For industry veterans, the CO2 shortage is nothing new. Last year, Alewerks Brewing Company had to shut down production for a week due to a limited gas supply, said Michael Claar, operations manager for the Williamsburg, Va.-based brewery. Claar was unsure of the cause of this shortage.
Alewerks was able to get CO2 this year, but it comes at a cost: a 20% surcharge on gas deliveries, Claar said. This is one more price increase among many for breweries, which are facing generalized inflation on everything necessary for the production and packaging of beer: barley, hops, bottles, labels… you name it. Alewerks has tried to absorb much of the costs, even though the brewery plans to raise prices this year.
“Just for now, we’re trying to get over it,” Claar said.
Breweries depend on CO2 not only for the bubbles beer drinkers expect, but also to move beer between tanks or to kegs and canning lines, and to purge oxygen from tanks. “Hot and flat isn’t where it’s at,” noted Bob Pease, president and CEO of the Brewers Association, which represents small, independent craft breweries. “It’s a key ingredient.”
Shortages began in mid-2020, he said, when ethanol production – of which carbon dioxide is a byproduct – slowed down as more and more people stayed at home. This summer, however, the problem is more acute, he says.
Contamination at a site in Jackson Dome, Mississippi, which is one of the nation’s largest CO2 producers, adds to the problem, 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 key CO2 producers, the association said, as well as the usually higher demand during the summer months. This is partly due to higher sales of beer and soda in warmer temperatures, and also due to butterfly wing effects such as a need for more dry ice – which also uses CO2 in its production.
Many breweries are reporting spikes in the cost of CO2, Pease said, and some are unable to get as much as they need. “We’re hearing people who their CO2 supplier has called saying, ‘We were supposed to deliver 100 pounds, but we’re only able to deliver 40,'” he said. “So they might have to change their production schedule, and the end result might be a beer shortage if that persists.”
Still, he hopes the supply issue will be resolved in 30 to 90 days.
However, the shortage did not affect all breweries. Some small producers have so far remained sheltered. Warren Stanko, chief brewer at Chattanooga Brewing Co. in Tennessee, saw no disruption to his CO2 supply, despite only producing about 2,000 barrels of beer per year compared to, say, the 9,275 barrels produced annually at Alewerks.
For microbreweries, however, even small price increases can be difficult to absorb at this stage of the pandemic. Christopher Gandsy, the founder, chef and head brewer of 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 suffer an economic catastrophe. Loan from the Small Business Administration. The $90,000 loan comes on top of economic pressures he already faces, including rising water and electricity costs.
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% more than a few months earlier. He is preparing for the CO2 price in September, when he will have to fill the tank.
“Most commodity disruptions disproportionately impact smaller players in a segment, so yes, the CO2 shortage is disproportionately affecting smaller craft brewers,” Pease told The Washington Post. “Large brewers may also have a technology called carbon capture in their breweries that helps protect them from supply disruptions.”
The recurring shortage of carbon dioxide has at least one small brewery looking for ways to capture the CO2 naturally produced during the fermentation process. Alewerks is investigating the possibility, said Claar, the chief operating officer. It’s not a cheap process, he said, but it could help offset Alewerks’ CO2 needs.
“Based on everything that’s happening now, we have to dive in,” Claar 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 brewers have grown accustomed to setbacks: Earlier this year, Ball Corp., the largest supplier of cans, quintupled its minimum order, forcing many breweries to seek out different suppliers, often at higher cost . Other successes include rising labor, transportation, and other ingredient costs.
“Our members have faced a long series of challenges, and we’ve found ways to overcome most of them,” Pease said. “We will try to help our members overcome this one.”
