“The acquisition we are doing today is very important for the future growth of Royal Unibrew in the Americas region,” Royal Unibrew CEO Lars Jensen said in a statement.

“We are adding capacity in Canada, which is also close to our U.S. business and over time we expect to serve most of Canada and partly United States from Amsterdam Brewery,” Jensen added.

The vast majority of Royal Unibrew’s revenue is generated in Europe. In 2021, around 11 per cent of the company’s net revenue came from its international segment, which includes the Americas, according to its annual report.

Royal Unibrew, whose own brands include Royal, Lapin Kulta and Faxe, noted Amsterdam maintains a “solid position in on-trade in Toronto” through its two retail stores and two brewpub restaurants in that city.

Amsterdam was founded in 1986 as a Dutch-themed Toronto brewpub and expanded following its 2002 acquisition by Jeff Carefoote, who previously worked for major brewers Molson and Miller in Canada and the U.S.

The acquisition is expected to close in the third quarter of this year, paid on a debt-free basis, Royal Unibrew said. It expects the deal to be earnings-per-share accretive within the first year of ownership.

— Reporting for Reuters by Nikolaj Skydsgaard; includes files from Glacier FarmMedia Network staff.

CORRECTION, July 18, 2022: Royal Unibrew on July 17 published a statement of correction, lowering the acquisition value. The initial announcement on July 15 had valued Amsterdam Brewery at about 300 million Danish crowns (C$52.8 million).

The post Denmark’s Royal Unibrew to buy Toronto’s Amsterdam Brewery appeared first on Grainews.

Sydney-based GrainCorp announced Thursday it plans to “demerge” its global malting business from its grains and edible oils business, forming two separate ASX-listed companies: MaltCo and “New GrainCorp.”

GrainCorp shareholders would get MaltCo shares proportionate to their stakes in GrainCorp if the company completes the demerger as expected by the end of calendar 2019.

GrainCorp said it expects annual savings of about $10 million by integrating New GrainCorp’s grains and edible oils businesses, cutting out duplication of costs and corporate functions, plus $10 million in “business simplification initiatives” coming out of the separation of MaltCo (all figures A$).

MaltCo, the company said, would be the world’s fourth largest independent maltster, operating malting houses in the U.S., Canada, Australia and the U.K., as well as Country Malt Group, the company’s North American craft malt distribution business.

MaltCo, GrainCorp said, would have the benefit of “high-quality, low-operating-cost processing assets strategically located in premium barley-growing regions.”

In Canada, those assets are under the purview of Calgary-based Canada Malting, which produces about 400,000 tonnes of malt per year.

The Canadian assets include malting plants at Calgary, Montreal and Thunder Bay, nine country elevators across the three Prairie provinces, and the Country Malt facilities at Delta, B.C., Didsbury, Alta. and Brampton, Ont.

Canada Malting’s history dates back to 1902, when it formed in the merger of three Ontario malting companies. GrainCorp in 2009 bought Canada Malting in a takeover of its then-parent, United Malt Holdings.

MaltCo, which in fiscal 2018 yielded EBITDA (earnings before interest, taxes, depreciation and amortization) of $170 million, is to focus on “further developing its international portfolio.”

Specialty malt, whisky and craft beer markets “are experiencing substantial growth,” GrainCorp said Thursday, and MaltCo will have “sufficient balance sheet flexibility to support the capital investment required to capture these growth opportunities.”

‘Ongoing investment’

New GrainCorp, after the demerger, would be an “integrated global agribusiness with grain handling, storage, trading and processing operations in Australia, New Zealand, North America, Asia, Europe and Ukraine, focused on grains, oilseeds, pulses, edible oils and feeds.”

GrainCorp said New GrainCorp’s strategic focus will be on” building and developing its global grain and oilseeds origination network, including through ongoing investment in the GrainsConnect Canada supply chain and growth into new markets in the Black Sea and Indian subcontinent.”

