According to at least two sources familiar with the matter, AB InBev and Carlsberg may have discussed the possibility of an alliance centered around sharing of production and distribution platforms in India's rapidly growing beer market, VCCircle posted on April, 7.

Preliminary talks have taken place between the senior management of the two brewers in charge of their Asia-Pacific operations, sources claim.

Both Carlsberg and AB InBev have struggled a bit in their push into one of the fastest growing beer markets in the world. The two brewers have invested in breweries that are operating below optimal utilization as their brands made a sedate start. While sharing of infrastructure between the drinks rivals is not common in the matured markets, there are instances of them working together in Africa to optimise resources in rather difficult operating conditions.

AB InBev spokesperson Michael Torres declined to comment on market speculation, while an emailed query to Carlsberg remained unanswered at the time of posting this report.

Carlsberg has four operating breweries with a combined capacity of over 10 million cases annually while AB InBev with its one plant has over 6 million cases capacity. With market access in a heavily consolidated market taking time, most of these ...More Info

With most analysts predicting a light upswing of the world economy already this year, beverage markets analysts also expect an increase in beer sales after a small reduction in 2009, a research note said earlier this month.

Positive beer sales in China, Southeast Asia, Africa and South America had been compensating for a bad year 2009 in North America, West and East Europe and Japan. This trend has continued in the early months of 2010. News from the emerging markets is predominantly good.

Beer sales in the U.S. dropped by 6.2% in February after 8.2% in January, both compared to last year. U.S. craft brewers hold only a small percentage of the nation’s beer sales, but they bucked the downtrend in 2009. They produced 10.7 mln hl, 7% more than in the preceding year.

Germany reports a minus of 1.5% in February, for a total minus of 5.7% in the first two months of the year.

Russia’s figures look awful, their brewers sold 29.2% less beer in Jan/Feb than at the same time last year.

New York-based Brahma Management, an India-focused private equity firm, is in advanced talks to pick up 50% stake in Cobra Beer India for a consideration of $7.5 million, Reuters communicated on April, 7.

Lord Karan Billimoria-owned Cobra Beer had appointed Grant Thornton London to rope in an investor for its Indian operations, it is reported.

Last year, Billimoria, faced with mounting debt, divested 50% stake in Cobra's mainstay UK operations to North American brewing giant Molson Coors.

The London-headquartered Cobra Beer's India unit was not part the earlier transaction and was demerged into a standalone entity subsequently. A Cobra India spokesperson could not be reached for immediate comments.

A source directly familiar with the situation said, an initial agreement was already in place, and a formal deal announcement could happen later this month. Brahma’s investment will be through a combination of fresh equity and convertible instruments. Both the original promoter and Brahma will have equal board representation and equal management rights.

Cobra Beer India reportedly sells just under two million cases (of 7.8 litre each). It owns one brewery in Patna and has multiple contract brewing tie-ups across India.

This is one of the rare instances of private equity deals in the Indian alcoholic ...More Info

World’s second-largest brewer SABMiller wants to take over the Brazilian Schincariol brewery, Cidade Biz posted on March, 30.

According to the publication, the companies have started a new round of negotiations last month. Instead of a simple purchase of Schincariol, SABMiller is now offering an up to 10% stake in itself to the controlling shareholders of the Brazilian brewer, Cidade Biz said.

The deal may become SABMiller’s answer to its feeble attempt to acquire Mexican FEMSA’s beer business, which was sold to the Dutch Heineken, analysts said.

Schincariol brewery declined to comment on the report.

Schincariol is the last possibility to buy a brewer of a more or less significant size in the region, analysts said. SABMiller is already represented in Colombia, Equador, Peru, Panama, Honduras, and El Salvador.

Large brewing corporations, representing 50% of the global beer market, still buy 70 – 80% of their malt demand by LTA’s. But the other half of the world industry is using less long-term agreements (LTA’s), many smaller brewers none at all.

The world average may be around 50% LTA’s, 50% plain purchases, analysts sum up. Part of the purchases is done by internet auction, and for both LTA’s and auctions barley prices, transport and energy charges are considered separately.

It has become extremely difficult to put price labels on malt markets, but it is obvious that presently prices in northern Europe, from Britain through the Netherlands and Northern Germany to Scandinavia, are the lowest in the EU. By comparison the larger part of the continent is in better shape, industry observers said.

Better prices for future years are due to a general expectation of a recovery of beer markets in the world, and very much due to an apprehension, almost a conviction in Europe that barley production is endangered by present price levels. Malting barley will require better revenues to survive against the competing maize, rapeseed and wheat production, it is stated.

