In the developed world markets, such as North America, Europe, and Japan, carbon dioxide (CO2) usage in the food and beverage sector is the largest combined consumption for the commodity. More specifically, these two sectors generally represent around 70% of all merchant usage in the developed economies. In the developing world markets, beverage carbonation represents the single highest demand for the product, often up to 80% of the total merchant market while food can be small in some cases.
The food and beverage sectors are truly sustainable, with new applications being developed and new markets created for the use of CO2 as well. As to applications, beverage carbonation has been well in place for a very long time; however, there is a new surge of usage with the draw toward ever more new seltzer drinks, and craft brewing, with major branded and new / independent labels which continue to appear. For some time, in the mature CO2 markets in the developed countries, CO2 usage was often seen from flat, to a slight amount of growth; and even some decline for old-line beverage carbonation with often little or new product lines being developed. Today, CO2 is used to carbonate a full range of drinks from sports drinks to seltzer products with alcoholic content, to new fruit and specialty flavored carbonated beverages, some fermented, which are found throughout the world. I don’t see an end to the development of new brands, those which can include CBD, so the beverage carbonation market is a growth market, unlike a few years back. Such new usage began with a shift to non-carbonated water and sports drinks, and has expanded from there.
As to the food industry, a wide range of applications continues to grow, as long as supplies of CO2 are reliable, and fully available. As of late, and throughout the year, there have been significant disruptions, allocations, and shortages of CO2 in various markets, including North America and much more severely in Europe and the UK. In the US, and Canada, there were many plant turnarounds in the ammonia, refining, and ethanol sectors, which occurred at extremely inconvenient times. Prices have increased, allocations occurred, surcharges have been placed on deliveries. A shortage of drivers, also contributed to the shortage of product throughout the markets. In Canada, the national rail service experienced problems, such as railcars being stuck near Montreal, and those operators who filled the cars have been sick with Covid, to make things even worse. Some of the product in the eastern provinces is delivered into the US, and this further hampered the capabilities of the US CO2 supply network.
As to seltzer or hard liquor based beverages, this has been a growth market, but as of September 21, 2021, Nielsen’s data indicated a decline of 1.8% over the last four weeks. The gain, per some opinions, is within the in-premise consumption of these drinks, over that of the at-home consumption. On the other hand, hard seltzers have the appeal of low carbohydrates, sugar, and calories, versus many other alcoholic beverages. Hard seltzer growth has been reported to be pegged at $3.83 billion in 2019, and is expected to garner $10.92 billion by 2027, growing at a compound annual growth rate of 12.7% from 2021 to 2017, per Allied Analytics, LLP. As to craft beer production, since 2005, industry revenue has grown by more than 300%, with thousands of new breweries and brewpubs. In the US, at least 7,000 craft breweries have appeared in the US.
As to labels for the craft brew and seltzer industries, improved adhesives are available for these sectors along with shrink-wrap labels. Shrink sleeve applicators and tunnel solutions can offer high flexibility in labeling specialty and seasonal beers, where changing a roll of film can more affordably and conveniently replace large inventories of printed cans. There are innovative label solutions which foster such craft and seltzer beverage manufacturers, which require label flexibility versus those of major liquor and beer manufacturers.
In any event, as a total, carbonated beverage growth is up versus what was found some years ago, when the limited number of majors and private label products offered mostly carbonated soft drinks, and beer alone. Today, we have a highly diverse market for carbonated beverages, with and without alcohol; carbonated water with unique flavors, or not. Therefore, an extraordinary range in carbonated beverages is ever-growing with new flavors, and new manufacturers, now adding to a once relatively flat CO2 demand for carbonated beverages.
Food supplies, food processing and preservation
When thinking of food preservation, this occurs via IQF (individually quick frozen) products, such as convenience/frozen foods as a liquid product, to a gaseous product for MAP (modified atmosphere packaging), snow production, and dry ice applications. The growth of CO2 usage in the food sector is generally thought to be resilient. On the other hand, during the shortages of CO2 (which have been driven by the problems associated with the ethanol and ammonia sectors in the US, UK, and Europe) there is some concern that CO2 borne freezing and refrigeration could be replaced (where possible) by other agents. Such agents include mechanical refrigeration, glycol, and nitrogen. All such agents are not amenable to all CO2 applications, by any means.
The challenge remains to supply CO2 to the customers, particularly those under contract, during times of plant turnarounds, which has been a part of the supply problems in the US and Canada. It is felt such problems will have a supply resolution once turnarounds are completed. More specifically in the US, there seems to be a high demand in the supermarkets for frozen and processed foods, as well as delivered food products.
We know the supply challenges in the UK and Europe have been highly driven by the pricing and availability of natural gas as a feedstock for the production of anhydrous ammonia. In October, the UK CO2 industry struck a deal to ensure supplies to businesses, including those in the food processing sector, and avoid CO2 shortages. CF Fertilizers (CFF), which produces 60% of the UK’s CO2 from its two plants in northern England, temporarily closed its plants in September due to the rapid rise in natural gas prices. But CO2 suppliers agreed to pay CFF, an indirect subsidiary of US company CF Industries, a manufacturer and distributor of agricultural fertilizers, a price for the CO2 it produces that will enable it to continue operating while global gas prices remain high.
Earlier in the pandemic, coalitions sought government help in North America to secure adequate supplies of CO2 for the meat sector, in particular, since it is so critical. Realistically, replacement of CO2 systems in favor of mechanical, would be very expensive and complicated, and in light of today’s difficulty in ordering and receiving hardware such as mechanical freezers, and having them installed, would be the same as all other industries which are facing labor shortages and long production schedules for such hardware.
I see the switch to other forms of refrigeration as unreasonable in many cases, or impossible. In the end, staying with CO2 would make the most sense, since alternate means are often much more expensive, where nitrogen can be so; or the reality of trying to replace less expensive CO2 systems with very costly mechanical systems would make little sense. Further, the portability, and availability of CO2 in meat processing plants which uses rice dry ice, gaseous CO2, and liquid for snow and cryogenic freezers could not be replaced by single or any alternatives, in some cases.
The CO2 shortages today, and earlier in the pandemic, will cure themselves in time. In the meantime, what makes the most sense to me is to seek alternate supplies from other sources, where possible. Further, in light of our ever-growing climate change challenges, maybe economically subsidized solutions for flue gas recovery from all hydrocarbon combustion sources, starting with the power sector, can become sources for merchant CO2. This would create new jobs, supplies of CO2 in strategic locations, and help the environment.
For the gas companies, I recommend working on alternate solutions of supply such as biomass, which will be a power source of the future and via various technologies. This could be a CO2 source which would add to the badly needed expansion of the supply portfolio. Other sources could also be developed in some markets, should this problem become chronic.
About the author
Sam A. Rushing is President of Advanced Cryogenics, Ltd, a major CO2 and cryogenic gas consulting firm operating globally; and a supplier of all types of cryogenic and CO2 equipment to industry. Please contact us for CO2 consulting expertise.