A Revolution Is Brewing
Malting barley and malt are on the rise, with a 14 percent consumption growth forecast in the next five years. The main underlying drivers for this increase are a growing population in Asia, Latin America and Africa, a rise in per capita beer consumption and an increasing demand for higher quality beer. Therefore, the future for maltsters—both in the short term and the longer term—looks bright.
Malting barley and malt are on the rise
“There are three main reasons why we’d expect malting barley to be in scarce supply in the next few years; the current tightness in the market and the projected 14 percent rise in demand, the perception of malting barley as a risky crop for farmers, and the request for different types of barley due to the increasing popularity of craft beers,” explained Grains and Oilseeds Analyst Ciska van den Berg. “Currently the production of and demand for barley are almost equal, meaning that there is no room for crop failure. Many farmers regard malting barley as a risky crop and one with highly volatile premiums, which inevitably means that they will only grow if the premiums are high enough.”
Malt demand is mainly driven by emerging markets
Malting barley needs are expected to grow by 14 percent in the next five years also requiring investment in the malt industry. The main drivers for this increase are the growing global population and the premiumisation of the beer market in emerging markets. A smaller proportion of the increase is due to the growth of craft beers, which require four to seven times more malt than ordinary beers.
Rise of the craft beer segment
The seemingly unstoppable growth of the craft brewing sector, and competition for good quality hops has also had an impact. Craft brewers increasingly look for malt with distinctive flavours and aromas in order to distinguish their products in a competitive market. As a result the industry demand for malting barley has become increasingly fragmented, creating additional pressure on supply.
To cope with demand growth, investments on a global scale are needed in order to increase malting capacity, and thereby avoid any potential shortage in the malt supply. Find out more in the Industry Note ‘A Revolution Is Brewing—Changes in Today’s Malting Landscape’.
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Where to go from here
Ciska van den BergAssociate Analyst - Grains & Oilseeds
RaboResearch Food & AgribusinessPO Box 17100 (UC 053) 3500 HG Utrecht, The Netherlands