Business

Carbon dioxide shortage worries craft breweries

Carbon dioxide shortage worries craft breweries

Remark

IPAs and lagers aren’t the only things being brewed at craft beer makers this summer — troubles are in the works too, with carbon dioxide shortages driving prices soaring and production delays.

The culprit is the dreaded phrase ‘supply chain problems’, a well-known pandemic era that in this case covers a range of issues from increased seasonal demand to contamination of a key supplier.

For industry veterans, the CO2 shortage is nothing new. Last year, Alewerks Brewing Company had to shut down production for a week due to limited gas supply, said Michael Claar, director of operations at the brewery in Williamsburg, Virginia. Claar did not know exactly what the cause of that shortage was.

Craft beer polarises: more drinkers want high ABV or none at all

Alewerks was able to get CO2 this year, but that comes with a price: a 20 percent surcharge on the delivery of the gas, Claar said. It’s one of many brewery price hikes that have to do with inflation across the board for everything needed to produce and package beer: barley, hops, bottles, labels… you name it. Alewerks has tried to absorb much of the cost, although the brewery expects to raise its prices this year.

“For now, we’re trying to get through it,” Claar said.

Breweries rely on CO2 not only for those bubbles beer drinkers expect, but also to move beer between tanks or to barrels and canning lines, and to remove oxygen from tanks. “Warm and flat is not where it is,” noted Bob Pease, the president and CEO of the Brewers Association, which represents small and independent craft breweries. “It’s an important ingredient.”

The shortages started in mid-2020, he said, when ethanol production – of which carbon dioxide is a byproduct – slowed down as more people stayed at home. This summer, however, the problem is more acute, he says.

Adding to the problem is the pollution of a site in Jackson Dome, Miss., one of the nation’s largest CO2 producers, the Brewers Association wrote in its July newsletter. There, raw gas from a mine reduced the amount of food-grade CO2 available. Another factor is planned and unplanned maintenance shutdowns at several ammonia plants that are major CO2 producers, the association said, as well as the usual higher demand in the summer months. That’s partly due to higher beer and soft drinks sales at warmer temperatures, as well as butterfly wing-like effects, such as the need for more dry ice – which also uses CO2 in production.

Many breweries report spikes in the cost of CO2, Pease said, and some can’t get as much as they need. “We hear from people that their CO2 supplier called and said, ‘We were going to supply £100, but we can only supply 40,'” he said. “So they may have to adjust their production schedule, with the end result being potentially a beer shortage if this continues.”

Still, he hopes the delivery problem will be resolved within 30 to 90 days.

However, the shortage has not affected all breweries. Some smaller producers have remained immune so far. Warren Stanko, head brewer at Chattanooga Brewing Co. in Tennessee, has seen no interruption in its supply of CO2, although it only produces about 2,000 barrels of beer per year compared to, for example, the 9,275 barrels produced annually at Alewerks.

For microbreweries, however, even small price increases at this stage of the pandemic could be difficult to absorb. Christopher Gandsy, the founder, chef and head brewer at DaleView Biscuits and Beer in Brooklyn, says he was proud to be debt free when he opened his business in 2018. But when the pandemic hit, Gandsy had to endure an economic injury disaster on the Small Business Administration Loan. The $90,000 loan adds to the economic pressures he already faces, including the rising costs of water and electricity.

Crispy, refreshing Mexican lagers finally come into their own

Gandsy hasn’t had to refill his 200-pound CO2 tank since the shortage hit the industry. But even then, he had to pay about 10 percent more than a few months earlier. He braces himself for the price of CO2 in September, when he has to top up the tank.

“Most commodities disruptions disproportionately impact the smallest players in a segment, so yes, the carbon shortfall disproportionately affects small/craft brewers,” Pease told The Washington Post. “Large brewers can also have a technology called carbon capture in their breweries that helps insulate them from supply disruption.”

Due to the recurring shortage of carbon dioxide, at least one smaller brewery is capturing the CO2 naturally produced during the fermentation process. Alewerks is studying the possibility, said Claar, the operations director. It’s not a cheap process, he said, but it could help offset Alewerks’ carbon needs.

“Based on everything that’s happening now, we need to dive in,” Claar said.

The Brewers Association has established 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 brewers have become accustomed to setbacks: Earlier this year, Ball Corp., the largest supplier of cans, increased its minimum order requirement fivefold, causing many breweries to seek different suppliers, often at higher costs. Other hits included increased costs for labor, transportation, and other ingredients.

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