News about construction of the future malt plant, having a capacity of 300.000 t. at the territory of the China-Belarus industrial park “Great stone” by Chinese investors’ – “Juxin Malt Technology”, from P.R.C., unknown to anybody, seems to be fantastic on the background of the poor condition of the malt industry in participating countries of the Eurasian Economic Union, as well as future closing of the malt plant of “Cargill” in Efremov, the Tula Region.
According to information from relevant sources, the malt plant of “Cargill” in the Tula Region will be closed in the nearest time. But it will not have an impact on the activity of the glucose and molasses company. Why were Americans dissatisfied with the lie of matters? Beer production volumes of transnational companies in Russia are dropping and nothing can stop it. It bears noting that Carlsberg is developing a bailout plan on an urgent basis, focused on closing of plants in Russia, especially after introducing of the excise redistribution system and transferring of beer excise taxes to the Federal budget.
So, for obvious reasons, the key malt consumers of “Cargill” were transnational companies. Moreover, “Cargill” has lost one of the main consumers due to the merger of SAB MILLER and EFES and the market battle with Russian independent brewers had an adverse effect on their activity.
So, back to the Chinese.
“Great stone” – a special economic zone in Belarus created by the intergovernmental agreement between P.R.C. and the Republic of Belarus.
The industrial park is created at the territory of Smolevichsky district of the Minsk Region near the National airport “Minsk”.
Our Union has been closely working with the leading malt and brewing companies in China, participants of “Beijing Program”, for 10 years, but we’ve heard nothing about “Juxin Malt Technology”.
So, we’re impressed by sums that representatives from P.R.C. are ready to invest in the construction of the malt plant and Belarus economy – over 100 million dollars/year. The construction will be divided into two stages – each stage is 150.000 t. A detailed development of the project is also fantastic:
After completion of the construction, “Juxin Malt Technology”, the eighth resident of the industrial park, is planning to produce malt for direct export to P.R.C. and foreign countries.
It bears noting that the Chinese also promised to made malt of imported malting barley and not to distribute it at the territory of Belarus in order not to compete with the local company JSC “Belsolod”.
Let’s refer to the world malt producers:
“Juxin Malt Technology” is not on the list of the largest producers as well as malt producers. There is a screw loose somewhere.
But construction of this malt plant was agreed by the President of Belarus and P.R.C. during the visit of Xi Jinping and in September 18, 2015 there was a ceremony of breaking ground for “First stone”.
Ceremony of breaking ground for “First stone”
So, if everything is serious and “Juxin Malt Technology”, appeared as if from nowhere, will construct a plant for 300 thousand of tons, it will meltdown the malt market in the Republic of Belarus as well as all Russian malt business, because all malting barley will be purchased in Russia and malt will be also exported to Russia as it is considered to be the key sales market. So, not only “Cargill” will stop operating in Russia, but all independent malt producers as “Belgorsolod”, “Kursky solod”, Baltic Malt Company…
Who will gain by that? No doubt, malting barley producers (a new opportunity for sale will appear) and Russian brewing companies (maybe in the beginning, when the Chinese will engage in predatory pricing).
What is the result? If the Chinese don’t joke, there will be a serious redivision of the market. It may safely be said that the Chinese will win any price and competitive battles in the nearest future.
Perhaps, Russian and Belarusian malt business community will give serious thought to necessity of joining efforts for defending their common interests. But experience has proven that companies don’t strive for cooperation, even taking into account obvious advantages, for example, introduction of the RF standards for use of 80% of malt in beer production at the territory of the Eurasian Economic Union. Alas, the Chinese stand a good chance.
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