Malt Prices Explained

Malt prices slowly solidify their position in the market as the commodity’s demand largely leans on shifting consumer taste preferences, functional beverage innovations, emphasis on sustainability and organic ingredients, and the rise of gluten-free and specialty malt products. 

The rising adoption of flavored drinks and growing preference for organic drinks lead to lucrative Asian market opportunities for this commodity. The region dominated the global malt beverages, with the largest market share at 36%. 

The increasing number of bars, pubs, and craft beer events contributed 98% to its segmented alcoholic malt beverages market. 

The established vibrant beer culture and the growing interest in craft beers continue to propel malt prices in North America. Its affection for Corona and Budweiser strengthens the commodity’s presence in the region and strategic initiatives by Carlsberg and Anheuser Busch fuel malt demand.

While Europe has a steady demand for malt because of its growing beer production, the increasing health awareness among consumers drives the sales of low-alcohol and non-alcoholic beers. These beverages utilize malt extract to secure the organic ingredients of the products. Also, beverage companies in the region use this commodity to create non-carbonated malt-based drinks. This trend expanded the malt-segmented market globally.

Why are malt prices fluctuating?

1. Beer Market

Beer is a carbonated and fermented alcoholic drink with less than 5% alcohol concentration (frequently brewed from malted cereal grains and flavored hops. This commodity gives color, flavor, and foam to beer.

The rising beer market contributed to the exponential malt prices in the market. Breweries experiment and produce new tastes and types of beer as consumer preferences become diverse. Additionally, increased disposable incomes and the sprouting of bars and restos provide marketability of this commodity.

As proof, the Brewers Association sales and production data showed that overall sales of beer rose to 1% and the craft breweries spiked by 8%, bringing their volume market share to 13.1%.

2. Microbreweries and Craft Breweries

In addition to household beer brands, the growing microbreweries and craft breweries rapidly support the growth of this commodity. These businesses are small-scale beer production facilities that make unique handcrafted brews, highlighting quality, flavor, and traditional brewing methods.

These SMEs use malt ingredients to provide distinct flavor, aroma, and character to their beers. According to the Brewers Association (a U.S.-based trade association), the country’s manufacturers, distributors, and resellers of craft beer reached an all-time high of 9,552 (0.50% increase).

Thus, these expansions drive demand and prices of malt.

3. Online Sales

Sellers’ and manufacturers’ adoption of online sales shapes the malt market. E-commerce has become a reliable and popular tool for marketing and selling alcoholic beverages. Thus, it’s the fastest distribution channel of the commodity. Also, this platform helps enterprises that produce craft cocktails, craft spirits, and beers to reach their potential customers.

For instance, Coca-Cola India joined the Opened Network for Digital Commerce (ONDC) while launching its marketplace, the ‘Coke Shop’ on the platform. This streamlined marketing initiative boosts sales and increases brand awareness.

4. Market Consolidation

Mergers and acquisitions are a major trend in the industry, particularly in the European malt extract industry. Larger companies are acquiring smaller competitors to integrate manufacturing resources and distribution networks across countries.

For example, Cargill acquired malt extract facilities of Boortmalt and Malteurop Group. This purchase allows companies to achieve economies of scale, expand their production footprints, and provide a bigger market for malt producers.

Which variables impact the price of malt?

• Beer Market
• Microbreweries and Craft Breweries
• Online Sales
• Market Consolidation
• Production Costs

Where does malt come from?

Early malting methods involved soaking grains in the water to initiate germination, followed by drying to preserve the sugars produced. This technique was accidentally discovered when grains were left in moist conditions and began sprouting.

The resulting malt was used to brew primitive beers and wines, unlocking the nutritional potential of cereal crops. Over time malting techniques evolved and the introduction of indirect kilning by Daniel Wheeler in 1818 allowed the production of lighter-colored malt without a smoky flavor.

The malting process involves three main steps: steeping, germination, and kilning. During steeping, grains are soaked in water to initiate germination. The germination stage allows enzymes to break down starches into fermentable sugars, controlling the process to optimize enzyme activity.

Finally, kilning halts germination by drying the malt with hot air, developing the desired color and flavor. Modern malting is highly automated to ensure consistent quality and efficiency.

What are the uses of malt?

While malt is generally known in the alcohol industry, this commodity has extensive uses in the food and animal feed sectors.

1. Brewing – Malt is a crucial ingredient in beer production. Pale, caramel and roasted malt are mostly used in making beers as they contribute to the beer’s flavor, color, and body. Brewers carefully select and blend malts to achieve the desired characteristics in their beer.

2. Whiskey Production – Malted barley is used in malt whiskey. The malting process activates enzymes that convert starches in the barley into fermentable sugars, which are then fermented by yeast to produce alcohol. The end product has a rich and complex flavor profile that is highly prized by connoisseurs.

3. Baking – Bread and pastry recipes use malt extract or malted barley flavor to enhance color and texture. It adds a subtle sweetness and a nutty flavor to baked goods and improves the dough’s elasticity and rise.

4. Confectionery – Maltose syrup is a sweetener used in the confectionery industry for candies, chocolates, and other sweets. Malted milk powder is used in malted milkshakes, malted milk balls, and other confectionery items.

5. Animal Feed – Malt by-products are used as a nutritious component in animal feed. These spent grains are rich in protein, fiber, and essential nutrients, an excellent supplement for livestock feed. Also, malt extract supplements are used in dietary supplements for animals due to their nutritional content.

What is the future price of malt?

Consumers’ preference for more diverse flavors provides significant malt market growth. Innovative product launches, like flavored malt beverages (FMBs) and hard seltzers, are huge malt price boosters. Additionally, the rising concern toward sustainable and healthy consumption urged manufacturers to reinvent their product offerings according to customers’ buying trends.

For instance, Bottega (having produced lemon liqueurs for 30 years) ventures into producing citrus-based drinks that are alcohol-free.

The growing pub culture in developing countries rapidly boosts malt demand and prices. This trend is particularly noticeable in Thailand, South Korea, and parts of Southeast Asia (where the middle class is expanding and disposable incomes are increasing). The rising demand for craft beers and specialty malt beverages heightens the need for high-quality malt.

Simultaneously, the rising market of malt extracts in nutraceuticals presents profitable gains. Malt extracts are valued for their vitamins, minerals, and antioxidants, making them popular in health-focused products.

ADM and Lantmännen Unibake are investing in research and development to create innovative malt-based products for the nutraceutical industry. These products are used in dietary supplements, energy bars, and functional beverages, appealing to health-conscious consumers.

On the restraint side, honey, molasses, and maple syrup challenge the market by offering different flavor profiles and nutritional benefits. These alternatives are used in various food and beverage products, providing consumers with diverse options. While they do not replace malt entirely, they complement it by catering to different consumer preferences and dietary needs.

Overall, the increasing and emerging application of this commodity in various industries presents a tailwind in its market. Experts projected a CAGR of 5.8% and a market value of $28.86 billion in 2028, with a tag of $326 per ton in the same year.