Trouble brewing for Joe White

[Oliver]

Interesting. No doubt homebrewers will have been affected, too.

Oliver

Substandard malt by Joe White leaves brewers bitter
By BEN BUTLER
The Australian, October 08, 2014

BREWERS have been routinely supplied with substandard malt by the country’s biggest producer, Joe White Maltings, which covered up the deception by altering chemical analysis certificates, a court has been told.

The accusations are made in a lawsuit filed against former Joe White owner Viterra, a subsidiary of controversial Swiss commodities group Glencore, by the maltster’s new owner, US agribusiness behemoth Cargill.

Cargill, which paid $420 million for Joe White last year, claims it was deceived by Viterra and was forced to slash production by 60,000 tonnes in the first six months it controlled the ­company.

Malt is a key ingredient in beer and about a quarter of Joe White’s output goes to brewers in Australia — including Tooheys owner Lion, CUB owner SABMiller and Adelaide-based Coopers — with the remainder exported, mostly to Asia.

In a statement of claim filed with the Victorian Supreme Court, Cargill alleged that during a sales process run by Merrill Lynch in July last year, Viterra executives said Joe White made “high quality malt” whereas in fact it could not produce malt in the quantity and quality required by customers.

Cargill said Joe White could now produce only 60 per cent of its contracted output, which is believed to be about 500,000 tonnes a year, to the specifications set by customers, and would need to spend $30m to upgrade its plants.

The company said that Joe White’s previous financial performance was “substantially underpinned” by Viterra’s deceptive practices.

“We’re still determining the full damages and will provide further particulars prior to trial,” Cargill spokesman Peter McBride said.

Viterra did not return calls.

A Coopers spokesman confirmed the family-owned brewer bought its malt from Joe White. CUB and Lion spokeswomen declined to comment.

Swiss-headquartered Glencore agreed to buy Canada’s ­Viterra for $US6.1 billion in March 2012, but the deal did not close until January last year.

Viterra then moved quickly to sell Joe White, instructing Merrill Lynch to send out an information memorandum in early May.

Cargill told the court it made an offer to buy the business on June 7 based on claims in the memo saying that Joe White “utilised technical analysis and strict quality control procedures to ensure that customer specifi­cations were consistently met”.

Cargill allegedly approached Viterra in late October after reports from Joe White executives that the company had supplied customers with malt made from the wrong variety of barley, had used additive gibberellic acid, which speeds up the malting process, and had supplied chemical analysis certificates to customers that “misstated the results of ­analytical testing on the malt”.

In response, Viterra allegedly admitted there had been “instances” where the wrong barley had been used but said there was no “fundamental issue” with Joe White.

[Pogierob]

It will be interesting to see what happens in court.
Innocent until proven guilty? ??