Calgary-based grain handler GrainsConnect Canada — a joint venture between GrainCorp and Japan’s Zen-Noh Grain — on Tuesday opened its third Prairie grain terminal at Vegreville, Alta. and plans to open a fourth at Huxley, Alta. this fall.

In a separate joint venture, GrainsConnect and Winnipeg grain firm Parrish and Heimbecker are building Fraser Grain Terminal, a Vancouver export terminal expected to handle up to four million tonnes of grains, oilseeds, pulses and other commodities per year following its completion, expected next year.

New GrainCorp’s plan calls for GrainsConnect to “expand (its) origination footprint n Canada and enable (a) multi-origin service offering to customers in Asia and MENA,” referring to the Middle East and North Africa.

“Our portfolio review made clear that these businesses have different characteristics and would benefit from operating separately,” GrainCorp CEO Mark Palmquist, who in the demerger would become MaltCo’s new CEO, said Thursday in a release.

“A demerger would provide both MaltCo and New GrainCorp with increased flexibility to implement independent operating strategies and capital structures and allow them to attract investors with different investment priorities.”

Klaus Pamminger, now general manager of GrainCorp’s grains group, would become CEO of New GrainCorp following the demerger.

While the MaltCo demerger progresses, GrainCorp said, it “continues to engage actively with parties who have expressed an interest in acquiring part or parts of the GrainCorp portfolio.”

Specifically, GrainCorp said it has “engaged extensively” with Long-Term Asset Partners (LTAP), a Sydney-based asset management firm, about a possible takeover, but as of Thursday “has received no recent definitive update from LTAP.”

LTAP was set up in 2016 to pursue “long-term, patient investing in Australian agricultural assets and infrastructure.” In November 2018, by which time it owned a 4.2 per cent stake in GrainCorp, it made a “non-binding indicative proposal” to the grain firm, valued at $2.38 billion. — Glacier FarmMedia Network

The post Canada Malting to join GrainCorp’s global malting spinoff appeared first on Grainews.

However, those two customers have different needs which can also create some challenges, said industry officials speaking Tuesday at the annual Grain World conference in Winnipeg.

Lorelle Selinger, North American supply chain manager with Cargill Malt, and Peter Watts, managing director of the Canadian Malting Barley Technical Centre, gave a joint presentation on the industry that highlighted two key trends.

China, the world’s largest beer maker, is seeing a shift from low-quality beer to higher-quality beer, which also necessitates a shift to higher-quality barley, which is good for Canada.

At the same time, North America is seeing an explosion in the craft beer sector. While craft beer still only represents a small portion of the total beer sold in North America, the beer uses three to four times more malt per unit.

“Our single largest export market for malt barley is China,” said Watts, noting the country imported about 1.3 million tonnes of Canadian malt barley in 2017-18 and was set to increase that level going forward.

Brewers serving the Chinese market “are seeing a shift to more premium beers,” said Watts, noting that also means a need for higher-quality barley.

“China is a very important customer, and we have to keep them happy and make sure our varieties meet their needs,” Selinger said.

The ideal protein levels for most North American maltsters are in the 11 to 11.5 per cent range, according to Selinger. However, China is looking for protein in the 12.8 to 13 per cent range.

“For farmers, that’s a good thing,” said Selinger, “because it allows selections of malt barley in a much wider range of protein increments and allows us to adapt on a year-to-year basis.

“Adversely, the craft industry is pushing for lower protein,” she added.

With a vast growing region, Canada can supply both markets and deliver specifications to meet both demands, but newer varieties face challenges to gain acceptance from end users.

“Brewers can be pretty conservative,” said Watts, noting it can take a while to transition to new varieties.

Looking ahead to 2020, Watts showed data forecasting relatively steady beer production in the U.S. compared to 2015, with craft beer rising from 29.1 million hectolitres to 39 million, while non-craft beer declines from 194.5 million to 183.9 million hectolitres.

