China Brewing Industry Trend and imported barley demand

Dr Yan Lin Tsingtao Brewery Co Ltd

Feb 24th 2015

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Report Topic

Key messages • China brewing industry overview and trends• China malting industry overview and trends• Imported malting barley demand quantity 、quality and requirement

Aim• Provide a complete understanding of China brewing industry in

recent decade and its demand of imported Malting Barleys

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3

0

1000

2000

3000

4000

5000

6000

2004年 2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年

国家统计产量(kL) 行业统计产量(kL)

Production by NBS (kL) Production by CBA (kL)

� In 2013, Beer production reached 46.54 million kL，increased by 5.0%, net increase 2.0 million kL。Per capita consumption was 34.2L，went up 1.4L with 4.3% rate.

� In 2014, latest data from CBA showed the total production went to 49.22 million kL，but production in the second half year continued on decline.

1.China Brewing industry overview and trend

• In 2013 ,Beer sale income was 140.7 Billion RMB，increased by 9.2％. Sale income per kL Beer reached 3074 RMB，went up by 5.1%.

• The total profit and tax went to 28.4 Billion RMB ， increased by 5.8%. Tax was 22.4 Billion RMB with 4.3% growth rate .6 Billion RMB profit came true with 11.7% increase rate .Tax per

kL beer increased by 0.4%，but its profit went up with 7.4% rate。

Benefit&Profit

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No Province Production ( 1000kl) Growth

rate(%)Numbers of brew

1 山东Shandong 5568.44 3.66 23

2 广东Guangdong 4187.51 0.22 6

3 浙江Zhejiang 2863.54 5.58 1

4 河南Henan 2563.83 1.25 14

5 辽宁Liaoning 2469.84 4.60 2

6 四川Sichuan 2457.56 13.30 2

7 黑龙江heilongjiang

2189.77 4.36 8

8 福建Fujian 2017.75 3.74 3

9 江苏JIangsu 1992.46 -2.23 3

10 湖北Hubei 1965.90 0.93 2

+500ml

-500ml

Can

Barrel

others

No companyProduction

(1000 kl)

growthrate(%)

No of

brew

Shareof

market

BrandValueBillon RMB

1 Snow 11710 10.3% 92 23.15% 91.1

2 Tsingtao 8700 10.1% 64 17.19% 180.8

3 AB-inbev 6720 17.7% 42 14.10% Haerbin82.3

4 Yanjing 5710 5.8% 40 12.2% 46.4

5 Carlsberg 2640 / 40 / /

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Top 10 Provinces production in China Top 5 Brewery Companies in China

Beer Products in China

1990

Ranking

mln

hl

2025

Forecast

Ranking

mln hl

1 USA 228.5 1 China 759.2

2 Germany 114.4 2 USA 261.5

3 China 66.6 3 Brazil 180.5

4 Japan 66.3 4 Russia 99.5

5 UK 63.1 5 Mexico 90.7

6 Brazil 58.0 6 Germany 74.4

7 Mexico 37.2 7 India 52.7

8 Russia 33.1 8 Japan 52.4

9 Spain 28.3 9 Vietnam 50.6

10South

Africa22.4 10 UK 40.5

Future Beer Market

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China malting industry used to face challenge to production capacity surplus, higher

dependence on imported barley , unreasonable market share distribution .

4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00

3.68 3.64 3.64 3.68

3.79

3.90

4.02

4.14

3.30

3.40

3.50

3.60

3.70

3.80

3.90

4.00

4.10

4.20

2013 2014 2015 2016 2017 2018 2019 2020

Capacity Demand

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2.China Malting industry overview and trend

• Insert Text here

World Malt Market

No companyProduction(1000 ton)

Number of malts

Share of market

1 Supertime 860 6 21.5%

2 Cofco 740 3 18.5%

3 Beidahuang 300 2 7.5%

4 xingze 240 1 6.0%

5 Chunlei 240 7 6.0%

6 Suken 200 2 5.0%

7 Yanjing 200 2 5.0%

8 Tsingtao 180 4 4.5%

9 Sihai 170 1 4.25%

10 Mogao 120 2 3.0%

Total 3250 4000 81.25%

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Top 10 Malting Companies in China

