The Co2 Shortage Impact on FMCG Supply Chain: Is there still a CO2 Shortage?
Another “crisis” for the food & drink industry. The Carbon dioxide (CO2) shortage is still having a ripple effect across the FMCG sector – putting more pressure on the already stretched Supply Chain services!
Why is there a CO2 shortage?
Following the global shortage of natural gas, two of the main fertiliser plants in the country were closed, which actually produced up to 60% of the UK’s CO2 supply. The closure of the CF Industries’ CO2 plants was the nail in the coffin in the general disruption of Supply Chain, as food & drink across the UK was already suffering with: labour shortages, panic buying, the pandemic issues, and much more.
This isn’t the only CO2 shortage of recent times either! In Summer 2018, as the UK were experiencing a heatwave combined with the excitement of the prospect of England winning the World Cup, the CO2 shortage hit the headlines, and news spiraled with the thought of running out of beer and frozen products.
The CO2 beer gas shortage
Like the 2018 shortage, the CO2 shortage now could be described as a “perfect storm” – the unusual combination of CO2 chain issues. Three years ago it was the cocktail of: demand for drinks due to the heatwave, the production outages, the availability of imports… and today it’s not so different. A similar set of issues, with the main difference being the impact of COVID.
Despite the 2018 CO2 shortage being a “wake up call” to make the CO2 chain a lot more resilient, the impact of the current CO2 gas shortage doesn’t seem to be less drastic – and there is no clear (and permanent) pathway out of this.
What is being done to help the CO2 shortage?
The government has claimed that they will temporarily cover the full operating costs of the CF industries’ CO2 plants for a few weeks, which could be tens of millions of pounds. This also means that the food industry might have to pay five times more for their CO2!
The restart of CO2 production at the plant in Billingham is seemingly good news as CO2 is widely used in the food & drink industry, and if supply had carried on without this key source of carbon dioxide – we could be looking at a lot of empty shelves and consequences.
Empty Shelves & Soon to be Empty Tables…
Supermarkets are said to be rationing frozen food supplies, online grocers (such as Ocado) are limiting their delivery of frozen foods… the CO2 issue has led to a “big supply issue”, according to one supermarket executive.
Businesses across the food & drink sector were already struggling with labour shortages, COVID and Brexit related issues, and are now dealing with shortages of supplies. This is significantly affecting the Christmas build up, and with the rise of panic buying at the moment – we can predict what will happen with the limited online and in-store supplies that are available!
What is CO2 used for?
CO2 is not just used for fizzy drinks… it has many uses in the food & drink industry, such as:
- Packaging – extends product shelf life
- Farming – used to “humanely” slaughter animals
- Dry Ice – freezing products in delivery lorries
Navigating the Supply Chain issues
How do you think the government should be dealing with the CO2 shortages? What does the future look like for Supply Chain services? Comment below…
