India: Weak demand for beer makes barley prices tumble

Weak demand for beer has made barely 20% cheaper over the last three months in India, the Economic Times reported on August 5.

The lockdowns, which shut bars, restaurants and for some time even alcohol shops, came at the time when beer sales boom. About 65% of beer is sold between January and June.

PK Jain, chairman and MD of PMV Malting, which supplies malt to Anheuser Busch, Carlsberg, Heineken and others, said most breweries, distilleries and malting units are running at 35% capacity.

“With tourism, hotels and restaurants sectors yet to pick up, sales remain negligible. This has led to a drop in buying of barley from mandis and farmers are under tremendous stress to sell, which has led to a drop in prices,” he said.

Jain said some states fixed the shelf life of beer at three to six months, compared to the international norm of one year. This had also hit retail sales, he said.

Shobhan Roy, director general of All India Brewers Association, said half of annual beer sales are between March and June. “In some states, the companies are still not able to get 100% access to retail outlets due to lockdown and curfews. On top of that, 35% of the sales to restaurants and hotels is not happening due to government restrictions, leading to units to run at 45% to 50% capacity,” he said.

Roy said the slowdown will hit barley planting in India, one of the largest beer markets, with 85 breweries producing about 340 million cases per year (at 7.8 litres per case).

Malting industry consumes 600,000-650,000 tonnes of India’s barley output of 1.7 million tonnes A small percentage is used for food supplements and breads. The rest is used as animal fodder.

Dharamchand Jain of Sanmati Broker Agency in Chandpole mandi, Jaipur, said there was no major purchase at the time of the harvest. “Fall in sales of beer in 2020-21 has led to 70% drop in purchase of barley by malting companies and thereby prices fell by 20% to Rs 1,200 per 100 kg in the last three months. Demand is now largely coming from animal feed buyers in north and east India,” he said.

Prices are 30% less than August last year, said Jain. He added that malting companies were unlikely to import barley from France and Argentina this season as has been the trend in the past few years.

Pankaj Aggarwal of Pragati Global Corporation, Sri Ganganagar, said export demand of barley for cattle feed from Iran, Tanzania to Saudi Arabia was also less this year as freight rates were higher and transportation issues continued.

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