Craft brewing in US relies on imports of quality barley from EU
WHEN Ron Barchet set up his Pennsylvania craft brewery after quitting his job as a financial analyst, he turned to Europe for the malted barley needed to make a distinctive-tasting beer.
Two decades on, and Barchet’s Victory Brewing Company has been joined by a brigade of small American brewers, now multiplying at a rate of about 20percent a year, in a $22billion (R295bn) industry that’s helping drive record exports of European malt to the US.
“We’ve been using European malt from day one in our brewery, and that was one of the things that we did think would differentiate us,” Barchet said. “The barley that they grow in Germany and in Europe in general is more suitable for all-malt beers, which most craft beers are.”
Craft brewers tend to use more than three times as much malt as their industrial-scale peers, which typically brew with a mixture of malt and cheaper grains such as maize and rice, known as adjuncts. Barley is used to make malt.
While craft volumes made up 7.8 percent of the US beer market in 2014, they accounted for a quarter of malt consumed, data compiled by the beer makers’ lobby show. Meanwhile, numbers of producers from brewpubs to microbreweries grew more than 18 percent last year to 4 225 operations.
Pioneer Victory, set up with school buddy Bill Covaleski in the former paper-mill borough of Downingtown, was among the pioneers in an industry that’s been trending faster in recent years than woodsman attire and extravagant facial hair. Sales of US craft beer jumped 13 percent last year.
That bucks the outlook in a broader beer industry that looks pretty flat, with total sales down 0.2 percent in 2015, according to the Brewers Association lobby. It also spurs demand for materials from Europe, the largest producer of barley. In the past five years, malt exports to the US from EU nations more than tripled, according to Eurostat data.
Industrial-scale American brewers’ use of adjuncts gives brews from Anheuser-Busch InBev and SABMiller a lighter, drier taste and clearer look.
It also cuts the cost for maltsters, who make malt by adding moisture and allowing grain to germinate before drying it. European brews usually contain more malt and are heavier and cloudier with a stronger taste of grain or hops.
“Adjuncts basically bring sugar without bringing any flavour, so it means they can make a very, very light beer,” said Scott Casey, an analyst in Hamburg at RMI Analytics. “The American industry is really focused around largescale beer, for a long time there hadn’t been investment in specialty malting.”
As long as US drinkers keep turning to European-style beverages, demand for malt will grow. If craft sales rise to a 10th of total beer volumes, the smaller breweries will consume more than 30 percent of malt used in the industry. An increase to a fifth of beer sales, and they’ll be taking up more than half.
That’s a glimmer of light for barley traders in Europe, where a glut is set to help drive global stockpiles of feed and malting varieties to a seven-year high by the season’s end next June, International Grains Council estimates show.
It also helps the region’s maltsters, said Andries de Groen, a managing director at trader Evergrain International, which boosted sales of barley to the specialty malt industry by about 20 percent annually in recent years. The taste for specialty beers is spreading. China has about 350 craft breweries from just a couple in Shanghai and Beijing three to four years ago, said De Groen. – Bloomberg