed and premium beer, whereas demand for beer in the economy segment declined. Growing category inflation driven by excise and input prices growth significantly influenced the beer market.

Nevertheless, during ...More Info

The Czech alcoholic drinks market is slightly changing its direction towards positive growth, it is asserted in a report published by MarketWatch on August 5. Beer sales are expected to be stable over 2007 – 2012, mainly because of a strong performance by low-/non-alcohol beer as well as healthy beer sales in the tourism industry.

Each sector in the Czech alcoholic drinks market is dominated by international players. As the strongest players in beer, the biggest sector in Czech alcoholic drinks, SABMiller and InBev are the overall leaders at GBO level, followed by Oetker-Gruppe, thanks to its strong position in wine. Only the two leaders hold shares of more than 5%, indicating the fragmented nature of the market due to the strong preference for smaller local brands in beer and wine.

As for sales growth, beer is expected to be static, the analysts believe. If women are noticeably switching to wine, beer is becoming more of a drink for the country's youth and/or males.

All sectors of the alcoholic drinks market are seeing increasing prices, resulting in slower volume growth. The Czech market is very mature with very high consumption levels and premiumisation is one of the options for manufacturers to ...More Info

Chile’s largest brewer CCU announced a 31.9 % increase of its first-half net profit compared to the same period a year earlier, Reuters informed on August 6.

The company’s success was boosted by the sales increases in Argentina, it is reported.

According to CCU, net profit rose to 46.177 billion pesos ($87.8 million) from 35.022 billion pesos last year, as revenue increased 9 percent to 336.726 billion pesos. Earnings per share increased to 145 pesos from 110 pesos.

The company said first half unit sales volumes rose 12 percent over last year, led higher by its Argentine beer division, which saw volumes rise 29 percent.

First half operating profit rose 14.4 percent to 56.522 billion pesos from 49.425 billion pesos. While dominating the Chilean beer market, CCU is also Argentina's second-largest beer producer, and bottles soft drinks, fruit juices, wine, mineral water and Pisco, a local brandy.

($1 = 526.05 Chilean pesos at the end of June)

Asia Pacific Breweries announced its unaudited results for the third quarter ended 30 June 2008 on its official site on August 7.

The company’s attributable net profit before exceptional items (APBE) grew 34% or S$10.7 million to S$42.5 million. Group profit before interest and tax (PBIT) rose 28% or S$17.4 million to S$78.7 million.

Excluding translation differences, gestation losses (i.e. the first 3 years' results from greenfield breweries in Laos, Mongolia and Hyderabad, India) and non-recurring items (i.e. a one-time recovery of business development expenses previously incurred on behalf of a Vietnam subsidiary), APBE increased organically by S$15.8 million or 54% to S$45.0 million; while organic PBIT reached S$88.7 million, up S$29.3 million or 49%.

YTD (9 months)

For the nine-month period ended 30 June, APBE grew about S$22 million or 20% to S$132.9 million; while PBIT reached S$247.7 million, up 18% or S$38 million from last year.

Excluding translation differences, gestation losses and non-recurring items, organic APBE rose 30% or S$32.6 million to S$142.3 million; while organic PBIT gained 28% or S$58.8 million to S$269 million.

Mr Koh Poh Tiong, Chief Executive Officer, APB said, "Building on the positive momentum in the 1st half of the financial year, very satisfactory results were ...More Info

Molson Coors Brewing Company reported higher sales volume and net sales and lower earnings per share for the fiscal second quarter ending June 29, 2008, the company’s official site posted on August 5.

Key results for the Company's fiscal second quarter ended June 29, 2008, compared to the fiscal second quarter ended July 1, 2007, include the following:

- A major achievement during the quarter was the formation of MillerCoors, creating a single, stronger, more competitive American brewer with a powerful portfolio of brands and economies of scale to win in the U.S. beer market. - Net sales increased 4.8 percent to $1.76 billion. - Net sales per barrel increased 3.9 percent. - Sales volume increased 0.9 percent to 11.6 million barrels, or 13.6 million hectoliters (HLs). - Total Company sales-to-retail (STRs) rose 2.3 percent. - Cost of goods sold per barrel increased 5.9 percent. - Marketing, general and administrative expenses rose 1.4 percent. - Income from continuing operations, a U.S. GAAP earnings measure, was $93.3 million after tax, compared to $184.3 million in the second quarter of 2007. The change is attributable to higher special charges, increased energy and commodity inflation in all markets, and a higher effective tax rate ...More Info

Slow beer sales have led to local postponements of malt shipments and created purchase opportunities of spot malt, market researches show.

