A lack of carbon dioxide (CO2) has forced several smaller breweries to temporarily or even permanently stop production. The shortage of up to 30 or 40% the normal production is caused by the significant reduction in the energy-intensive fertilizer production, which produces CO2 as a by-product.
Ammonia manufacturers and manufacturer of chemical raw materials such as Yara, CF Industries, Agrofer or BASF have reduced, relocated or even temporarily shut down their production because of the horrendous gas prices which have virtually exploded in the last months due to the reduction in Russian gas deliveries to Europe. The problem is not only the reduction in CO2 production but also the price which has increased more than sevenfold.
Holger Eichele, General Manager of the German Brewers' Association, describes the situation as "extremely worrying".Emma McClarkin, chief executive of The British Beer and Pub Association warned the surge in the price of CO2 might lead to beer shortages this Christmas. “Some brewers have reported week-on-week price increases of more than 400%, a cost they simply can’t pass onto customers,” she said.
Breweries mainly need carbon dioxide to evacuate the air from tanks, kegs and bottles during production and filling. In addition CO2 is needed in the production of soft drinks to carbonate the beverages and for tapping beer.
Actually, the problem shouldn't exist at all for breweries, since enough CO2 is produced during fermentation, which can be captured and used again in the later process steps. However, this requires systems that are normally only profitable from an output of 300,000hl. Therefore, most large breweries have a CO2 recovery plant and are not affected by this problem. These are now being pressured by their smaller colleagues to sell CO2, which in most cases is not possible.
The small breweries also have the problem that the CO2 industry first has to serve strategically more important sectors such as the pharmaceutical industry, which cools vaccines and produces medicines.
As a consequence, the smaller breweries and soft drink bottlers must now send their products to larger breweries for bottling, canning and keg filling, or if that is not possible, reduce or stop production altogether.
In Germany, this has already happened to the small Neunspringe brewery in Worbis, Thuringia, which produces not only beer but also a wide range of soft drinks. In the past few weeks, the brewery has repeatedly been forced to temporarily stop production and send the workforce home at short notice.
The neighboring Vereinsbrauerei Apolda has also been idle for a week. The CO2 supplier stopped supplying at short notice due to "force majeure". The brewery needs at least one ton of CO2 per day for 6,000 crates and up to 300 kegs of beer.
“The market for carbon dioxide has been swept clean. If anything, we would get something for ten to twenty times the price. But then brewing beer is no longer profitable,” says Carsten Schütz, Managing Director of the brewery who has now to send home part of his 42 employees.
Another brewery to face problems is the Bavarian Aktienbrauerei Kaufbeuren, which has already stopped producing lemonade due to the lack of carbon dioxid.
An end to the problems is not to be expected in the medium term as long as natural gas prices remain at their high level. However, the market also seems to be self-regulating here, as high CO2 prices make it more interesting to ramp up CO2 production. The big ammonia and fertilizer manufacturer SKW Piesteritz, a subsidiary of Agrofert, Prague, announced recently to start up again production. However, it seems unlikely that customers will be served at the old prices.
Market observers therefore believe that the combination of many negative factors such as the lack of financial cover after the corona pandemic, the high energy, raw material and packaging prices and consumer reluctance in view of the uncertain future situation, many breweries and beverage manufacturers in the coming weeks and months have to cease operations.
One of the first victims became known a few days ago. The Böhmisch Brauhaus Großröhrsdorf from Saxony, whose production has eroded in the last years to only 10,000 hl will close at the end of February 2023. The 136-year-old brewery was able to survive two world wars and 40 years of socialist government in the former German Democratic Republic, but the recent turmoil finally sealed its fate.