However, due to the increased malt usage in craft beer production, the total U.S. malt demand will grow from 2.014 million tonnes in 2015 to 2.211 million tonnes in 2020.

While North Americans may not be drinking any more beer, “the value of the industry continues to rise,” said Watts.

“Even though the total beer consumption in North America hasn’t been increasing, the total amount of malting barley needed has,” said Selinger.

However, acres seeded to barley are in a downtrend, which also makes it important to have improved higher-yielding varieties.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow him at @PhilFW on Twitter.

The post Canada’s malt barley courts two different buyers appeared first on Grainews.

Feed barley prices “make some of these other prices look a bit ridiculous. There’s no demand from the domestic maltsters because they’ve all been plugged up ever since harvest,” said Rod Green with Central Ag Marketing at Airdrie, Alta.

Old-crop feed barley is trading at over $5 per bushel while malt is around $4.25 per bushel. Feed barley has been feeling pressure due to higher export volumes and rising corn prices, caused by drought in Argentina.

As of March 4, Canada has exported 2,016,400 tonnes of barley compared to 1,550,300 last year, according to data from the Canadian Grain Commission.

Last year’s malt barley crop featured great quality across Western Canada, except for south of the Trans-Canada Highway where drought hit the region. Domestic demand was quickly filled and a drought in Australia led to increased demand from China.

According to Green, Chinese buyers prefer the Metcalfe barley variety with a bit higher protein level, leaving a lot of lower-quality Metcalfe and Copeland barley sitting in bins on the Prairies.

“There’s a lot of farmers wrestling whether to sell old-crop malt barley for feed or for malt,” Green said.

Looking toward the upcoming growing season, Green already has all of his contracts for malt barley filled until September 2019. Green deals primarily with domestic buyers.

“We’ve got a pretty steady demand (domestically). The beer consumption in North America is not rising; it’s falling slowly as we lose market share to wine and hard liquor, not in a big way but in a small way,” he said.

The rise in craft beers is helping offset the hit from falling beer consumption. Craft beer requires more barley as it is made from malted barley, yeast, water and hops. Big-box beer, however, is made from ingredients such as corn syrup and rice.

“The increase in the craft industry is slightly increasing the demand for malt barley,” Green said, “but you’ve got to realize that we’re still only at, I think the craft beer was about 10 per cent of market share right now, so it’s not a huge factor.”

Green thinks there could be a change in the kinds of barley varieties seeded this year. Producers have tended to seed varieties more suited for malt, but with feed barley prices higher, Green thinks producers could shift to seeding more feed varieties.

“I think, given the uncertain nature of the pea and lentil market and the current strength in feed barley, that certainly my outlook(s) for acres are a lot more friendly to barley than they were say in January,” he said.

Agriculture and Agri-Food Canada is predicting a slight rise in barley acres. In its outlook for principal field crops, released in February, AAFC predicted more than 6.1 million acres of barley to be seeded this year, compared to 5.8 million last year.

New-crop malt barley prices are sitting around $4.75 to $5 per bushel, delivered to elevator. Domestic demand should hold steady, according to Green. However, international demand will depend on the weather in Australia.

— Ashley Robinson writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

The post Prairie malt barley prices lower than feed appeared first on Grainews.

Saskatchewan’s craft beer sector has been growing steadily in recent years and one brewer says the future continues to looks bright.

“We just view it as nothing but untapped potential, especially for Saskatchewan,” says Mark Heise, president and CEO of Regina’s Rebellion Brewery, one of the biggest producers of craft beer in Saskatchewan.

The growth trend for the craft beer sector has proved to be true not only in Saskatchewan but across the country. In 2016, the number of Canadian brewing facilities had increased to an all-time high of 775, up 20.3 per cent from 2015.

While the majority of these brewing facilities are in Ontario and Quebec, Saskatchewan is within the top three provinces for the number of brewing facilities per capita (at a rate of 4.6 per 100,000 drinking age adults), with approximately 17 breweries in our province as of earlier this year.

