Brewing companies in China have been seeking cooperation with domestic agricultural enterprises to breed and grow barley, hoping to reduce reliance on foreign suppliers.

On Oct 31, Budweiser China celebrated its collaboration with Jiangsu Nongken Group, a State-owned agricultural company, at Xinyang farm in Sheyang county, Jiangsu province, by planting a new crop of barley which is expected to be harvested at the end of May next year before being supplied to Budweiser China.

While China is the world's biggest producer and consumer of beer, the country is also the biggest importer of raw materials for brewed beers, barley in particular, according to Yuan Yue, secretary general of the beer branch of the China Alcoholic Drinks Association.

"That means the domestic supply of those ingredients has fallen short of the demand growth. As a result, China's beer industry has been troubled by this imbalance for a long period," Yuan said.

Malt and hops, two main ingredients in brewing beers, play an essential role in bringing out a mellow taste and an aromatic flavor. Yet, for decades, China has been importing malt barley and hops from markets around the world, including Europe, Australia, Canada and Argentina.

According to a report by China Newsweek, Australia used to be China's largest barley supplier, accounting for over 70 percent of the country's barley imports prior to 2019. In 2020, other countries took Australia's place as the main barley suppliers to China, including Canada, France and Argentina.

In 2022, China imported 3.8 million metric tons of barley as the average price of barley imported from Canada reached 3,335 yuan ($458) per ton, a significant increase of 65 percent from 2019, according to the General Administration of Customs.

Against this backdrop, brewers in China started to work out ways to reduce their dependence on imported barley and hops, in a bid to minimize the risk of global price changes.

In 2023, brewing company China Resources Beer carried out a pilot planting project to grow a total of 6,000 mu (400 hectares) of domestic barley in Inner Mongolia autonomous region and Jiangsu province, together with Hulunbuir Nongken Group and Jiangsu Nongken Group, as reported by China Economic Times.

Likewise, Budweiser China inked a strategic partnership agreement with Jiangsu Nongken Group in 2016 to promote a series of in-depth cooperation initiatives, including breeding local barley varieties and innovating agricultural technologies. In 2020, the two companies signed a new deal, together with barley growers in Jiangsu province, to launch a trilateral collaboration in boosting barley output and breeding better-performing barley varieties.

"Jiangsu Nongken helped us to reach out to farmers, find the land, et cetera," said Jan Clysner, vice-president of sustainability & procurement, Budweiser APAC. "Through all the years of improvement, we know that the varieties that we're using today are much better for this environment, this soil than they were nine years ago."

The two companies have developed barley varieties that are better suited to the soil and climate of Sheyang county while maximizing yields. They have even conducted trials on crossing local barley strains with imported ones.

Over the past five years, Jiangsu Nongken Group has increased its barley output per mu from about 500 kilograms to about 550 kilograms. As a result, the yields for growers have increased by around 10 percent on the same land.

During the same period, the total amount of locally sourced barley that Budweiser China purchased from Jiangsu Nongken Group or produced with it has reached 180,000 tons.

"Our local malt industry has ranked top among counties across China, in terms of both the production capacity and the volume of malt output," said Wu Gangyu, Party secretary of Sheyang county. "Sheyang county is now home to five leading enterprises in this industry, including Jiangsu Nongken Group, a company representing the highest level of agricultural modernization among the State-owned enterprises in Jiangsu province. The total capacity of our local plants has exceeded 1 million tons."

In addition to strains with higher yields and better performance, Budweiser China and Jiangsu Nongken Group are set to work on breeding barley varieties with diversified tastes, in a bid to meet rising consumer demand for new products, according to Clysner.

"It's interesting for us to work together with a company like Jiangsu Nongken to see to what extent we can develop new varieties together that help to fulfill the needs of our consumers. For consumers that want something different in taste, maybe we can integrate that information into the barley breeding process," Clysner said.

Zhang Zile contributed to this story.