|Carbonation is the carbon dioxide gas in the liquid. / Photo by Potential Filmmaker via Shutterstock|
Beer and soft drink makers are now scrambling to access CO2, an important ingredient in carbonization as Covid-19 shutdowns have closed their access to the said chemical.
Carbonation is the carbon dioxide gas in the liquid. The CO2 helps the beer and soda become fizzy, giving it a distinct refreshing aspect and a mouthfeel to drinkers. The CO2 used in beer and soda carbonation is a byproduct of ethanol production. In the ethanol industry, it is the role of the ethanol producers to capture the CO2 byproduct and then sell it to the food industries but the lockdown measures have decreased the ethanol production.
This means that brewers that are already struggling to maintain its business amid the declining beer sales, mass layoffs, and forced closures, may soon struggle to produce their product altogether in the next few months, Reuters reports.
Trade association for America’s ethanol industry Renewable Fuels Association Chief Executive Geoff Cooper said that 34 out of 45 ethanol plants in the US that sell CO2 have cut their production or idled, causing a decline of ethanol output. This disrupts a highly specialized part of the food industry.
Because of the reduced supply, CO2 suppliers have increased their prices by 25% in dealing with beer brewers, said Brewers Association chief executive Bob Pease. The American trade group of over 5,400 brewers and breweries in planning, distributors, suppliers, craft beer retailers, and individuals concerned with the promotion of homebrewing and craft beer, get nearly 45% of their CO2 from the ethanol producers.
|The sharp decline in the production of ethanol is also seen as there is less demand for gasoline since more Americans are now quarantined. / Photo by VTT Studio via Shutterstock|
Ethanol blended in US gasoline supply
Pease added that they are hearing more about the supply shortage from their members. The sharp decline in the production of ethanol is also seen as there is less demand for gasoline since more Americans are now quarantined. Demand for gasoline declined by more than 30% in the US.
The Compressed Gas Association, a trade association for the industrial and medical gas supply, also sent a letter to Vice President Mike Pence in early April. It wrote that CO2 production fell by 20% and is forecast to be down by 50% mid-April. This affects the meat producers too because they are using the byproduct in shipment, preservation, packaging, and processing.
One of the largest meat-processing companies in the country Smithfield Foods’ CEO and President Kenneth M. Sullivan has warned of a “severe” or “disastrous” consequence of Covid-19 to the meat supply chain after the closure of its plant in South Dakota. If their plants are not running, it would also be difficult to keep the grocery stores in the country running.
California-based specialty beverage company LifeAID’s CEO Orion Melehan pointed out how two of his production partners have already started searching for other alternatives to source CO2. It keeps them up at night thinking of what available options there are, Melehan added.
Beverage developer National Beverage Corp.’s spokeswoman meanwhile said that their company sources from various CO2 suppliers in the country so they are not expecting a supply issue. The beverage company is known for its LaCroix sparkling water.
On the part of Denmark-based brewer Carlsberg Group, it said that they are “almost self-sufficient.” It has been a part of its sustainability program to create its own CO2 and capture it in the brewing process.
US brewery production, by the size of brewery 2019
US Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau has shared that there were 6,400 reporting brewery locations or facilities in the US last year. The number of operating or reporting breweries has increased by about 436 from the 2018 report by the bureau. A quarter of these numbers were considered as “brewpubs” or those that only brew for direct-to-consumer sale on brewery restaurants.
The US beer industry shipped or sold 203.1 million barrels of beer last year. A majority (82%) of all beer in the country in the same period was domestically produced and only 18% was important from more than a hundred countries.
While there were only 49 breweries in the country in 1983, the industry structure has significantly changed in the past 30 years. The most recent TTB data shows that there were 11,584 TTB permitted breweries in the US. More breweries are found in California (1,370), Washington (600), Michigan (577), Pennsylvania (560), and Florida (464).
Compressed Gas Association’s CEO Rich Gottwald said via Forbes that a serious crisis may happen in May if the government will not intervene. He also expects within one month that the CO2 production will reach more than 70% shortfall as it will continue to get worse. The food industry as a whole also understands the challenge caused by the pandemic since everything is interconnected.
Meanwhile, the Brewers Association report shows that there were 240 regional breweries, 3,011 brewpubs, 2,058 microbreweries, and 2,966 taprooms in the US in 2018.
Coronavirus-driven CO2 shortage
Major companies will survive but independent producers will be most affected. A global leader in beverage development and formulation Power Brands’s CEO Darin Ezra, for instance, has spent 15 years of this professional life on ingredient sourcing and consulting on formulations used by companies including Gatorade, Starbucks, and Pepsi. However, he has been spending most of this time for the past few weeks securing CO2. The previously abundant commodity is now difficult to find; now, Ezra has to rely on overseas markets.
Big producers may be able to recapture some CO2 they have used using price machinery but 99% of craft brewers in the country do not have the same capabilities.
Ezra said that he has now instructed his plant managers to fill out every tank they can find and try to find new sources because the situation may go from bad to a serious problem. If this goes on, a lot of carbonated drinks in the country may not be produced and the shortage will also threaten the carbonated drinks market, including hard seltzers and sparkling water.
Small beverage businesses may likely be hit the hardest because of coronavirus-driven CO2 shortage. But other carbonated methods may be used so that the supply lines will keep running.