Beer Drinkers in New Zealand May Face Summer Supply Squeeze

A worker rolls a keg of beer at the Young Henrys brewery in Sydney, Australia, on Friday Aug. 19, 2022. Most economists expect the Reserve Bank of Australia will shrug off the unexpected decline in the often volatile jobs report and execute a fourth half-point hike in September to bring the cash rate to 2.35%. Photographer: Brent Lewin/Bloomberg , Bloomberg

(Bloomberg) — New Zealand brewers face a summer squeeze on beer production and the risk of higher costs as the nation’s only maker of food-grade carbon dioxide remains closed.

The liquid CO2 plant at Kapuni on the North Island has been temporarily shut since late December while an issue affecting worker safety is investigated. Owner Todd Energy is unable to indicate when production might resume.

Brewers Association Executive Director Dylan Firth said if the plant remained shut for an extended period of a month or more it would slow beer production and could force breweries to only make their core range and halt production of specialty beers. Some breweries would also turn to imported CO2, which would drive up the cost of production, he said.

“Different brewers will make a call about whether or not they pass those costs on to consumers,” said Firth, whose organization represents breweries producing about 83% of New Zealand’s beer. “But honestly, we have no idea how long it’s going to be closed. I think there’s a lot of people concerned out there.”

CO2 prices have risen globally due to supply disruptions in Europe and the US. Higher costs and shortages could impact a range of food and beverage producers as well as industries such as water treatment and health.

Read More: British Pubs Fear Beer Shortage From Lack of Carbon Dioxide

In brewing, CO2 is used to carbonate beer and to purge oxygen. While some brewers are able to recapture the CO2 they use, smaller operators are less likely to have that technology, Firth said. Hospitality venues also use CO2 canisters to add fizz to beer stored in kegs.

Jos Ruffell, the co-founder of small Wellington brewery Garage Project, told New Zealand news service Newshub that production may be halted because the company’s supply of CO2 would run out in about a week. 

“This is our peak time of the year,” Ruffell said. “It’s summer, it’s beer-drinking weather and we can’t package beer. It’s a disaster.” 

Kapuni became the nation’s only domestic producer when the Marsden Point oil refinery closed in March last year. Todd sells its CO2 to two distributors who supply customers around the country, and who import additional product to meet demand. 

One of those suppliers, BOC Ltd., said it is prioritizing supply to critical medical, safety and water customers. Rationing is in place and allocations will be reviewed regularly in line with product availability, it said in a statement.

“We are working collaboratively with suppliers, customers and other industry stakeholders to manage the CO2 supply situation,” the company said. “This includes additional shipments of CO2 supplies from overseas.”

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