China’s Loss Is Mexico’s Gain As Barley Brawl Spills Into Beer

Australian malting barley, once favoured by China’s Tsingtao brewery until hit by punitive Chinese Government tariffs, has found a new market in Mexico.

Tsingtao, and other Chinese brewers through their industry group, the China Alcoholic Drinks Association, raised concerns earlier this year when the government unveiled plans for an 80% tariff on Australian barley.

China’s Commerce Ministry rejected the complaint despite warnings that the beer industry could be hurt by the sudden imposition of a high tariff as part of a trade and diplomatic spat with Australia.

Australian farmers were also concerned by the barley tariff which has effectively frozen them out of an important market.

However, as with other commodities caught in the dispute new markets are opening for Australian agricultural and mineral exports.

First Barley Shipment To Mexico

CBH Group, an Australian farmer-owned grain marketing business which once traded as Cooperative Bulk Handling, announced earlier today that it had shipped its first cargo of malting barley to Mexico.

Unlike feed barley used as fodder for livestock the primary market for malting barley is beer.

Tsingtao in particular preferred Australian barley for the taste it gave the company’s beer which is one of the most popular in Asia.

Some Australian malting barley is believed to still make its way to China despite the high tariff.

CBH said in a statement that the shipment of 35,000 tons of malting barley left the Western Australian port of Albany on Sunday.

The Mexican buyer was not named but it is likely to have been one of two companies which control 90% of Mexico’s beer market; Grupo Modelo which is part of the international group AB InBev and maker of Corona beer, or Cerveceria Cuauhtemoc Moctezuma which is part of the Dutch brewer, Heineken.

New Markets Opening

CBH chief marketing and trading officer, Jason Craig, said in the statement that following changes in the international trading landscape efforts to develop new markets for Western Australian barley were proving successful.

“While it is early days, this shipment to Mexico signals a potential new market for malting barley. However, this will need to be developed over time,” Craig said.

Demand for feed barley is also rising with sales to Saudi Arabia rising from almost nothing last year t0 more than two million tonnes this year.