Carbon dioxide shortage worries craft breweries

Latest / August 6, 2022 / DRPhillF / 0

Suspension

IPAs and beer aren’t the only things brewing in craft brewers this summer — there’s a problem making them too, with CO2 shortages causing prices to rise and production to slow.

The culprit is the dreaded phrase “supply chain problems,” a familiar pandemic-era woe that in this case covers a range of problems, from increased seasonal demand to contamination of a key resource.

For industry veterans, carbon dioxide shortages are nothing new. Last year, Alewerks Brewing Company was forced to halt production for a week due to limited gas supplies, said Michael Clare, operations manager at the brewery in Williamsburg, Virginia. Clare wasn’t sure what caused this deficiency.

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Alewerks managed to get CO2 this year, but it does have a cost: a 20 percent surcharge on gas shipments, Clar said. It’s yet another price hike among many breweries, dealing with blanket inflation on everything needed to produce and package beer: malt, hops, bottles, labels…you name it. Alewerks is trying to absorb many of the costs, although the brewery expects to raise its prices this year.

“Just for now, we’re trying to get over it,” Clare said.

Breweries rely on carbon dioxide not only for those bubbling beer aficionados expect but also to transport beer between tanks or to kegs and canning lines, and to purge oxygen from tanks. “Warmth and flat are out of place,” noted Bob Bees, president and CEO of the Brewers Association, which represents small and independent breweries. “It’s an essential ingredient.”

He pointed out that the shortage started in the middle of 2020 when ethanol was produced – and from it Carbon dioxide is a byproduct – slowing down as more people stay at home. But he says the problem has become more acute this summer.

Adding to the problem is the contamination of a site in Jackson Dome, Mississippi, one of the largest producers of carbon dioxide in the country, the Brewers Association wrote in its July newsletter. There, the raw gas released from the mine reduced the amount of carbon dioxide available for food. Another factor, the association said, is planned and unplanned maintenance shutdowns at many ammonia plants that are major producers of carbon dioxide, as well as the typically high demand in the summer months. This is partly due to higher sales of beer and soda in warmer temperatures, and also due to butterfly wing-like effects such as the need for more dry ice — which also uses carbon dioxide to produce.

Pease said many breweries are reporting a rise in the cost of carbon dioxide, and some are unable to get what they need. “We hear from people that their supplier of CO2 called saying, ‘We were supposed to deliver 100 pounds, but we’ll only be able to deliver 40,’ he said. This continued.”

However, he hopes the supply issue will be resolved within 30 to 90 days.

However, the shortage did not affect all breweries. Some small producers have, so far, remained immune. Warren Stanko, president of the brewery at Chattanooga Brewing Co., did not testify. In Tennessee, any interruption in its supply of carbon dioxide, even though it only produces about 2,000 barrels of beer annually compared to the 9,275 barrels produced annually at Alewerks.

However, for small breweries, it can be difficult to absorb small price increases during this phase of the pandemic. Christopher Gandy, founder, chef and president of the brewery at DaleView Biscuits and Beer in Brooklyn, says he was proud he had no debt when he opened his business in 2018. But when the pandemic hit, Gandsy had to weather an economic disaster with a business loan small. The $90,000 loan adds to the economic pressures he’s already facing, including rising water and electricity costs.

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Gandhi has not had to refill his 200-pound CO2 tank since shortages hit the industry. But even then, he had to pay about 10 percent more than he did a few months ago. He’s preparing for the September CO2 price, when he’ll have to refill the tank.

“Most of the raw material disruptions have a disproportionate impact on the smallest players in the sector, so, yes, CO2 shortages are disproportionately affecting micro/craft breweries,” Pace told The Washington Post. “Big breweries may also have a technology called carbon capture in their breweries that helps insulate them from supply disruptions.”

The frequent shortage of carbon dioxide has at least one smaller brewery looking for ways to capture the carbon dioxide produced naturally during the brewing process. Clare, COO, said Alewerks is studying the possibility. It’s not a cheap process, he said, but it could help offset the Alewerks’ carbon dioxide needs.

“Based on everything that’s going on right now, we have to dive into it,” Clar said.

The Brewers Association has released guidelines for brewers to help them get the most out of their carbon dioxide, including making sure there are no leaks in their lines. Pease says breweries have gotten used to dealing with setbacks: Earlier this year, Ball Corp. , the largest supplier of cans, increased the minimum order fivefold, causing many breweries to search for different suppliers, often at a higher cost. Other findings included increased costs for labor, transportation, and other components.

“Our members have faced a long line of challenges, and we have found ways to overcome most of them,” Pace said. “We will try to help our members get through this.”