21 Aug 2022 Where have all the bubbles gone?
Ironically, as the world is increasingly urged to reduce carbon emissions, CO2 shortages are causing havoc in the drinks industry.
As the northern hemisphere swelters in the hottest of summers, climatologists attribute the heat wave to global warming caused by excess carbon dioxide (C02) emissions.
Yet just as consumers reach for a glass to slake their thirsts, both soft drinks manufacturers and alcohol producers are facing shortages of vital C02. And it is excessively expensive to recapture it from the atmosphere.
Breweries from the UK to New Zealand have reported supply problems at the same time as the global beer market is projected to grow from $768.17 billion in 2021 to $989.48 billion in 2028 at a combined annual growth rate of 3.68%.
Few drinks are available without C02 being involved at some stage in the production process.
It is used not only in brewing but also to produce the fizz in carbonated soft drinks, as well as to dispense these beverages in bars and restaurants plus in the exponentially expanding volume of cans in the RTD market.
Wine makers use CO2 in its frozen form (dry ice) to protect grapes after harvesting and to slow the fermentation process.
CO₂ shortages in the UK have been a recurring issue for some time. Since as far back as the FIFA World Cup 2018 and the spike in demand for beers as England proceeded to the semi-finals, the UK seems to have been facing an impending crisis every few months.
Carbon dioxide for industrial uses is produced at very few sites in the UK: 60% of the country’s supply comes from US giant CF Industries,
It produces CO2 as a by-product alongside its main output of ammonia, a key constituent in fertiliser.
As energy prices soared even before Russia’s invasion of Ukraine and the subsequent strategic reduction in gas supplies to Europe, CF said that it would stop production because the cost was prohibitive.
Subsequently it mothballed its site at Ince in Cheshire and threatened to end production altogether by closing its bigger plant at Billingham on Teesside.
Plans to close the Ince site, in Ince, were confirmed in June. A consultation is currently underway with unions and staff.
The government stepped in with a short-term bail-out (thought to be less than £50m) towards production costs, largely to keep farmers supplied with fertiliser.
While consumers are protected by an energy price cap, industry has to pay the going rate, and that has been soaring. So output of C02 – a by-product- is under even greater doubt.
Heineken, which has increased prices this year by almost 9% to cover costs, is preparing to cut beer production at its European manufacturing plants if faced by a severe gas shortage in the coming winter.
Because Russia is threatening to cut gas supplies further, the EU wants to reduce usage by 15%, which will not only affect brewing but also ammonia output across Europe and thus supplies of C02.
In the US many breweries have struggled to find sufficient CO2 because of pandemic-related supply chain issues. And this dilemma is being heightened by a contamination scare at a major plant in Mississippi. This threatens to hit C02 output and create a beer shortage in the autumn. Many brewers are seeking ways to carbonate their beers, with nitrogen becoming a top alternative.
The giant brewers, who have more buying clout with suppliers, appear untroubled so far but many craft brewers have been hit already by supply problems….