(You can find them all listed at saskdrinks.com, a website launched earlier this year by the Saskatchewan Craft Brewers Association and the Saskatchewan Artisan Wines and Spirits Association.)

And this growth is good news for Saskatchewan malting barley growers, as craft beer production requires approximately three to four times as much malt as mainstream beer production, says Peter Watts, managing director of the Canadian Malting Barley Technical Centre (CMBTC).

“The growth in the craft sector leads to an incremental growth in demand for malt and ultimately malting barley,” Watts says. “Already 35 per cent of all malt in North America is used by the craft brewing sector and that may rise to 40 to 45 per cent in the next five to seven years.”

But the bad news is that this growth is likely to slow down.

A recent article from the U.S. Brewers Association shows that while the country’s craft industry was still growing as of last year, growth had declined. It looks like Canada might go in the same direction. Here, our national beer production declined 2.4 per cent from 2015 to 2016 and sales volumes declined 0.7 per cent during the same time period.

“My takeaway is that growth in both the number of craft breweries opening and volumes is slowing, which is not surprising as it grew at double digits for so many years,” Watts says.

However, he expects the growth will continue, just at a slower pace.

“I would also say that the craft sector itself will continue to grow. Today craft accounts for 10 to 15 per cent of national beer sales by volume, which could rise to 15 to 20 per cent over the next five years,” he says.

How big is the craft beer market?

It’s important to keep the overall numbers in mind, as the craft market represents a very small percentage of the overall beer market in Canada, perhaps as low as one to two per cent in Saskatchewan.

For example, Rebellion is on track to produce about 3,000 hectoliters (HL) of beer this year (for reference, one HL equals 100 litres.) While that is up about 1,000 HL from two years ago, it’s still nowhere near Great Western Brewery’s average of just under 200,000 HL a year.

But although Great Western competes with the major international players in the traditional beer market for market share in Saskatchewan, the company finds itself positioned somewhere in between the traditional and craft market in terms of definitions. While in the United States, a craft brewer is defined by being small, independent and innovative, Canada lacks a concrete definition for what qualifies as craft brew.

“We like to think of Original 16 as craft beer, as we double-age the beer and we only use Saskatchewan-grown barley,” says Great Western president and CEO Michael Micovcin. “But other people might not consider it craft just because of the size of our brand.”

Furthermore, GW has always promoted the use of local products — another attribute usually associated with craft brew. The brewery runs a program in partnership with Prairie Malt, in Biggar, to source 100 per cent Saskatchewan barley for its beer and uses, on average, 2,500 metric tonnes of Saskatchewan barley a year.

“It’s important to us to work with local companies, to celebrate the fact that we are a Saskatchewan company,” Micovcin says. “We want to support local partners and local growers as much as possible.”

But despite the confusion around the definition of craft beer, and where Great Western fits, Micovcin says the growing number of micro-craft brewers in the province is a welcome addition.

“We’re personally excited that the face of the industry is changing and that there are more local producers, which we think is wonderful,” he says, adding that Great Western has begun to collaborate with the local craft beer community.

“Our collective interest is to promote Saskatchewan-produced beer. We really have a common goal of supporting and promoting local growers. We’re looking for ways we can help each other in the best ways we can.”

Why the growth?

One of the reasons for the growth of the craft industry is that it has been working with the provincial government to create a more welcoming climate for craft operations in our province.

Last year the provincial government changed regulations to allow private and public liquor stores to fill beer growlers (glass jugs designed to keep draft beer fresh), in an effort to make craft beer more accessible to people in Saskatchewan.

Also last year, the government announced a change in the tax markup structure for craft breweries. While previous regulations had breweries that produced more than 5,000 HL of beer a year being taxed at levels that were not tenable for small businesses, these new regulations saw the markups decrease in an effort to nurture the young industry and allow it to stay competitive.

