Th lt d b lThe malt and barley supply/demand situation in A t liAustralia ‘A Brewers Perspective’

Dr Mark GoldsmithManager Beverage MaterialsTechnical Services

ContentContent

Gl b l B T d• Global Beer Trends• Australian Beer Consumption

A t li M lti B l S l• Australian Malting Barley Supply• Australian Brewing Demand• Australian Brewing Barley Requirement• The Future • Summary

Global beer trends - consumptionGlobal beer trends - consumption

W ld b it ti h i d b 20%• World beer per capita consumption has increased by 20% over the last 10 years, outpacing spirits, wine and cider#

• Global growth is expected to continue at 2-3%* pag• E Europe, Latin America, Asia, Africa annual growth will

be 3-4%* driven by increasing personal wealth and shift from spiritsfrom spirits

• US, Japan, Australia trend will be flat but 4%* annual growth in premium sector

• Western Europe will decline – switch to wine• Imports continue to do well in all markets with growth at

6%+*6%+

Sources: *Eurocare Alcohol Trends Report April 2009# Canadean – Brewers Guardian Feb 2010

Global beer trends - productGlobal beer trends - product

P i i ti• Premiumisation• authenticity, materials, process, packaging, pricing,

origin (import)g ( )• craft beer

• Flavour• both at entry point as RTD alternative and as a means

of premium differentiation• WellbeingWellbeing

• low-carb, low joule, nutrition, wellness ingredients, • Alcohol reduction

• driven by social pressure – 4% is the new 5%, • In developing countries emphasis is on cheap

affordable beer often low abv low bitternessaffordable beer, often low abv, low bitterness

Premium/Super Premium BeersPremium/Super Premium Beers

US t d t d hi h fl hi h b ff i• US - trend toward high flavour, high abv offerings• Michelob 2006 Celebrate beers, Chocolate (matured

on cocoa beans), Vanilla Oak (aged in bourbon casks ) ( gon whole Madagascan vanilla beans

• Samuel Adams Utopia, 25% abv, limited edition

S l AdSamuel Adams Utopia

Premium/Super Premium BeerspEurope

UK i l i t diti l b i• UK - revival in traditional brewing credentials

– Green King Strong Suffolk Vintage g g gAle brewed at 6% abv and matured for 2 years in oak barrels

• Denmark – traditional use of fruits &• Denmark – traditional use of fruits & herbs

• Bramley Wit, a Belgian style wheat beer with Bramley and Belle de Boskoop apples, orange peel, cloves, coriander

JacobsenJacobsen Bramley Wit

Premium/Super Premium BeerspAustralia

S l b d hi l f li it d diti• Seasonal beers used as vehicle for limited editions• Crown Ambassador Reserve – using ‘green’ hops

Crown AmbassadorAmbassador

Reserve

CraftCraft

• The craft sector is important in creating knowledge, p g g ,enthusiasm, and language around beer, as well as a connection with ingredients

• US - About 3.4% of market*, growth at 9% p/a• Trend towards highly flavoured beers, bitterness >50g y ,

• UK - About 1.7% of market*, growth at 12% p/a*• Revisiting older styles of ales

* Consolidated industry estimates

CraftCraft

A t li i 2% k t* th 13% / *• Australia – circa 2% market*, growth 13% p/a*• Limited range of styles, but increasing

120 Microbreweries in Australia

* Consolidated industry estimates

Flavoured beersFlavoured beers

Fl f h t i i t• Flavours, refreshment, energy, aiming at young, and/or female consumers

• Explosion of flavoured beers in Europe and US• Explosion of flavoured beers in Europe and US• Positioned both in full strength and lower alcohol

segmentssegments

UK - Chocolate & Strawberry beer aimed at females

Flavoured beers - EuropeFlavoured beers - Europe

G t d t f ll RTD fl• German trend to follow RTD flavours • beer with cola

• UK market favours citrusUK market favours citrus• Carlsberg Edge & Fosters Twist

with lime, Becks Green with lemonFosters Twist

Lime flavour

Becks green lemon orange

Carlsberg EdgeLime flavour

Becks - green lemon, orange, lime + mint

Flavoured beers - USAFlavoured beers - USA

D i b j b ft• Driven by major brewers – often targeting specific ethnic groupings esp. Hispanic

• A-B 9th Street Market • eg. Pomegranate & Raspberry

A B Chelada (Bud + Clamato• A-B Chelada (Bud + Clamato Juice)

