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Dave Roepke, Published December 17 2010

Tapping China’s beer biz

Beer sales in the U.S. and Europe are flat, but area barley producers may soon have good reason to hoist mugs in celebration.

Industry backers, Minnesota’s Department of Agriculture and North Dakota State University are trying to convince Chinese breweries to begin using American-grown malting barley.

A group that included an NDSU professor traveled to China in late October to pitch breweries on the six-row barley used for lighter U.S. domestic brews.

“It’s about building the relationships,” said Paul Schwarz, NDSU professor of barley and malt quality. “That’s important in the Chinese market.”

What’s also important in the Chinese beer market is its potential to expand.

In terms of total gallons guzzled, China ranks as the top beer-drinking nation, despite relatively low per-capita consumption rates, according to Credit Suisse.

While China has been tops in total beer-drinking for a decade, consumption and production remains on the rise, said Schwarz, director of NDSU’s Institute of Barley and Malt Sciences.

The Chinese need barley imports because they can’t grow enough to supply the booming beer industry, in part because barley grows best in still-rural northern China, but most of its breweries are in the urbanized east, Schwarz said.

“It’s a matter of shipping,” he said.

Marv Zutz, director of the Minnesota Barley Research and Promotion Council, said the domestic crop can only provide about half of the barley China needs.

The Chinese have relied on Australia, Canada and France for its barley, but a shortage two years ago is a good example of why the country should diversify its sources, Zutz said. U.S. barley couldn’t replace the main suppliers, but it could get a taste of beer’s biggest market, he said.

That’s one of the points the group made in the half-day presentations at breweries in China, including the nation’s largest beer producer, Tsingtao.

Schwarz said the four barley experts on the trip also talked about why U.S. growers prefer the six-row variety, instead of the two-row barley often used in European-style beers. Zutz said Chinese tastes are moving to the lagers for which six-row is used.

“They’ve switched whole-heartedly to the lighter beers,” he said, saying they are brewing beers far lighter than U.S. domestics.

A third piece of the seminars focused on how to get barley shipped from America. Arranging permits to import to China is “easier said than done,” Zutz said.

Because the trip was paid for in part by grants from the U.S. Department of Agriculture, it may not be repeated, Schwarz said. Even if it’s not, there will be a follow-up with the Chinese breweries. Some of them are already testing six-row barley, Zutz said.

It’s hoped that a deal for 480 tons of barley could be signed in the first half of next year, Zutz said.

“We have to start somewhere,” he said.

Readers can reach Forum reporter Dave Roepke at (701) 241-5535