Heise says these changes have come about as a result of a constructive working relationship between the industry and local government, one based on mutual goals of nurturing the local small-business environment and growing the economic output of the province.

“We’ve built a respectful back-and-forth dialogue and they’re willing to listen and we’ve earned that respect,” he says. “We’re not pitching things to take advantage of, or exploit a market. We’re trying to do things that legitimately improve the province’s economy and consumer’s enjoyment and experience of purchasing of alcohol in the province.”

“As consumer demand for locally-made products increases, Saskatchewan has seen tremendous growth in the craft beer industry,” says Saskatchewan Agriculture Minister Lyle Stewart.

“This industry’s growth sends a compelling signal to others that our value-added sector has significant opportunity to expand. Our government will continue to work collaboratively with alcohol producers as their success not only reflects the quality of the ingredients in our province, but also contributes to the prosperity of Saskatchewan.”

Another key to the growth in popularity of craft beer could be that it’s becoming less of a niche market product. Although it’s hard to find statistical evidence of this, Heise says he has seen an increasingly diverse group of people drinking craft beer over the past couple of years.

Part of this has to do with Rebellion’s marketing, which aims to position the brewery as a place where everyone is welcome, he says.

“We view beer as something that can be part of the normal culture — it doesn’t have to be a fringe thing,” he says. “We’re really gone out of our way to appeal to everybody and welcome everyone in.”

“When you first open a craft brewery you get all the beer nerds and that’s great, but we never wanted to stop there.”

Future potential

Although there is speculation that the craft beer trend will slow down, there are still several exciting new developments happening within the industry in Saskatchewan.

For example, earlier this year Saskatchewan’s first craft malting operation was launched in Rosthern. Structured as a grower cooperative, Maker’s Malts aims to support the local craft beer and distillery scene by providing more of a niche approach to malt, says president Matt Enns.

“There’s a number of things we can do better than the big maltsters just by nature of us being small,” says Enns, who is also one of the growers involved in the cooperative.

This includes the ability for the cooperative to deliver more diverse products, customized malts, guaranteed quality, and hands-on customer service.

“With us the buyer can talk not only to the maltster directly, but also to the guy who delivered the malt and the guy who grew it.”

Being a small malting company also allows the four growers involved in the cooperative to focus more on quality specs of the crop throughout the growing season, rather than just overall yields.

The idea for Maker’s Malt grew partially out of Enns’ observation that in areas of the U.S. where the craft scene developed more rapidly, craft maltsters were not far behind. It also grew out of his belief that the demand for local value-added products will continue to grow.

“In Western Canada, we’ve become very good at being efficient producers and producing a lot of grain for export, but we’ve really got away from using most of our supply locally,” he says.

“The general ‘farm to table’ movement has brought us to a bit of tipping point, where more of the general populace is looking for quality local products, and crucially, has become willing to pay for them. This shift has really paved the way for the craft brewing and distilling movement and Makers Malt is a natural progression, having the same philosophy towards malting as the craft brewer does toward brewing.”

Watts estimates there are approximately 10 more small malting operations now across Canada, with another 10 in the works.

“We will definitely see more small malting operations opening in coming years,” he says.

Another indicator of future growth for the industry is that several Saskatchewan breweries are looking at new ways to get their products to customers. Rebellion is one of several local breweries that have already, or are in the process of incorporating canning lines into their operations, which Heise expects will take his business to a new level.

“In the beer industry now, 90 per cent is sold in bottles and cans and 10 per cent is sold as draft so we’re actually only playing in 10 per cent of the market,” he says. “The real room for opportunity is to get into the retail market. That’s where the big growth is going to be.”

Heise says with new private liquor stores coming into Saskatchewan, the opportunity is increasing rapidly.

“We’re able to sell directly to them, and we’re already been able to build some great relationships,” he says.

