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  • By Lynda Kiernan-Stone, Global AgInvesting Media

Temasek, Unigrains Invest US$170M in Axereal’s Malting Business

Singapore’s sovereign wealth fund, Temasek, French farmer-owned investment fund, Unigrains, and a minority investor, sugar group, Tereos have invested US$170 million in the malting subsidiary of Axereal Group, the top cereal buyer in Europe and the fifth largest maltster in the world.

The capital is earmarked for Axereal’s malting business Boortmalt, and will be used by the business to increase production capacity, lift export volumes from Belgium, and to support the business in its goal of becoming directly involved in the production of barley and malt in emerging markets such as Africa and Asia.

“The involvement of investors focused on emerging markets will be a concrete advantage as we take our growth projects forward,” sid Yvan Schaepman, CEO of Boortmalt. “Singapore-headquartered Temasek, and Unigrains, specialized in the agri-food sector, bring proven expertise on the valorization of our malt business and in accessing international markets, most notably in Asia,” said Boortmalt CEO Yvan Schaepman.

Production In the Pipeline

The investment comes only months after Axereal announced its plans in February to build a malt processing facility in Ethiopia as the group seeks to leverage the rising demand for beer in emerging markets.

The group also announced its plans to build a fourth production site at the port of Antwerp - making its in-situ operations the large malt production hub in the world with an annual capacity of 470,000 tons, and will bring the group’s total annual global production capacity to 1.3 million tons.

The planned site in Ethiopia, which is scheduled to have production online by the end of 2018, will have malt processing capacity of 60,000 tons per year.

A Market of Opportunity

The global beer market was valued at US$530 million last year, according to Zion Market Research. Urbanization, demographic shifts, and rising disposable incomes across growing middle classes in emerging markets are expected to drive significant growth for the segment, which is expected to see a CAGR of 6 percent between 2017 and 2022 to reach a value of US$750 million within the next five years.

This growth is expected to be seen at its greatest in Africa, which is expected to grow faster than any other region on the back of economic and population growth. By 2050, Nigeria is expected to be the world’s third most populous country, with a larger working-age population than China or India, according to data from the UN, while 45 percent of the population in Tanzania will be between 15 and 45 years of age, according to Technavio. Factors such as this, combined with increased globalization and urbanization will drive Africa to see a CAGR of 5 percent in beer consumption between 2015 and 2020, according to Canadean.

“Urbanization in most African countries plays a crucial role in driving the demand for beer in Africa over the next four years,” said Arushi Thakur, a research leader on alcoholic beverages with Technavio. “Vendors are also increasing their presence in the market to tap the growing potential of the African market. SABMiller has a presence in 15 African countries, and it also has a presence in another six countries through partnerships with local and international brands such as French drinks company Castel.”

Axereal sees its strategic growth plans in the area of malt processing as a way to create value and gain exposure to the cereal and barley market for its members, which will be key to meeting this rising demand for beer.

“Our aim is to reinforce our cooperative Group, which is made up of two pillars, agriculture and food processing, by further adding value through downstream processing activities,” said Axereal Chairman Jean-François Loiseau. “Axereal can now pursue its growth targets and continue to offer its cooperative members a secure and efficient service, without losing its place as majority shareholder. By investing in food processing, we are both ensuring access to the cereals and barley market for our members and creating value.”

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