• Miller Chill (salt & lime)

Miller ChillLime & Salt

Flavoured beersFlavoured beers

I A i fl d b h ll b iti d• In Asia flavoured beers have usually been positioned as lower abv, refreshment products

• Guangdong Blue Ribbon 3%abv - pineappleg g• Jilin Yuehai Yinpu 2.2% abv - tangy apple

• Australia new category

Carlton Dry Fusion LimeCarlton Dry Fusion Lemon

Bare Cove Radler

Low/Lower Carb beersLow/Lower Carb beers• US standard for low carb – approx 2.0g/100ml• Over 50% of US beers are therefore ‘low carb’

• Miller Lite – the original low carb beer• Bud Light biggest selling beer in US• Bud Light – biggest selling beer in US• Michelob Ultra – extreme low carb <0.7g/100ml

Low/Lower Carb beersLow/Lower Carb beers

• No Australian standard, but taken to beLow carb = <1.5g/100mlLower carb = < 2.2g/100mlA t li t til 4• Australia – non category until 4 years ago

• Pure Blonde <1.0g/100ml• Plus Platinum Blonde Hahn Super Dry &Plus Platinum Blonde, Hahn Super Dry &

various others• XXXX Gold, Carlton Dry occupy lower

b tcarb sector• Europe - very weak low carb sector

Low Calorie / Low JouleLow Calorie / Low Joule

C f d t i l Li ht Lit Di t Di t L C b• Confused terminology – Light, Lite, Diet, Diat, Low Carb, Low Sugar, Low GI, Low Joule/Calorie

• ‘Low carb’ attracting some criticism as implying ‘low g y gcalorie’

• “Myth of the low carb beer”Calories contributed by alcohol and carbs• Calories contributed by alcohol and carbs

• 1gm alcohol = 7 calories; 1gm carb = 4 calories• In low alcohol beers carbs were often used to replaceIn low alcohol beers carbs were often used to replace

alcohol ‘mouthfeel• Carlton Mid has 4.0g/100ml of carbs

VB h 3 0 /100 l• VB has 3.0g/100ml• Germany - Becks Light sold as 64 calories per bottle• US - Miller Chill sold as 100 calories per bottleUS - Miller Chill sold as 100 calories per bottle

Low calorie / Low jouleLow calorie / Low joule

Becks Light

3.7% abv Corona Light

g64 calories

Corona Light from Mexico

– 105 calories105 calories100 Calorie

Australian Beer Consumption

Herald Sun May 28 2010Beer drinking in Australia at 60 year lowBeer consumption hits 1950’s levelsGap between wine and beer narrowing

Courier Mail November 14 2008E i t h i ti d i kEven in tough economic times, drinkers reach for a cold one to quench that hard-earned thirstearned thirst Australians spend $7.9 billion on beer a year wine sales are at $4.8 billionand spirits are at $3.5 billion annuallydemand for boutique beer has grown by 11.3

t i l tper cent in last year

Australian alcohol consumption per capita (>15 )Australian alcohol consumption per capita (>15 years)

6 105 L / person >15 yrs

4

5

rson 4.49

3

4

hol /

per Beer

WineS i it

1

2

L al

coh Spirit

0

996

997

998

999

000

001

002

003

004

005

006

007

008

009

19 19 19 19 20 20 20 20 20 20 20 20 20 20

Source: Australian Bureau of Statistics

Australian alcohol available for consumptionAustralian alcohol available for consumption

80,000

100,000

hol

60,000

es o

f alc

o

Beer Wine

20,000

40,000

'000

litre Spirit

0

996

997

998

999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

1 1 1 1 2 2 2 2 2 2 2 2 2 2

Source: Australian Bureau of Statistics

Australian beer available for consumptionAustralian beer available for consumption

2,000

1,600

,Low strength (>1.15 and=<3.0)

800

1,200

M L

itres

Mid strength (>3.0 and=<3.5)

400

800M Full strength (>3.5)

Total

0

001

002

003

004

005

006

007

008

009

Total

20 20 20 20 20 20 20 20 20Source: Australian Bureau of Statistics

Low and Midstrength beer consumptionLow and Midstrength beer consumption

250,000

300,000

40%

150,000

200,000

000

L

Low strength(>1.15 and=<3.0)30%

40%

50,000

100,000

'0

Mid strength(>3.0 and

0

2001

2002

2003

2004

2005

2006

2007

2008

2009

=<3.5)