180

200

220

240

260

280

300

320

Canada MB USD

Canada FB USD

Australia MB USD

Australia FAQ USD

Australia FB USD

Argentina MB USD

Argentina FB USD

German FB USD

EXPORTERS 1.000 t Destination IMPORTERS 1.000 t

Argentina Brazil 350 Brazil 420

Colombia 200 Colombia 280

1.500 Chile 40 Chile 40

Peru 100 Peru 100

Ecuador 40 Ecuador 40

Uruguay 150 Uruguay 150

South Africa 0 Mexico 100

China 200

EU 27/Russia/C Europe 50

long 370

Australia China 1.900 China 2.700

Vietnam / other Asia 130 Vietnam / Taiwan /Philip. 130

2.100 South Africa 30 India 0

long 40

Canada USA 200 USA 200

China 300

900 Colombia 80 South Africa 60

Mexico 20

South Africa 30

long 270

EU 27 China 300 Russia / Kazasthan / Ukraine 150

South Africa 0 Central Europe & others 0

800 North Africa 15

Brazil 70 Turkey 100

Turkey 100

Russia 150 North Africa 15

others 10

long 155

SUPPLY 5.300 DEMAND 4.485

SURPLUS/DEFICIT +815

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3. China demand of Imported barley

Malting Barley Trade worldwide World Barley Prices crop 2013 - USD

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1 23

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Import Barley in China from 2012 to 2013

国家和地区Country

2012 2013 进口量增长（%）Import

increase (%)

价格增长（%）price

increase (%)

进口量（吨）Import (Ton)

单价USD/ton

比例 per cent（%）

进口量（吨）Import (Ton)

单价USD/ton 比例 per cent

（%）

澳大利亚Australia

2078353 298.89 82.2 1759337 334.17 75.3 -15.35 11.80

加拿大Canada

313786 355.92 12.4 376887 376.32 16.1 20.11 5.73

法国France

23017 340.76 0.9 133294 336.21 5.7 479.12 -1.33

阿根廷Argentina

112500 359.96 4.5 63551 364.46 2.7 -43.51 1.25

丹麦Denmark

2147 374.65 0.1

蒙古、美国Mongolia;

USA60 423.08 0.0

合计 Total 2527655 309.07 100.0 2335216 341.95 100.0 -7.61 10.64

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China brewery industry reliance on imported barley

Imported barley in China 2013 per month

5000

55000

105000

155000

205000

255000

305000

355000

大麦进口量[T]

200.00

220.00

240.00

260.00

280.00

300.00

320.00

340.00

360.00

380.00

Imported barley price in China 2013 per month

Imported barley quantity (Ton)

Imported barley price (USD)

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Import Barley in China on April 2013 and 2014 crop

国家和地区Pays

2013.4 2014.4 进口量增长（%）Import

increaserate

价格增长（%）price

Increaserate

进口量（吨）

Import (T)

单价USD/Ton

比例 per cent（%）

进口量（吨）Import (T)

单价USD/ton

比例per cent（%）

澳大利亚Australia

361550 342.92 63.8 1328016 287.61 92.4 267.31 -16.13

加拿大Canada

138273 380.90 24.4 67048 345.36 4.7 -51.51 -9.33

法国France 3001 366.00 0.5 6358 360.93 0.4 111.85 -1.39

阿根廷Argentina

63551 364.46 11.2 30740 340.11 2.1 -51.63 -6.68

丹麦Danmark

3967 323.23 0.3

美国 USA 0.1 0.0 1337.7 262.59 0.1

合计 Total 566376 354.74 100.0 1437467 291.83 100.0 153.80 -17.73

4738761566

139708

57708

110129

80000

121000

0

20000

40000

60000

80000

100000

120000

140000

160000

2009y 2010y 2011y 2012y 2013y 2014y 2015y

Tsingtao Australian Barley purchase metric ton

Australian Barley Varieties & Quantity by Tsingtao

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Varieties 1 2 3 4 5 6

Leading Baudin Bass Buloke Hindmarsh Vlamingh Gairdner

Purchased Scope Commander Flagship Stirling Hamelin Non Grade 1

Evaluated Westminister La Trobe Flinders

observation Grange Henley Navigator Skipper others

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Australian Barley Pre-sprout Damage and Protein Problem