And despite the overall small size of Saskatchewan’s craft beer industry, Heise is optimistic about the future. With relaxing government regulations, a growing market for the product, and breweries finding new and innovative ways to get the product to consumers, the sky’s the limit for this exciting new industry, he says.

“There’s so much more to discover there,” Heise says.

This article was originally published in the SaskBarley Fall 2017 newsletter, available at www.saskbarleycommission.com.

The post Crafting a brand new industry appeared first on Grainews.

“We get our base malt locally, but we don’t have any maltsters in the province making the specialty malt we need,” Colin Enquist, sales and marketing manager with PEG Beer Co. in Winnipeg, said via email.

The specialty malt being imported from the U.K., Germany, and other countries “comes down to the availability and some suppliers just having a better product,” he said.

Malt is created through a three-step process which sees grain soaked, germinated, then kilned, converting the starches in the grain into sugars.

Variations in that process, from the grain used to how long the end product is kilned or roasted, can impact the flavour of the resulting beer.

“We’ve actually had a couple people come into the pub and ask if they opened a specialty malt shop if we’d be interested in buying more locally grown malt,” said Enquist, adding “we absolutely would buy all local if we could and it was to the quality we need.”

An added irony of the situation is that in some cases the European malt finding its way into Canadian beers could have been created using Canadian barley to begin with, said Lawrence Warwaruk of Farmery Estate Brewery at Neepawa, Man.

The Farmery brewery creates beer using grain grown on its own farm, but that barley is still malted offsite through an agreement with the Malteurop facility in Winnipeg.

“There is definitely a market for specialty malts,” said Warwaruk, adding that while the large malting companies “do a fantastic job of what they do,” specialty malts have a higher value and could find a home both domestically and even abroad.

“You need to create a demand for locally sourced barley, malted locally, and sold locally,” he said. His company has looked into malting its own grain as well.

The Canadian Malt Barley Technical Centre (CMBTC) in Winnipeg runs training programs a few times a year for aspiring maltsters and those already in the industry.

Peter Watts, managing director of the CMBTC, noted the craft malting sector is very small in North America, accounting for less than one per cent of the total malt production.

He estimated that of the 40 to 50 craft maltsters in North America, only about half a dozen were in Canada. However, he said, there was plenty of interest from the craft industry.

“With the growth and expansion in the craft brewing industry in the last ten years, it has created demand for craft maltsters,” said Watts.

From a theoretical perspective, malting grain is rather basic, but in practice “it’s a pretty big investment up front,” said Watts.

Matt Hamill of Red Shed Malting in Red Deer went through the CMBTC course and is now operating a small-scale maltster. The company’s genesis came from a conversation between Hamill’s father, a farmer, and his brother, who was brewing his own beer.

“Why are we getting malt from Germany, when we grow pretty amazing malt-quality barley right here on the farm?” was the question asked, which, after a number of steps along the way, eventually led to a malt house.

“We certainly felt, and still do feel, that there is a need and a place for craft maltsters,” said Hamill.

“We can play around with different barley varieties and production methods,” he said, adding that the smaller scale also allows them to work closely with craft brewers “to make sure we’re giving them exactly what they’re looking for.”

Craft brewing also uses more barley to make the same amount of beer, said Hamill, noting craft beer may need three to seven times more barley compared to mass-produced beers, as brewers are not supplementing with corn, sugar or other adjuncts.

“The big maltsters make a great base malt, but we feel there is an opportunity to do some unique things and put our own twist on it,” said Hamill, adding that “seeing your product make it into beer that you can get at the local liquor store is a pretty amazing thing.”

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting. Follow Phil at @PhilFW on Twitter.

The post Growing craft beer sector thirsty for local malt appeared first on Grainews.

Labatt Breweries, the Canadian arm of Anheuser-Busch InBev, announced Friday it has bought Mill Street Brewery for an undisclosed sum and will “immediately” invest $10 million in upgrades at Mill Street’s Toronto plant.

