UK: Food wholesalers start to ration beer and cider supplies due to CO2 shortage (E-malt.com)
A massive shortage of food-grade carbon dioxide (CO2) has ratcheted up fears of disruption to Europe’s meat and fizzy drink supplies, CNBC reported on June 27.
A shortfall of CO2 in Europe comes at a time of excitement over the World Cup soccer tournament and amid peak season for summer barbecues. The ill-timed crisis has subsequently prompted several big name producers in the food and drinks industry to warn consumers of major shortages over the coming weeks.
The trade journal Gas World — which was the first to report on an EU-wide shortage of CO2 earlier this month — described it as the “worst supply situation to hit the European carbon dioxide business in decades.”
One of the largest sources of EU food-grade CO2 has traditionally come from major ammonia plants. But at least five gas producers in Northern Europe began a planned shutdown during the early summer months to resolve maintenance issues.
Meanwhile, a number of other EU bio-ethanol plants — which provide an alternative source of CO2 — also went offline for summer repair work. The U.K. was thought to be the hardest hit by the closures, with only one major CO2 plant seen to be operating at present.
The clear, odorless gas is used to carbonate products such as soda and beer. It is also used during the bottling and kegging process.
On June 26, Tesco-owned food wholesaler Booker started to ration beer and cider supplies.
The food retailer, which is used by bars, restaurants and traders, is restricting customers to 10 cases of beer and five of cider or soft drinks.
In a company statement, Booker said it had been forced to restrict beer and cider supplies because of an "international shortage" of food-grade CO2.
The news follows supply disruptions at both Heineken and Coca-Cola, with several European food and drink companies struggling to cope with a scarcity of CO2.
Last week, a spokesperson from Heineken, the biggest brewer that serves the U.K., told CNBC via email: “Like many other businesses in the food and drinks industry, we are affected by this shortage … We continue to work hard to resolve this issue as quickly as possible within our European supply base, and are working with customers to minimize disruption to their business.”
Heineken also warned pubs to expect “major shortages” of its Amstel and John Smiths brands.
The U.K.’s largest pub, Wetherspoons, also said it would be forced to pull a number of beers and other carbonated drinks from its menu soon.
More recently, Coca-Cola said it had “temporarily paused” some of its production due to the shortage of CO2 gas. In a company statement issued Monday, the soft drinks manufacturer sought to reassure consumers that so far the shortfall had not affected overall supplies.
Despite those disruptions, it is unclear how the shortage could affect brewers long-term.
"I think that if this were to persist for several more weeks, there really is share opportunity for those who are better equipped to deal with it, but at this point, I don't see any major damage to any particular brands," Macquarie Research analyst Caroline Levy told Melissa Lee on CNBC's "Power Lunch."
The drinks industry is not the only one to have been hampered by the crisis. CO2 is also an essential part of the production process for packaging meat.
A spokesperson at the British Soft Drinks Association, told CNBC via email: “The shortage of CO2 across Northern Europe is impacting a wide range of businesses across the food and drink sector.”
The Grocer, a weekly food industry magazine, reported last week that nine of Britain’s largest poultry plants were currently facing “critical” shortages of CO2 gas. That is widely thought to have a significant impact on the usual distribution of poultry products throughout the U.K. and Europe, including restaurants such as Nando’s, McDonald’s and KFC.
The British Poultry Council has also warned that up to 60 percent of poultry processing plants could come offline “within days.”