04/07/2018 – News / Beverages / Food Packaging / Meat / Carbon Dioxide / CO2 / UK

UK’s CO2 shortage deflates activity in various F&B segments

Described by one expert as “the worst supply situation to hit the European carbon dioxide business in decades”, dwindling supplies of CO2 continue to sting a diverse array of businesses across the UK’s food and beverage sector.

 

CO2 puts the bubbles into beer and soft drinks, and is used in food packaging to prolong shelf life. The gas is also seen as the most humane way to stun pigs and chickens prior to slaughter, alongside being required to generate dry ice – a crucial component in coldchain logistics. The continued shortage of the gas, which first came to light last week, is widely viewed as the exceptional and simultaneous production shutdowns of raw CO2 production units based in the UK and Europe that supply the region’s industrial gases players.

 

Supply is fizzling out

 

Heineken and Coca-Cola are two of the high-profile beverage sector casualties of the on-going shortage, with the latter firm forced to temporarily halt production at one of its UK plants – amid robust demand on account of the country’s heatwave and the World Cup.

  

Elsewhere, Scotland's biggest abattoir – operated by Tulip and Quality Pork Ltd, and handling 6,000 pigs a week – has temporarily closed. It’s animals are instead being sent to England for slaughter – although this is only a stop-gap solution, given that CO2 supplies in England are also running low. A spokesperson from Tulip said the firm was “extremely concerned…that very little, if any information is coming out of the gas sector about when this will be rectified”.

 

Meanwhile, supermarkets Morrisons and online food retail giant Ocado have suspended some frozen food lines due to a lack of dry ice (created from CO2) as required for their delivery, while major wholesaler Booker is rationing the number of units it sells to restaurants and bars. 

 

Impacting a £112bn supply chain

 

Unsurprisingly, the Food & Drink Federation – the body representing the interests of the UIK’s largest manufacturing sector – has said that it and its members are “concerned about CO2 supplies” and the “lack of clarity regarding how long a shortage might last and the scale of such a shortage”.

 

“Despite the focus in the media on certain sectors, this is an issue that will affect much of the UK's £112bn farm-to-fork supply chain,” warned an FDF spokesperson last week. “Government must act with urgency to assess the issue as quickly as possible and support the industry through any period of restricted supply.”

 

At this stage, there remains a key question about when a regular supply of CO2 will be available. There has been little by way of action from the government to date in relation to the shortage. The Department for Environment, Food & Rural Affairs (Defra) told the BBC that it was “aware that there are reports of a CO2 shortage”, and was in contact with the industry and gas suppliers “to understand the implications of the situation”.

 

A spokesman from the Food & Drink Federation advised that the industry body remains “in discussion with a number of governmental departments to establish a clear timeframe”, adding that: “we hope the issue can be resolved as quickly as possible”.

 

Animal welfare considerations

 

However, given that the situation is essentially industry-led, it seems difficult to see what the government could feasibly do to get CO2 suppliers to ramp up production once more. 

 

When supply does start to return to normal, it is possible that some sectors will be given precedence – not least the country’s abattoirs, on account of the animal welfare component. Zoe Davies, CEO of industry body the National Pig Association advised that the industry body’s members were nonetheless “contingency planning” to put in place electrical stunning – a manual method that would slow down operations. Indeed, poultry producer 2 Sisters temporarily adopted such measures last week but has since returned to gas stunning following what it termed “contingency measures and strong procurement planning”.

 

Meanwhile, Nick Allen – CEO of the British Meat Processors Association – told FT he had received guarantees from gas suppliers that the CO2 shortage would be brought to an end within the next few weeks.

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