CBH Group’s half-owned Intermalt processing facility in Vietnam has flagged plans to double plant capacity and production as part of an estimated $80 million expansion. Intermalt is South-East Asia’s biggest plant for turning barley into malt for brewing beer and boasts major customers including Heineken, Carlsberg, Sabeco and Habeco. The plant has capacity to process 140,000 tonnes of malt barley annually, about 75 per cent of which is sourced from WA via grain handler CBH. Intermalt senior director Robert Wicks revealed the expansion plans during a visit to the facility by 37 WA farmers during this year’s CBH Grower Study Tour. “Our big dream… is we really want to build stage two, which is basically doubling the capacity of the plant… and that would double production,” he said. “There’s a lot of benefits in that because we don’t have to double labour, we can use the same lab, a lot of the admin’s the same, and we can double up on a lot of the storage. “It (would) help us be a lot more efficient, and the market here is certainly supporting it.” Intermalt has vacant land set aside at the site and Mr Wicks said senior staff were “flat out” planning the stage two upgrade, which early cost estimates had put at about $80m. But he would not reveal a timeframe, saying it was “up to the shareholders” — CBH Group and Indonesia-based conglomerate Salim Group — to give the the project the green light. “I can’t really say when that will be done… but we’re getting close,” he said. “If we do it, we’ll do it on the back of a lon- term contract with a big customer.” Intermalt was commissioned in 2017 and is jointly owned by CBH and Interflour, a joint venture between CBH and Salim. It is located alongside Interflour’s self-managed Cai Mep port, about 65km south-east of Ho Chi Minh City in southern Vietnam. Shipments of barley are received at the port and transferred directly via conveyer belt to the facility, where 12 air-conditioned silos have capacity to store 32,000t of grain. Once processed, the facility can hold 12,000t of malted barley with an annual capacity of 110,000t, most of which is sold to Vietnamese brewers. “Vietnam can take about a bit over half a million tonnes of malt (annually), and we only produce about 100,000t, so there’s plenty of market in Vietnam,” Mr Wicks said. “The business model is really based on us bringing in mostly Aussie barley, mostly WA barley, mostly CBH barley, converting it to malt here, and then supplying to breweries in Vietnam.” Intermalt currently favours WA-grown Maximus and Planet barley, but Mr Wicks said keeping up with rapidly changing varieties was a constant challenge. As a rule, he said 100t of barley produced about 80t of malt. A GROWING MARKET Beer has become the drink of choice for the Vietnamese, making up about 95 per cent of all alcohol consumed in the country, which presents the fastest-growing beer market in Asia. China is still the biggest market in South East Asia, followed by Japan, but Mr Wicks predicted Vietnam would overtake the latter within three years. “The demographic in Vietnam is in our favour: you’ve got growing wealth, a young population, and a great beer drinking culture,” he said. “They don’t drink a lot of other stuff… they really like beer.” For East Hyden grower Max Nield, the Intermalt tour left a lasting impression. “The biggest thing was just the forward planning in terms of an investment... because they’ve still got room to improve it by double,” he said. “They’ve made the plan so that there’s room for investment, and I think that’s something that sometimes businesses don’t really think about.” CBH head of accumulations Trevor Lucas said it was an exciting time to be involved with Intermalt, but downplayed any suggestion the expansion would necessarily see the company double imports of WA wheat. “Potentially (it could happen), but Intermalt are there to make money, and they have imported malt and barley from other jurisdictions based on price and availability,” he said. “They’ve got the demand there and that demand was predicted when they first built the plant, and it looks like it’s coming to fruition. “It’s exciting for them to be able to double that capacity, and if we can supply as much as we can, it’s a great option other than China. “The reality was we needed Intermalt in the Vietnam market when China disappeared, and they’ve been loyal to us during the last two years, so we have to be loyal to them going forward. That’s the plan, and we’ll support them 100 per cent.” INTERFLOUR Interflour is one of the region’s biggest flour millers and the largest in southern Vietnam, supplying about 1.8Mt of flour a year to the growing South East Asian market. CBH joined forces with Salim in 2005 to buy the business, which has a total wheat milling capacity of 6320t a day across its nine mills in Vietnam, Indonesia, Malaysia and the Philippines. The Cai Mep mill alone boasts 20 wheat silos with 80,000t of storage capacity, plus flat warehouse storage of up to 160,000t. The facility boasts three production lines with additional warehouse storage capacity for 5000 tonnes of flour, and bulk loading capacity of up to 60 tonnes an hour. About 30 per cent of flour produced last year was sold direct to Vietnamese customers — including biscuit, confectionary and instant noodle factories, as well as hotels, restaurants and caterers — according to Interflour Vietnam country chief financial officer Varian Phua. Another 30 per cent was exported throughout the region as part of what Mr Phua described as a “mitigation” strategy to counter the highly competitive domestic environment, though he noted freight costs were “very high”. Seventeen per cent was sold to feed mills supplying Vietnam’s massive aquaculture industry, and 23 per cent went to Interflour’s extensive network of distributers. “We sell throughout the country and there are around 50 or more provinces, so each province will have their own distributor,” Mr Phua explained. “These are very traditional businesses; they may have started 30, 40, 50 years ago, and they’re run by families, so it’s very difficult to penetrate if you want to come in and sell to the market.” Interflour imported more than 2Mt of wheat last year, of which Australia accounted for 81 per cent or 1,634,409t. The most popular Australian varieties were AH2, which accounted for 406,792t, followed by APW (380,194t), APH2 (325,410t), ASW (229,756t) and AH9 (151,998t). By contrast, North America accounted for just 11 per cent of total wheat imports while Brazil and Argentina combined accounted for eight per cent. Mr Phua described wheat from the latter two countries as “filler wheat for cost improvement for products which have less quality sensitivity”. “Vietnam still prefers Australian wheat, mainly because of the colour. The whiter it is, is better for the customers,” he said. “The US-based wheat is softer, so it’s mostly used for biscuits and confectionaries, but in Vietnam, the biggest segment will be bread… up to 40 to 50 per cent.” Mr Phua said banh mi baguettes — which he described as “the national food” — accounted for “the biggest segment for flour usage”, followed by instant noodles. Nationwide, he said Australia accounted for 81 per cent of all wheat imported into Vietnam last year, compared with 11 per cent from the US. Adam Poulsen travelled as a guest of CBH Group.