Mill Street brewmaster Joel Manning, who will continue in that role, said Labatt’s investment in a “state-of-the-art brewhouse, that Mill Street will run on a stand-alone basis, positions us to reach the very top of our craft.”

Labatt said the deal will allow Mill Street, which operates brew pubs in both Toronto and Ottawa, to “deepen its traction with consumers in the fast-growing craft beer segment.”

Mill Street opened as an organic brewery in Toronto’s Distillery District in 2002, converting that space to a brew pub in 2006 when it set up an expanded brewery. It opened its Ottawa pub in 2012, in a former grist mill on the Ottawa River.

The company’s brands include its Mill Street Original Organic Lager, 100th Meridian, Barley Wine, Belgian Wit, Coffee Porter, Vanilla Porter, Lemon Tea Beer, Spring Thaw Maple Ale, Tankhouse Ale, Portage Ale and Cobblestone Stout.

“Our partnership and investment will accelerate its growth in one of the most dynamic beer segments, while fully preserving Mill Street’s creative character and pioneering spirit,” Labatt president Jan Craps said in a release.

Mill Street CEO Irvine Weitzman, in the same release, described the deal as “a natural evolution in our growth that will allow more Canadians to enjoy our beer and secure the legacy of our brands.”

Belgian mega-brewer AB InBev, whose heritage company Interbrew bought Labatt in 1995, recently put out a $136 billion takeover offer for rival SABMiller, which on Wednesday rejected InBev’s offer. — AGCanada.com Network

The post Labatt buys Toronto craft brewer Mill Street appeared first on Grainews.

Typically produced by small, local brewers, the popularity of craft beers has grown rapidly in recent years in the U.S. as drinkers seek new tastes, with sales estimated to have climbed more than a fifth in 2014.

GrainCorp on Tuesday said it would spend US$75 million to increase production capacity at its Great Western Malting facility in Pocatello, Idaho by 120,000 tonnes, to 220,000 tonnes.

The move comes a few days after Australia’s largest listed agribusiness said it was looking to diversify internationally, curbing the potential impact of the recently emerged El Nino weather event that could reduce wheat production in the company’s stronghold across Australia’s east coast.

“The craft sector in the United States has been growing consistently at 10-15 percent per annum over recent years,” said Mark Palmquist, GrainCorp’s managing director and CEO.

U.S. sales of craft beer in 2014 were worth nearly US$20 billion, according to U.S. industry body the Brewers Association, up more than 22 per cent from the previous year and accounting for nearly a fifth of all beer sold in the country.

That contrasts sharply with U.S. sales of traditional beer products, which have seen little growth in the last 12 months.

Producing craft beer usually consumes larger amounts of malting barley than traditional beers.

The Idaho expansion is expected to begin in the third quarter of 2015 and to finish by June 2017.

GrainCorp said it would fund the project via cash flow and debt facilities spread evenly over its 2016 and 2017 financial results.

Great Western Malting and its Canadian sister firm, Canada Malting, both became part of GrainCorp through the Australian company’s 2009 takeover of United Malt Holdings, now named GrainCorp Malt.

On top of its U.S. market share, Great Western Malting also supplies brewers, distillers and food processors in Canada, Asia and South America with malts. Its malt and brewing supplies warehouse and distribution system, the Country Malt Group, includes warehouse operations at Delta, B.C. and Didsbury, Alta.

“Building our capacity at Pocatello makes sense on a number of levels,” Graincorp Malt president Greg Friberg said in a company release.

“Idaho is one of the most reliable sources of quality malting barley in North America and Great Western Malting has developed very close relationships with Idaho malting barley growers over 30 years. Freight and utility costs are competitive and the plant is well located to key target markets.”

— Colin Packham is a commodities correspondent for Reuters in Sydney, Australia. Includes files from AGCanada.com Network staff.

The post GrainCorp to boost U.S. malt output, target craft beer boom appeared first on Grainews.