EU’s export sales of malting barley are substantial, a research communicated at the beginning of April.

Estimates are that 600,000 tonnes of French barley were sold to China, about 100,000 tonnes to Turkey and North Africa, 75-100,000 tonnes to Brazil and at least 50,000 tonnes to the Pacific coast of South America.

German shippers, mostly malting barley specialists, had fixed 513,000 tonnes, about 73% of all export licences booked to-date, it is reported.

Market prices went up by a few euros, driven by new inquiries from abroad and purchases against LTA’s and short positions, mostly for crop 2010. Altogether, however, brewers continue to act very cautiously, leaving part of their normal demand open.

New crop French barley for delivery in the first months after harvest is buyable at very interesting discounts below the regular crop quotes, but the demand is negligible, market sources said.

U.K. and Danish 2RS barleys, crop 2010, are quoted EUR128,-, FOB seaports, basis October, for Oct/March delivery. German 2RS barley, delivered malthouses, costs EUR 116,-/118,- for prompt delivery, while new crop is quoted EUR 145,-.

EU intervention stocks of barley reached 5.04 mln tonnes on March, 21, an analysts’ note reported on April, 6.

Inside the Union, 803,000 tonnes are offered for sale, nevertheless, end of campaign stocks are expected to exceed 5 mln tonnes.

Export certificate bookings are 703,000 tons to-date, but the EU has lost most of its traditional export markets to Russia and the Ukraine.

There has been a small flurry of feed barley export business lately due to depressed domestic price levels and a weaker Euro against the U.S. Dollar, helping exports to dollar markets. Domestic (French) feed barley values, down to EUR 90,- per ton, basis July, delivered Rouen, are caused by the lack of storage space in France.

Barley, if sold to intervention, would remain in the coops/merchants silos and block new crop grain receivals in summer of this year, experts forecast.

Barley markets remain fairly quiet in North America – weather across the Western prairies is dry and it has been an early and warm spring, Integrated Malt Barley Management (IMBM) communicates.

According to the latest USDA forecast, the areas planted to barley in the US will be down by 8% this year, whereas Canada’s barley acreage is expected to decline by about 10%.

Barley prices for Canadian domestic brewers have declined over the last few months, but remain high compared to values in the USA and Europe. A positive movement of pricing is likely to come with the improvement in the economy, IMBM experts said.

Malt/barley supply was tight prior to the recession. Today, Canada struggles to gain ground in export markets as the nation’s feed markets show values equivalent to about 175 CDN FOB leaving little for a premium on export malt barley sales. The CWB has not shown a willingness to be aggressive yet.

The question of the CWB’s monopoly is still causing discussions in Canada. The current federal agriculture minister has stated his government will make changes and recent court rulings suggest they have the legal authority to do so, IMBM said.

Chmiel Polski, the largest hop processing firm in Poland, is searching for an investor which could rent the company’s facilities, Rzeczpospolita reported last week.

In mid-February 2010, a court declared the company insolvent.

Potential investors include the company’s employees, but they need financial support from the government, as the Treasury owns around 20% of Chmiel Polski’s stake. In addition, the Institute of Soil Science and Plant Cultivation (IUNiG) in Pulawy is interested in cooperating with the firm.

Polish hop producers are facing difficulties because breweries are not purchasing hop produced in Poland. The beer producers claim that the decline in demand for hop is a direct result of the 12.5% reduction in beer consumption in 2009. Furthermore, there is surplus production of around 40% on the global market.

The Agriculture Ministry has proposed support for Polish hop producers, who are to receive around PLN 29,000 (€7,500) each in 2010. The farmers argue, however, that the only solution is to increase the amount of domestic hop purchased by breweries in the country.

Poland is the third largest hop producer in Europe and the fifth largest in the world. 3,400 tonnes of hop cones were produced in 2009.

Dr. Patrick BOIVIN

ABSTRACT Beer quality that is depending on the processes (malting and brewing) and raw materials is a very fragile product. The flavour quality of the beer decreases during the storage and the challenge for the breweries is to maintain a fresh flavour in their product for about 9 to 12 months. The T2N that is the major contributor of oxidised, is formed during malting and during brewing from milling to boiling by enzymatic and non enzymatic oxidation of lipids. Polyphenols from malt and hop that have antioxidant activities (inhibition of Lox-1 activity, metal chelating activity, and radical scavenging activity), contribute to improve the flavour stability of beer.
Cerevisia, 33(4) 2008 http://www.cerevisia.eu