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Australian Barley Grade 1 Specification for TsingtaoItems unit Grade 1 Non-Grade1

Color、Smell Uniform light golden

yellow fresh no off flavor

Mold % ≤4 ≤5

Blight % ≤3 ≤4

Germinated % ≤1 ≤1

Heat Damage % ≤0.5 ≤0.5

Frost % ≤2 ≤4

Immature % ≤1 ≤1

Peel&Broken % ≤3.0 ≤4.0

Items unit Grade 1 Non-

Grade1

Moisture % ≤12.0 ≤12.0

Germination % ≥96 ≥95

Protein % 10.5-12.5 10.5-13.0

Thousand weight g ≥41.0 ≥39.0

Test weight Kg/hl ≥68.0 ≥66.0

Plumness（≥2.5mm） % ≥86.0 ≥84.0

Thinness（≤2.0mm） % ≤3.0 ≤4.0

Foreign Matter % ≤1.0 ≤1.0

Variety Purity %≥96 ≥95

Water Sensitivity % ≤15 ≤15

Pre-Sprout RVA RVU ≥130 ≥130

Iitems Performance

Higher Protein(11.5-12.5%) Foam quality improve

Higher Extract Save grain、 higher utility

Higher DPE No addition extra enzyme

Higher Fermentation Good Yeast performance

Lower Glucan (80-120mg/L) Save Filtering time 、Body mouthful taste

Lower Lox Good Freshness

Lower boiled color Light beer color

Malting Process Balance between Protein & B-Glucan modification

Filtering Save time

Resistant to Pre-sprout Good storage

Balance & harmonious taste Similar to Canadian Copeland 17

Our expectation for Australian Barley Quality

Beginning1994-2000R&D CenterNational technical center

Development2001-2009Mobile center for post doctoral research

CNAS China National

Accreditation Service for

Conformity Assessment,

Qingdao Key Lab

Promotion2010--so far

State key Lab of beer fermentation

Over 40 million RMB

facilities & instruments

BRM analysis &research platform

BRM quality control & applied research

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� Identification of Barley 、Malt & Hop Variety &Purity and their quality control by DNA molecular Analysis

� Technical Evaluation of Malting barley 、Malt &Hop varieties &their performance � Study on Malt &Hop varieties recipe、 brewing performance and malty and hoppy

flavor characteristic� BRM Microbiological effects on MB quality 、malting &brewing performance� Barley pre--sprout damage effects on storage quality、 malting &brewing

performance� Study on DPEs and LOX of malting &mashing and their control � Research on Malty flavor and high-malty flavor malting process

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Topic applied research of Brewing Raw Materials

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New Variety Evaluation Principle

Core

Malt Recipe Based on current

purchase demand

Based on future

purchase demand

Uniform intended Variety

Malting&Brewing Test

Purchase list updates

MB accreditation

Micro-malting&brewing

plant-scale test list

Barley：preferred varietiescommercial&industrial

Malt：not in Tsingtao purchase list

Recognized & testedpotential varieties in

advance、

Barley Variety Choice 1.Advantage variety with Large scale planting 2.Potential variety with 5% planting percent3.Commercial variety with strong recommend4.Market supply 20

QA

Name: Yan LinPosition: Director of Brewing Raw Materials Lab Organisation / address: Tsingtao Brewery Co.,Ltd / R&D Center602 Tailiu Road Qingdao Shandong PR China 266100Contact:T +86 532 85706627 F +86 532 85761301linyan@tsingtao.com.cn linda68731@126.com, Website: http://www.tsingtao.com.cn

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