In Europe, bubble trouble
BREWERIES across northern Europe are fretting about shortages of beer, slaughterhouses face possible shutdown and British consumers may find it harder to buy a popular breakfast food - all because of a shortage of carbon dioxide on the continent.
The gas that gives soda its fizz, and is used to package food and even stun pigs before slaughter, is in short supply due to a high number of closures at ammonia plants that produce CO2. That’s pressuring food and drink industries just as warm weather, soccer’s World Cup and the holiday season typically boost demand for fizzy drinks, beer and barbecued meat.
“There is a serious concern that consumers may face a limited choice of food and drink on supermarket shelves if a normal supply of CO2 is not restored as quickly as possible,” said Ian Wright, chief executive of Britain’s Food and Drink Federation.
Carbon dioxide, often associated with global warming, is a byproduct of ammonia produced by the fertilizer industry. When puffed into packaging, it helps prolong the shelf life of meat or salads, and is also used in dry ice, which helps transport frozen goods. The shortage has been caused by too many ammonia plants closing down for planned maintenance or production issues.
It could be September before more ammonia, and with it CO2, comes back to the market, according to CRU’s Fertilizer Week publication. A supply squeeze for another three or four weeks may cause more considerable problems for the food and drink industry, Berenberg Bank analysts said last week. Northwest Europe has been particularly affected. Norway’s Aass Brewery halted operations and German brewer Radeberger Gruppe has been forced to carefully manage gas supplies, while others have also warned of low CO2 supplies. The city of Oslo has even restricted watering of gardens due to the shortage of the gas used by utilities to treat water.
“It’s quite unprecedented and quite unique,” said Francois Sonneville, a beverages analyst at Rabobank in London. It’s becoming harder for the beer industry to deal with the shortage and brewers may start to limit output of brands that yield lower margins, he said.
The UK, which imports the majority of the CO2 it uses, has been among the hardest hit. — WP-Bloomberg