05 December, 2002

China brewers brace for higher barley costs

HONG KONG, Dec 4 - Rising barley prices are threatening the bottom lines of Chinese breweries next year, and the country's beer makers are working hard to stave off the looming hangover, Reuters reported
According to the same source, China's largest beer maker, Tsingtao Brewery Co Ltd, plans to crank up production of its more expensive, flagship Tsingtao beer to reduce the damage from rising barley prices.
"This will affect our earnings next year," Chief Financial Officer Sun Yuguo said in an interview. "But the company will boost sales to improve margins."
Some brewers in the world's second-largest beer market are expected to lower the barley content in their beers, switching to animal feed for lower-end brands, traders say.

Others, like Yanjing Brewery, say they have stocked up enough barley to ride out the price rise.
Prices of imported malting barley -- which accounts for 15 percent of Tsingtao's production costs -- have risen about 30 percent in the past few months, Sun estimated. Droughts in major producing countries have squeezed supply.
Tsingtao will consume 400,000 tonnes of barley this year, half of which will be imported from Canada, Australia and France, Sun said.

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