CBH bets on Vietnam beer market with new malt factory

Australian grain company CBH has opened a $92m malt processing factory in southern Vietnam.

Interflour CEO Greg Harvey in front of CBH Group’s $92m malt plant near Saigon in Vietnam.

Australia’s largest grain company, the $3.2 billion CBH co-operative in Western Australia, has ventured into the barley malting industry, yesterday opening a state-of-the-art $92 million malt processing factory at Cai Mep port in southern Vietnam.

The new Intermalt plant, 80km south of Ho Chi Minh City on the Thi Vhi river close to the South China Sea, is half-owned by CBH and the 4200 WA shareholder-farmers, who supply it with grain, through its Interflour joint venture with Indonesia’s Salim conglomerate.

The malting facility is the biggest specialised plant built in Southeast Asia to turn barley into malt, the base ingredient of beer brewing. It also adds another dimension to CBH’s supply chain strategy, which has given Australia’s largest grain exporter a 50 per cent stake in 10 flour mills across Asia through its 2005 part-purchase of Interflour, and now a role as a Southeast Asia’s first major local maltster.

The Intermalt plant will process 140,000 tonnes of barley — 75 per cent of it grown in WA by CBH farmers and shipped to ­Vietnam by Interflour — each year into 110,000 tonnes of malt geared to the seven large brewing companies in Vietnam, including Heineken, Carlsberg, Sabeco and ­Habeco.

Beer consumption in Vietnam is a high 119 litres per person among its 92 million population, making it the largest beer market in Asia, with affluence, economic growth, alcohol consumption and population all increasing by 9-10 per cent a year. Beer makes up for about 95 per cent of all alcohol consumed in Vietnam, with a 330ml can of locally made Heineken in Saigon costing about $1.

A beer festival in Hanoi.

The opening of the Intermalt facility — a subsidiary of Interflour — is expected to bolster ­demand for Australian barley of high malting grade quality in Asia.

WA farmers will benefit because of the stake held by CBH in Interflour, the short nine-day shipping distance between WA grain ports such as Kwinana and Albany and Vietnam, and competitive shipping freight rates of about $20 a tonne. Big Asian brewers also have a preference for the premium malt barley varieties such as Bass and Baudin commonly grown in southern WA.

Interflour chief executive Greg Harvey said 32,000 tonnes of barley from the WA 2016 bumper harvest had already been germinated and processed into malt at the new plant and made into beer by Heineken.

“We are proud to be opening up a whole new market for these WA grain growers and offer our customers a great quality locally made product with reliability and consistency,” Mr Harvey said.

“Traditionally malt has been made where the barley is grown — in countries such as Canada and France — and then shipped to the brewers in Vietnam.

“We are doing it the other way around because we are shipping large volumes of wheat for our two flour mills here anyway, have our own deep sea port, a new malt ­facility built for the tropics and great relations with breweries in Vietnam who can order fresh malt to their own specifications and beer recipes.”

Mr Harvey is so confident of the success of his local malting ­facility that Interflour is already planning to double the size of its new Vietnam plant within the next two years. CBH chairman Wally Newman, in Vietnam yesterday for the Intermalt plant opening, said the firm’s involvement in downstream grain processing though the Interflour joint venture had ­diversified the co-op’s income stream and resulted in increased market opportunities.

Four million tonnes of barley was grown in WA last year, with 1.5 million tonnes exported as ­premium malt barley (the rest is used for livestock feed), returning $300m to CBH and its growers.

Mr Newman hopes the value of barley exports will now grow ­rapidly, as demand for malt barley booms in Asia and with the successful commissioning of the new Intermalt Vietnam facility.

“It will be a new chapter for Western Australian barley growers who now have direct access to Vietnam’s burgeoning beer market — the fastest growing beer market in Asia,” Mr Newman said.

Barley grower Chris Antonio from Northam in WA is also excited about the quick market signals that can now be given to farmers about what barley’s end customers — the breweries — want, such as new barley varieties grown, because of the direct link through CBH’s malt plant investment.

“It’s so exciting to see Bass barley made into Heineken beer being drunk in Ho Chi Minh City,” Mr Antonio said yesterday.

Sue Neales travelled to Vietnam for the Intermalt plant opening courtesy of CBH.