Bending Soufflet malt production capacity in Brazil

When the French Soufflet agro-industrial Group acquired control of the Valley in Brazil Malthouse, in August last year, became the first malt producer in the world, next to the French producer Malteurop also.
At the company's headquarters, in the Champagne region, two hours from Paris, Jean-Michel Soufflet, the CEO of this family group that won € 3.5 billion in 2012, spoke to about the plans for Brazil and to consolidate the global leadership in malt house.
First, the Group wants to double the production capacity of Brazilian malt house until 2014, with an investment of € 40 million, in anticipation of increased consumption of beer in the Brazilian market.
The French account executive who began preparing the future discussing partnerships "long term agreement" (five-year contracts), with large breweries in the country-AB Inbev (parent company of Ambev), Heineken, Kirin (Schincariol) and Petrópolis (Crystal, beer Itaipava etc), which are longtime clients of your French malt. The Group exports 70 thousand tons of malt to Brazil every year.
The structure of the Soufflet was essentially maltarias with 26 scattered in 11 countries of the old continent. The acquisition initially 60% of the capital of Brazilian malt house was the first major incursion on the American continent. With this, added 105 thousand tons of production capacity.
"But you can enlarge well in Brazil," he says. The plan is to raise production capacity in two steps, first to 145 thousand tons and then to 200 thousand tons in Brazil.
To make the malt, barley. For this, the group will encourage farmers to produce the raw material at a distance of up to 300 kilometers of Taubaté, to reduce imports and improve quality.
The French group hopes to count on help from the Ministry of agriculture, to allow imports of foreign varieties of barley seeds. "Those used in Brazil are not the best. The breweries are expecting the best varieties, "says Christophe Passelande, responsible for expansion in Brazil.
Of 130 thousand tons of barley, the Malthouse purchase only Valley 10 thousand tons in São Paulo. There is barley produced in the South of the country, but the price of transportation to São Paulo is as expensive as import, according to Passelande.
In total, the Brazil consumes 900 thousand tons, of which half comes from imports.
"Brazil is a big agricultural producer and consumer of beer, and it seems more logical to produce locally to make your malt barley," says Soufflet, expecting to count on cooperation from the Government of Dilma Rousseff.
The Brazil is the third beer consumer market, after China and the USA. In terms of per capita consumption, the Czechs are the world champions, with 140 litres per year-the Brazilians drink 55 liters per year. And it is in the emerging markets that demand increases.
"When we invest in malt house in Russia, the Russian drank 17 litres per year, and ten years later the consumption jumped to 80 litres. This gives courage to invest in Brazil, where the population will grow and the purchasing power increases, "says Soufflet.
After Brazil, the group will close business in India, where they are going to all the major international breweries attracted to a per capita consumption of just 1.4 liter per year, which tends to multiply.
But the Executive said that production in Brazil will be only for local consumption, for one simple reason: the country is too expensive. "We would not be competitive for export, the cost of production in Brazil is 40% higher than in France," says Soufflet, who knows well the Brazil of many holidays but that doesn't hide his surprise.
"The cost of labor is too expensive. There are additional costs that we have in Europe, as the security 12:0 am the day. the cost of energy is salty. Here in France we are accustomed with the cheapest energy in Europe. And we also have to face a Brazilian tax system too complicated, "he says.
The Group also wants to enter the business of selling ingredients for bakery in Brazil, taking advantage of the synergy with the acquisition of Grupo Guarner, in Argentina. The idea is to improve the mixture into the flour. "The malt itself brings taste and colour to bread," says Soufflet
"When we see the situation of France or Europe, does not make us dream," says Soufflet. "It's more exciting to invest in Brazil, where the potential is enormous."