This, however, has not influenced the malt market on the whole, because malting capacities are still tight, as new malthouse construction is slow as well. High construction cost will definitely limit the expansion of malting capacities, because new factories must work with a much higher malting cost than existing factories.

The constant increases of the cost of energy and transport have pushed malting margins to EUR 140,-/150,- per ton.

Maltsters in the EU are relaxed, because they have sold the bulk of their production for 2009, and they know that a number of brewers must still buy malt for next year, experts report.

Canada barley production is forecast by Statistics Canada to decrease by 4%, as the decline in area is partly offset by higher yields Agriculture and Agri-Food Canada (AAFC) communicated on July 2. Barley Supply is expected to fall by 7% due to lower carry-in stocks.

Total barley exports are expected to decrease significantly due to lower exports of feed barley while exports of malting barley are forecast to remain stable. Carry-out stocks are forecast to remain stable at near record low levels. The average off-Board feed barley price is forecast to increase from 2007-08 due to lower supply and higher US feed grain prices.

Canada production of grains and oilseeds (G&O) for 2008-09 is forecast by Statistics Canada to increase to about 64 million tonnes (Mt) from 60 Mt in 2007-08.

It is assumed that precipitation will be normal for the remainder of the growing and harvest periods, and that the abandonment rate and crop quality will be normal. Slightly above trend yields are now expected for most crops in western Canada, due to improved moisture and warmer weather. Normal yields are expected for eastern Canada.

World and Canadian prices for G&O are expected to remain historically high due to strong demand ...More Info

Recent developments

Barley is the second most important coarse grain traded internationally after maize. Malting and feed barley producers normally enjoy different margins with malting barley drawing a price premium on the market. Feed barley prices increased significantly in 2007/08 due to strong international demand, limited feed barley supplies caused by supply problems in Australia and Ukraine and high prices for other grains. They were also high relative to the prices of malting barley. Projected feed barley prices fall to a more usual level relative to the price of malting barley in 2008/09. International demand for malting barley is strengthened by strong growth in beer demand in many developing countries, China included, due to growth in income and population aided by foreign investment. The expansion of brewing results in China becoming the world’s largest malting barley importer.

Outlook for world consumption

World total barley consumption is holding strong albeit does not show the signs in escalation as other coarse grains, such as maize, do. FAPRI projects an increase in the world consumption from 138 million metric tons in 2007/8 to 151 million tonnes at the end of the projection period.

USDA projections are more moderate, with an increase in total consumption from 131 ...More Info

Prices for feed barley are on the decline this week, and the market has not regained its interest for malting barley, La Dépêche posted on August 6.

Barley prices were slightly revived by the purchase of Egyptian wheat. The market activity regarding feed barley remains limited. It should be mentioned, however, that Brussels certified 150.000 tonnes of which 50.000 tonnes in France. For malting barley, the situation is reported to have remained stable, though a decline for prices is to be expected due to the harvest. The market is focused on the crops (announced to be very good) from France, Germany, and Great Britain, waiting at the same time for the results on quality and quantity of the malting barley from Northern Europe, particularly from Denmark.

Markéta Dvoráková, Luis F. Guido, Pavel Dostálek, Zuzana Skulilová, Manuela M. Moreira, and Aquiles A. Barros

Abstract

J. Inst. Brew. 114(1), 27–33, 2008 Ten different barley cultivars and their corresponding malts were used to obtain different fractions. Phenolics extracted belonged to free, soluble esters and insoluble-bound fractions. Total phenolic content (TPC) of the free fraction, as measured according to the Folin-Ciocalteu method, ranged from 37.7 to 167.2 mg gallic acid equiv/kg of dried material (GAE/kgdw) for barley and between 34.1 and 72.3 mg GAE/kgdw for malt. The bound phenolic content ranged from 210.3 to 320.5 and between 81.1 and 234.9 mg GAE/kgdw for barley and malt, respectively. The contribution of bound phenolics to the TPC was significantly higher than that of free and esterified fractions. Catechin and ferulic acid, quantified by high performance liquid chromatography with diode array detector (HPLC-DAD), were the most abundant phenolics in the free and bound fractions, respectively. The p-coumaric acid content was lower in hulless genotypes, as compared to hulled genotypes, showing that it is mainly concentrated in the hull. The antioxidant activities of the phenolic fractions were investigated using the radical scavenging assay (DPPH) and ferricyanide reducing power. The bound phenolics demonstrated a significantly higher antioxidant capacity compared to the free and esterified phenolics. During the malting process, a significant decrease of the bound phenolics was observed with a corresponding increase of the esterified fraction. Key words: Antioxidant properties, barley, free phenolics, insoluble- bound phenolics, soluble ester phenolics, malt. Load full article, 7 pages, 558 Kb, PDF file