New Zealand drink makers slash production as CO2 shortage strikes | New Zealand

Trouble has bubbled up for New Zealand’s craft breweries and soda makers, with a shortage of carbon dioxide leaving their drinks un-fizzed.

A temporary shutdown of New Zealand’s only liquid carbon dioxide plant has prompted beer and soda makers to slash production at the height of summer and warn of drink supplies drying up.

The Kapuni plant was New Zealand’s only producer of food-grade CO2 since March last year when the country’s other site closed permanently, but operations paused in December due to a potential safety issue, said Mark Macfarlane, chief executive of owners Todd Energy. While the facility is due to resume production in about a week, it will only produce 30% of pre-shutdown levels and will take months to return to full capacity.

CO2 is used to add fizz to carbonated drinks, to preserve and process numerous common food products, and for medical purposes. Shortages have caused global chaos in recent years, with New Zealand the latest country to face an abrupt and disruptive shortfall.

“This is a bad situation that’s gotten a lot worse,” said Jos Ruffell, the co-founder of craft beer producer the Garage Project. His business has produced 64,000 litres of beer that it cannot package until more CO2 arrives.

“I think at this point we would probably pay a king’s ransom for anybody to deliver CO2 to us.”

The shortage has prompted domestic CO2 distributor BOC to ration supplies, prioritising “critical medical, safety and water customers”, according to a statement from the company.

One soda producer said the rationing system was understandable but had created a “fickle” supply chain.

“Today I’d ordered four bottles of CO2 and I only got one,” said Marleen Suy, a spokesperson for Pete’s Natural Sodas, a small producer based in Nelson. “If we cannot bottle the drinks then there’s no business.”

Suy and other beverage makers are plugging gaps with imported CO2, but acquiring it is not simple; it costs more than the domestic product and delivery times and quantities are subject to uncertain global freight networks.

For those now looking offshore to source their gas, “it’s pretty competitive, given that there are shortages in Europe and America and the UK as well,” said Dylan Firth, executive director of the Brewers’ Association, which represents brands accounting for about 70% of the country’s beer sales.

New Zealand’s smaller market could also make it hard to compete internationally, especially for independent brewers. “There’s a scale issue,” Firth said. “They’re just not ordering the quantities that are needed to meet an order.”

Firth said brewers were in discussions with the government this week on longer-term solutions for the industry.

Despite the resumption of production at the New Zealand plant, he said, “with the limited supply and further shutdowns it is unlikely we will have a massive reprieve.”

The UK government in 2021 intervened to curb the damage caused by CO2 shortages; that crisis prompted a government bailout of the largest supplier to the country. Britain was once again scrambling for CO2 imports in 2022, along with Germany and Italy, due to plant closures and cost increases blamed on soaring natural gas prices.

A statement from New Zealand’s Ministry of Business, Innovation and Employment said several agencies are monitoring the shortage and facilitating conversations within the industry about it. Officials are also liaising with the British government to learn from the UK experience.

In 2021, 84% of beer available for consumption in New Zealand was produced domestically.

Ruffell, from Wellington’s Garage Project, said the sector needed more investment in innovation, particularly to develop its capacity for capturing and processing its own CO2 – and the shortage seemed to be prompting the government to consider it.

“It sounds like they acknowledge the CO2 issue is an unintended consequence of the move away from oil and gas and don’t want to see certain industries unfairly penalised,” he said.

The brewery lifted its beer prices in 2022 for the first time since it was founded 11 years ago after CO2 costs “more than tripled”, Ruffell said.

“We’re really reluctant to do it again because we know that people are finding it tough out there,” he added.

The shortage has prompted cautions from other New Zealand food producers – from warnings that some chicken products might disappear from supermarkets, to predictions of price rises for tomatoes. Meat and dairy processors have also raised alarm, as have exporters who use liquid CO2 for dry ice, which keeps food products fresh in transit.