20 20 20 20 20 20 20 20 20

Source: Australian Bureau of Statistics

Australian Barley Supplyy y

Australian Barley ProductionAustralian Barley Production

10000

8000

4000

6000

kT

2000

095-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

Source: ABARE

Australian Malting Barley ProductionAustralian Malting Barley Production

10000

Total Malting

6000

8000

T

2000

4000

kT

095- 96- 97- 98- 99- 00- 01- 02- 03- 04- 05- 06- 07- 08- 09-96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Source: BBM estimate

Australian Malting Barley Production – Domestic brewing use

Total Malting Domestic Brewing

10000

Total Malting Domestic Brewing

3% 9%

6000

8000

T

2000

4000

k

095-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-1096 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Australian Malting and Brewing sitesAustralian Malting and Brewing sites

MaltingBrewing

Australian malting barley supply and demandAustralian malting barley - supply and demand

800

600

700

Average Malting Barley

400

500

barle

y

Average Malting BarleyProduction 2000 - 2009Malting Capacity

200

300kT b

Brewing demand

0

100

S Q SNSW Vic Qld WA SA Tas

WA malting barley demandWA malting barley demand

Market usage Baudin Buloke Gairdner Hamelin Schooner Stirling Vlamingh

Export grain Very High Moderate High Contract X Low Moderatep g(>500,000 mT) Very High Moderate High Contract X Low Moderate

Export malt (300,000 mT) High Moderate

– High High Contract X Very Low Low –Moderate(300,000 mT) High Moderate

Domestic brewing (15,000 mT) X X Low X Contract Very Low X

Shochu (140,000 mT) Moderate X X X X High X

Overall demand Increasing Developing Stable to Limited Limited Decreasing DevelopingOverall demand Increasing Developing decreasing Limited Limited Decreasing Developing

Source: GIWA Barley Council

Domestic and Export UseDomestic and Export Use

MBIBTC lt i t• MBIBTC malt scoring system • Two brewing styles

• sugar adjunctsugar adjunct• starch adjunct

• 6 parameters

• ExtractModification Same requirements • Modification

• Beta glucan• Viscosity

qfor both brewing styles

scos ty

• Attenuation High - for starch brewing• Diastase Low - for sugar brewing

Baudin (2002)Malting varieties Baudin (2002)Hamelin (2002)Flagship (2005)Gairdner (1997)Stirling (1980)

g

Buloke (2006)Vlamingh (2006)Hindmarsh *

Gairdner (1997)Fitzroy (2005)Commander (2009)

Stirling (1980)Grimmett (1982)Schooner (1983)

Low Malt Attenuation High

Hindmarsh *( )( )

Low Malt Attenuation High

Low alcohol Regular alcohol Low carb / DryMid alcohol

g yAll malt beers

Variety not relevant to Australian Beer Styles (sugar adjuncts)Variety not relevant to consumers

Australian Beer Stylesy

No direct correlation between beer style and malt usage

Malt UsageC f

Low alcoholLow Carb / Dry

Fl d

Craft

Premium

Regular alcohol All maltMid l h l

FlavouredLow cost

Mid alcohol

The FutureThe Future

*beer means a brewed beverage that:• *beer means a brewed beverage that: • a) is the product of the yeast fermentation of an aqueous extract,

being predominantly an aqueous extract of cereals: • i) whether the cereals are malted or unmalted; and• ii) whether or not the aqueous extract contains other sources of

carbohydrates; and………

• Beer produced from unmalted barley?• Australian brewers will not use materials derived from GM crops• Australian brewers will not use materials derived from GM crops

to produce beer• Government Tax

• "The tax on one standard drink of wine is about 4c on beer around 37c and on a standard• The tax on one standard drink of wine is about 4c, on beer around 37c, and on a standard spirits drink or an RTD it's about 93c“

• Greens leader Bob Brown will today announce in Melbourne the party's plan to impose a 1.5 per cent levy on alcohol and junk food ads (Herald Sun 21/7/10)

* Australian Excise Tariff Act

SummarySummary

Gl b l b ti ti t i• Global beer consumption continues to rise• Australian beer consumption is flat

A t li lti b l l t t i• Australian malting barley supply outstrips domestic brewing demand

However variety development not• However, variety development not favourable for domestic brewers

• The number of beer styles continues to grow• The number of beer styles continues to grow both globally and in Australia

• However no direct impact of beer style onHowever, no direct impact of beer style on malt usage (apart from low cost and premium)

• Australian brewers have a no GM crop policyp p y