Value creation is on the mind of every brewer.

How do you optimize your current malting allocation? How do you balance stability with the lowest long-term malt pricing? Are you the best ‘parent’ to run your own malting plants most efficiently? Can you be a low-cost quality malt producer?

Let First Key help you answer these questions. We review, plan and implement competitive malt strategies that create real value for our clients. Our services include:

Review of Existing Situation

Malt from own malting plants:

  • A technical audit of existing malting sites, costs and conditions, KPIs.
  • Benchmarking with other malt plants in the same market and with industrial maltsters. Identification of constraints.
  • Evaluate quality of local barley purchase or need to import
  • Review of agreements with traders and specific agreements with farmers, cooperatives, merchants.
  • In-house and external storage, financing (cash management).
  • Determine availability of (quality) local barley and does it represent good value for beer marketing
  • Determine if there is a need for a specific internal structure devoted to malting activity
  • Determine any gain in synergies, such as sharing utilities, use of steam, people (maintenance)

Malt from local/regional suppliers (we will get answers to the following questions):

  • Is it worth reviewing existing contracts and the conditions for renegotiation?
  • How expensive compared to present market price conditions?
  • What additional values do the industrial suppliers bring just in time deliveries, but security of supply?
  • Quality (how much can it be justified in the whole chain)?
  • Better cash management (no financing of stocks)?
  • Guarantee of price volatility?
  • Hedging tools?
  • Lower TCO (total cost of ownership)?
  • Ability to bring new barley varieties, a better malting process, a better fit to brewers’ requirements (higher DP, if more adjuncts, higher level of FAN, and their consequences in terms of brewers’ benefits: higher extract, better filtration, improved fermentability, etc.)?

What is the supply & demand situation?:

  • Evaluation of brewers’ total requirements for malt (how many kg malt per hL of beer for competitors?) — in the country, in the region (neighboring countries, if getting malt from these countries make sense from a logistic/delivery point of view (total cost delivered).
  • Historical data of barley production in the different countries.
  • Existence of (barley) seed breeders, seeds multiplicators at farmers’ level.
  • Capacity of local farmers to address quality requirements and meet them.
  • Who are the largest players locally? What are their respective strategies?
  • Who would be able to challenge them (any other small/middle size maltster)?
  • Do they have strong links with competitors?

Development of a Procurement Strategy

Building own malting plants:

  • Can you be a quality malt low cost producer?
  • Do you have the production costs to become a low-cost producer?
  • Recommendations on what should be done/invested to achieve these costs objectives. Economic and financial consequences if recommendations are implemented.
  • If achievable, do you want to invest in a non-core activity?

What are/would be the benefits of stopping malting activity:

  • Focus on core business.
  • No cash in agriculture (barley pre-contracting, storage, etc.).
  • Lower total cost of ownership?
  • How to identify/measure (brewing yield? cost of raw material per hL of beer?).
  • Reducing head count?

What are the risks of stopping malt activity:

  • Security of supply should be guaranteed.
  • What if the only producing plant of the supplier fails (for whatever reason)?
  • Volatility of prices: How to fix it.
  • What is the malt supplier’s policy in this area?
  • Long term agreements with fixed price, based on local barley contracted price – but what about crop failure?
  • Has the malt supplier a really dedicated team to agriculture?
  • How do they advise in advance of any potential mishaps?

Establishing your requirements:

  • No limit in requirements is the base for discussion… but secure the supply chain.
  • How are you regarding decreasing malt usage?
  • And if less malt, then what should this malt be (higher FAN, higher diastatic power, other)?
  • Identify future quantities required based on you long range plan.
  • Can the quantity be flexible (will it depend on malt price)?
  • In case of abundant crop, where is the lowest level?
  • What is the interest for adjuncts and enzymes?
  • What is the vendor’s malt storage policy at brewery’s gate?
  • Transport specs (food safety).
  • Request for competitive information on barley and crop prospects.
  • Competition clause? Other clauses?

Evaluate supply and procurement trends:

  • What are the leverages that you can negotiate to bind a malt supplier who is retained for short term (transactional relationship) purchases to a long-term commitment?
  • How do you estimate the future local/regional supply and demand situation?
  • Evaluation of (all) brewers’ total requirements for malt.
  • How many kg malt per hL of beer for competitors in the long run — in the country and in the region (neighboring countries)?

Risk analysis:

  • How secure is the malting barley cultivation locally?
  • What are the competitive crops?
  • How sustainable is the existence of the present maltsters in the region, mainly those with financial problems, or stand-alone structure (no backing), small-size family or individual business?
  • What is the capacity of local farmers to address quality requirements and meet them?
  • Who are the largest players locally: what are their respective strategies?
  • Who would be able to challenge them (any other small/middle size maltster)?
  • Do they have strong links with competitors (global players, local brewing companies)?


We will review alternative procurement strategy models and prepare discussions with suppliers and make recommendations:

  • Transactional: annual contracts; depend on market conditions – volatility risk; quality of product is no compromise
  • Collaborative: closer relationships with supplier(s); tailor made product – consideration of crop fluctuation; hedging tools to be negotiated; security of supply – long term agreement to be considered; value added partnership to demonstrate; benefit of new technology developed by supplier(s)
  • Strategic Partnership: total outsourcing of non-core business; supplier to take care of your maltings; buys the assets / rents the assets; can decide to close; “buy” the capacity against secured sale of same (or bigger or lower) quantity of malt; supplier to originate malt from best located production plant; commitment by supplier to deliver the highest value, i.e. the lowest total cost delivered.