Vietnam: Interflour to build a 220 thousand tonnes malthouse in Vietnam

Interflour, one of the largest integrated wheat buying, flour milling and marketing organisations in South East Asia, has announced plans to build its own malthouse and form a new company to be called Intermalt in Vietnam, Farm Weekly reported on March, 19.

Interflour's chief executive officer Greg Harvey made the announcement at last week's annual South East Premium Wheat Growers Association (SEPWA) harvest review, season preview and AGM.

Mr Harvey said the US$70 million investment in its own malthouse would perfectly position Australian growers to export combination cargoes of wheat and barley directly to Interflour's Vietnam port.

In an attempt to expand its business Interflour's management board approved construction of the malthouse to have an expected production capacity of 220,000 tonnes of malt which would require about 260,000 tonnes of barley each year - a figure SEPWA growers hoped to contribute significantly to during the coming years.

Mr Harvey said it was decided to build the malt facility alongside Interflour's existing Vietnamese flour mill in order to make the most of its waterfront location.

He said the malthouse would be integrated with the flour mill, which in its first year of operation in 2011 took in more than 1.2 million tonnes of grain.

The new malt facility will have its own dedicated storage area and twin tower operation system backed by the service and support of some of the malting industry's brightest minds including a former Joe White Maltings head who will advise on the commissioning of the factory and then stay on board as the chief operating officer (COO) of Intermalt.

An advisory board has also been set up which consists of a former chief executive officer of Joe White Maltings, Andrew Gee and a former COO of Malteurop, the largest malting company in the world.

"We have focused on Vietnam because we have the integrated port operating system now which already brings wheat in from WA," Mr Harvey said.

"But it's also well positioned to tap into the growing beer market in Vietnam and throughout the rest of South East Asia."

Mr Harvey said current statistics showed that 30 litres of beer per person every year were consumed by the Vietnamese and China had also experienced exponential growth in the brewing industry.

"Vietnam has been the fastest growing beer market in Asia with a growth rate of 12-16 per cent annually," Mr Harvey said.

"From this site we're also anticipating entering the malt markets in Thailand, Laos and Cambodia which are very much on our doorstep."

Mr Harvey said there was currently only one competitor in the Vietnamese malt space but it only occupied a 28,000 tonnes portion of a rapidly expanding market.

Interflour hoped to begin construction of the Intermalt malthouse by September this year once construction designs had been finalised.

"Realistically we should be in the production phase by the end of 2014 into the beginning of 2015," Mr Harvey said.

Interflour is one of the largest flour milling operations in Asia.

Since 2004 CBH had invested about A$100 mln to secure a 50pc stake in Interflour and its associated milling interests in Malaysia, Vietnam and Indonesia.

Mr Harvey said the company was "going well" and turned over US$500m in 2011 while aiming for a 20-25pc gross profit.

The initial A$72 mln investment into Interflour was made through Pacific Agrifoods, a joint venture investment vehicle owned by CBH and the Salim Group, one of the largest conglomerates in Indonesia.

The joint venture resulted in the acquisition of a 100pc stake in Interflour which operates four mills in Malaysia, a mill and grain port terminal in Vietnam and PT Eastern Flour Mills in Indonesia.

CBH said these partnerships continued to be an exciting opportunity for WA grain growers to participate in the value chain and capture extra value created through the processing of their grain.

The co-operative also said the partnerships provided a greater degree of surety for the international demand of Australian wheat by displacing wheat previously supplied from the US, Canada, the Indian sub-continent and Europe.

And in addition CBH was able to convey clear market signals and unique feedback from its international customers directly back to its growers.