Brewing boss sees bright future for malt

• Craft beer boom
• ‘Profitability through complexity’
• ‘More and more hops’

It is said businesses are built on good relationships –and that certainly seems to be the case when it comes to food firms.

“Not long after I started farming back in the 1980s, I sold some milling wheat to a merchant who offered very good prices to farmers in the area, before reneging on the deals,” recalls David Thompson, boss of the UK’s largest independent maltster, Anglia Maltings Holdings (AMH).

“And I tell you this – all these years later, his company is only now just recovering any kind of market share.”

According to Thompson, farmers must be treated fairly, because they simply will not deal with people who he describes as “disagreeable”.

Responsible for turning Marston’s into one of the UK’s greatest brewing success stories, it’s clear that an honest and candid approach to business counts for a great deal with the eloquent 61-year-old.

Now, solely focused on AMH, the business he set up prior to retiring as Marston’s chairman in 2013, Thompson has his sights set on growing emerging markets and developing new technologies that, together, are set to take malting into a whole new sphere.

When Ragleth, the company set up by Thompson and business associate Edward Whitley, acquired AMH in 2005, Thompson had effectively taken his family history full-circle – having started out as maltsters back in 1720.

At the time of the purchase, AMH comprised Essex-based food ingredient business Edme, and the Crisp Malting Group, which operated four sites – Great Ryburgh in Norfolk (the largest), Ditchingham in Suffolk, and Portgordon and Alloa in Scotland – before a fifth, Mistley in Essex, was added in 2008.

By Thompson’s own admission, 2005 was a “nadir” in malting, with the Scotch whisky distilling market having endured difficult years, and UK beer volumes in continuing decline.

“But thanks to some very experienced and bold investors, we made the purchase just at the right time,” Thompson says.

Craft beer boom (Back to top)

Soon after, the whisky market recovered, the craft beer sector took off, and business picked up considerably. “Craft brewers use around 1.5 times as much malt per barrel as the big brewers, and they tend to use more specialist malt varieties – so we have benefited considerably,” he says.

In 2014, AMH bought North Yorkshire-based Micronized Food Products, which specialises in making cooked cereals for both brewing and pet and animal food. This took the group’s annual malting output to 250,000t, and in 2015, turnover reached £117M.

Earlier this year, the company expanded into Europe with the acquisition of the 110,000t Tivoli Malz in Hamburg, Germany, and a 75,000t malting plant in Bydgoszcz, Poland, which is likely to mean turnover in 2016 will top £150M.

“Part of our overall strategy is to have a good spread of customers, and geographies,” explains Thompson.

“It’s about managing risk. With 50% of our malt going into distilling, we’re still very dependent on the Scotch whisky distillers – and if they suffer a similar downturn to the one they had in the early 2000s, it would have quite an impact on our profitability.”

Thompson says the Hamburg site produces “fairly basic malt” – a large proportion of which is shipped to south-east Asia and Africa.

“Across the group, exports make up about 20–25% of our overall business, and we’re aiming to increase that to about one-third,” he says.

“We are responsible for about half of all UK malt exports to the US, and that market continues to grow.

“Take Oregon, for example, where half of all beer now sold is craft beer. Meanwhile, in states like Texas, craft beer is only just taking off – so the potential is huge.”

Back in the UK, the craft beer market also continues to grow, but there is an acknowledgement that market saturation is likely to come sooner than in the US. Therefore, much of AMH’s focus here is about adding value.

‘Profitability through complexity’ (Back to top)

“[Crisp Malting Group md] Euan Macpherson’s mantra is ‘profitability through complexity’,” says Thompson.

“Brewers are looking for their malt to perform in different ways, in order to differentiate their beers,” he says.

“We could take a simple route and produce one Pilsen-type malt for everybody, to keep the costs down low and the plant streamlined. Or, we could take the opposite approach, and charge a premium for it.”

The same approach applies to Edme, which Thompson says operates a “significant” research and development (R&D) operation.

One of the leading products to come out of Edme is WholeSoft, a pre-softened wholegrain for bread makers.

“WholeSoft allows bakers to put wholegrains into a recipe without having to pre-soak them. It’s part of our plan to put the complexity onto our shoulders, and make it simpler for the baker.”

According to Thompson, much of the current R&D work is centred on reviving ‘heritage’ grains. One recent example is Chevalier, which he says dates back to 1825.

“We revived that from five seeds in the seed bank. Now, it’s available in commercial quantities, and there are others in the pipeline. We believe Chevalier was used to make the first barley Indian Pale Ales.”

Another innovation has been Clear Choice Malt, which is free of proanthocyanidins – polyphenols that are responsible for making beer cloudy.

‘More and more hops’ (Back to top)

“With brewers wanting to put more and more hops in their beer, it’s much harder to keep it clear,” says Thompson.”

Taking away the proanthocyanidins from malts gives you a clear, stable beer with a much longer shelf-life.”

Thompson professes frustration that malt is sometimes commoditised by some users, who fail to recognise how it can significantly enhance the flavour of products. He concedes that it’s part of AMH’s job to make that message clearer.

And for him, this all comes back to the importance of good relationships.

“Brewers tend to find a whole range of technical issues, and we encourage them to tap into our professional expertise, or even test their products at our small brewery at Great Ryburgh. In fact, I believe our technical expertise sets a benchmark for the rest of the industry.”

And when it comes to the other side of the supply chain, that relationship-building approach is as vital as it has ever been.

“We probably work more closely with farmers than any other maltster. At Marston’s, we introduced long-term contracts to give farmers the security to grow aroma hops, and here, we have introduced the same contracts for barley.

“In the advent of a poor harvest, you want farmers to choose to supply you over your competitors – that’s why maintaining good relationships with them is absolutely critical.”