Daily Management Review

Heat wave in Europe creates problems for brewers


08/08/2018


Barley crops in northern Europe are threatened by hot and dry weather. This can create problems for brewers who need to buy malt, writes Bloomberg.



Wagner T. Cassimiro via flickr
Wagner T. Cassimiro via flickr
According to Evergrain Germany trader, the yield of the main barley producers in Scandinavia, Northern Germany and the Baltic states may be 30-40% below the norm.

Prices for barley are already showing a sharp increase, and the increase in costs will be transferred through the supply chain. Some German brewers are beginning to raise prices for their products, says GrainCom GmbH trader Stefan Wolmar.

"We have big supply problems," said Jonathan Arnold of British trading company Robin Appel Ltd. "The cost of malt is not that big a share in the price of a pint of beer, but in combination, with a lot of pints of beer, that's a big sum."

If the heat hurts the crop, the EU will face a deficit of brewing barley at 490,000 tons this season. It will be the first deficit in eight years, warns RMI Analytics.

Hot weather also reduces the quality of barley. This means that there will probably be an excess of grain that can only be used as feed for livestock.

"The farther to the north, the more difficulties," Wolmar said, "it's hard to say with confidence about the crop that we just started harvesting, but we expect the volume to be quite low and there will be some quality problems."

Prices for French brewing barley jumped by more than 35% since April, reaching a maximum since 2013, shows Commodity3’s data.

Heineken NV, the second largest beer producer in the world, pointed to higher raw material costs in the second quarter. Although the company said that a poor harvest in Europe would not hurt its results for 2018, it refused to comment on the consequences in the future.

source: bloomberg.com






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