Commentators are reporting that the dynamics of UK malt supply are changing.
Expanding world demand for malt, and at prices that represent a premium over UK values, has already begun to increase the export market’s share of the UK’s total malt capacity. That this market does not appear to be overly price sensitive can be put down to, first and foremost, a worldwide thirst for specifically English barley and English barley malt. Four elements are underpinning this:
1.) The Global brands are feeling the impact of the worldwide Craft Brewing expansion. If they are to defend their market share, according to Francois Sonneville, Global Beer Analyst for Dutch based Rabobank, “they need to raise their game!”. They need to double their inclusion of malt in their beers (we are talking about flavour). They would still be trailing Craft Brewers by 30-40%, but it could be enough to make a difference. Whether global malt capacity could meet this new demand is altogether another question!
2.) Latin America, Africa and Asia are all just waking up to the Craft Brewing revolution. Amazingly, they particularly want English barley malt. It seems English beer styles have become almost as iconic as the Belgian brands. In particular we are talking about IPA (India Pale Ale), and even the Indians want to brew this as authentically as possible, and they want to brew it at home.
3.) Currently, the continued weakness of sterling, coupled to the preference by UK farmers to major on Spring barley production, makes both English malting barley readily available, and English barley malt financially attractive to foreign buyers. Add to this the belief that barleys grown in a maritime climate are superior to others, and there are not many maritime climates around the world, then you can add in the ‘terroir’ factor, and the price of English malt commands a premium. That is all before you factor in the likes of Maris Otter, and Otter’s still unchallenged status as the world’s most revered barley variety.
4.) Further forward, conversely, Brexit, threatens to destabilize UK malting barley production. Michael Gove, DEFRA Secretary, has clearly signalled a sea-change to farm support, which will be all about delivering “public goods”. Mr Gove appears to be talking specifically about farm support targeted at the environment, as opposed to subsidising cheap malting barley production for brewers. Farmers are not wedded to barley production. What they are committed to, for the most part, is passing on their farms to the next generation, and they will determine how to do this by whatever means that takes!
Reports go on to highlight that, perhaps, the biggest threat to the beleaguered UK Craft Brewing industry may not after all be the continual demise of the pub; it may not be the overcrowded market place, or the global brands’ encroachment into the ‘craft’ market by acquisition. Instead, they now begin to implicate the price and/or the availability of malt!
There’s no reason why this needs to challenge every Craft Brewer, although it might fast track what, some would say, is much needed consolidation. However, for those with ‘real staying power’ there is an old saying “Where there’s a will, there’s a way”. But firstly, those brewers need to recognise what is already very clear to others, malt is neither commodity, nor a raw material that can be taken for granted in the future. Perhaps it’s now time to give malt a lot more serious consideration than just arguing about the price!
January 2018.
