The beverage industry relies on distributors and equipment suppliers for the carbon dioxide (CO2) and nitrogen (N2) used to dispense soda, beer, wine, coffee and kombucha. Successful brewers and bottlers are constantly developing products to meet changing consumer demand, which in turn trigger new requirements for gases and dispensing equipment. Over the last 18 months, those servicing the beverage industry also have had to react and adapt to pandemic related challenges. To get a better idea of market trends and what we might see in the year ahead, gasworld spoke with associations, equipment makers, and distributors that support the Beverage Industry.
LN2 doser markets on the move
Liquid nitrogen doser systems are used to nitrogenate packaged beer, cold brew coffee, and other beverages. Chart Industries, a leading provider of liquid nitrogen (LN2) dosing solutions, has seen continued growth in this market. Increased demand for LN2 dosers is being generated by producers of canned drinks of various kinds. Richard Rosik, Sales Manager of Chart’s Specialty Markets segment told us, “As we gain traction with new markets and new products for doser applications, we anticipate a healthy growth rate from the previous year for this product line.”
While pandemic related supply chain issues have been a concern, Chart reports it has been able to meet its customer demands while keeping everyone safe.
Kombucha, RTD (Ready To Drink) cocktails, and CBD infused drinks are LN2 doser markets that are gaining traction, according to Chart. Rosik reported: “As more US states legalize cannabis, we are seeing growth in nitrogen dosing for packaging of other cannabis products. Nitrogen preserves the quality and extends product shelf life.”
LN2 dosing is being used as a solution for beverage producers concerned with Total Packaged oxygen (TPO) as well. Rosik explained, “Reducing TPO increases shelf life, and nitrogen dosing is the best way to do this.”
Gas blending technology
McDantim, Inc. specializes in developing and manufacturing technology for beverage producers. It is known for its ability to create solutions for on-site gas blending technology to meet new market demands. The company felt the impact of the pandemic on its customer base. Kayla Mann, McDantim’s Sales & Marketing Director, reported, “With bars and restaurants reducing their hours or closing because of shutdowns, the beverage market suffered and the introduction of new beverages and related equipment was stalled.”
As the market reopens, however, McDantim expects to see more businesses in the draught beverage industry. Mann explained, “As the draught beverage industry expands, the application of mixed gas, straight carbon dioxide, or straight nitrogen becomes more critical to the maintenance of beverage quality at the source. While our equipment maintains correct carbonation levels in certain beverages, there are additional options for establishments to expand their draught beverage program. We’ve seen an increase in kegerators being utilized for kombucha at breweries to offer a non-alcoholic craft beverage. We’ve worked with local establishments on their draught wine systems as well, giving the public more options for great wines at different price points.”
Nitro beverage solutions
AC Beverage Inc. is a draught beer and beverage equipment specialist that supplies products and services across the US. The company has been instrumental in developing technology for the beverage industry, including nitrogen generators and LN2 dosing systems for packaging. According to Charley Kleinrichert, the company’s founder, nitro-infused beverages have been growing in popularity for years: “Sales of nitro beers, such as Guinness and Left Hand, have been gaining market share for a while. In the past few years, we have seen demand grow for nitro cold brew coffee. Now, the nitro cold brew category is expanding to include teas and cocktails.”
The company reports it experienced a fall in demand for all beverage dispensing equipment at the height of the pandemic due to off-premise restrictions. However, production and packaging solutions actually grew to support demand.
Today, Kleinrichert said, “The LN2 doser market shows steady growth as packaged nitro beverages continue to evolve. The quality benefits of LN2 dosing are becoming understood by multiple industries, including applications used to reduce oxygen in the packaging process.”
The company also sees the N2 generator market growing at a steady rate, as it has for more than 20 years. Kleinrichert explained, “The cost associated with transporting high pressure cylinders continues to rise. N2 generators eliminate the need for cylinder exchange, which provides faster service and enhanced safety at a lower cost.” He continued, “AC Beverage has been expanding its range of N2 generators beyond beverage dispense to include commercial applications. Breweries can now use N2 produced on-site to move beer for tank transfers or purge tanks and kegs. This has been done using CO2 which can be expensive and ultimately gets released into the environment!”
Kleinrichert believes N2 gas will continue to replace CO2 as a utility gas for multiple applications in beverage markets. Most Post-Mix soda systems utilize Bag-In-Box systems that operate with CO2 driven pumps. These pumps discharge CO2 gas into the atmosphere each time a soda is poured. N2 can be utilized as the pump gas providing a clean and dry gas source.
“Purging and counter pressurizing tanks and kegs using N2 will become more common,” related Kleinrichert. “Our latest innovation is the Rack AeriAle®. This hybrid system incorporates advanced technology to extract barrel-aged beer that is chilled and infused with nitrogen and CO2 gas. Different gas blends can be selected, and you can change the taste of your beer on the fly, which enables a truly unique tasting room experience.”
A fast growing beverage market
Kombucha, a tangy, sweet and highly nutritious fermented beverage, is gaining in popularity. According to Kombucha Brewers International (KBI), kombucha is the fastest growing functional beverage category and has been on an upward trajectory since 2014. It is expected to reach $3.5 billion by 2025 with more than 700 commercial brewers in the United States alone.
Brewed at home, kombucha does not require any added CO2 to reach its natural effervescence. Commercial bottlers, however, do add CO2 to the process. Hannah Crum, President of KBI, explained: “The equipment involved in brewing kombucha commercially is similar to that used in brewing beer. Smaller producers will start by force carbonating in the keg. As they ramp up production, brewers move to brite tanks and pipe the product from the tank using counterpressure hoses. Brite tanks are primarily used to clarify and carbonate kombucha.”
Crum continued, “The largest volume commercial kombucha makers use in-line carbonation, the process of dissolving CO2 into the kombucha as it is being pumped from one vessel to another at the bottling plant. The decision on what process to use is typically the result of a balance of cost, labor and volume.”
Nitrogen can also be mixed with CO2 in the kombucha brewing process as it is with beer. Adding nitrogen smooths out tart or bitter tones. Crum reported that brewers using mixed gas are those generally sourcing their gases from a beer CO2 supplier: “We haven’t seen a proliferation of “Nitro Kombucha” yet but it may be in our future.”
Covid disrupted the kombucha supply chain and a few brewers went out of business, but today business is brisk. Crum explained: “Supply chain issues have continued to plague all consumer packaged goods products. For our brewers, bottles and even cans have been difficult to come by, or, are a lot more costly. We heard some whispers about CO2 supply issues but not in the same way that has impacted other carbonated beverages.”
Today, by all accounts, kombucha is moving from being a niche to a mainstream beverage, which will open up opportunities for gases and related equipment suppliers. Considering the emphasis on “better for you” products, KBI anticipates consumers will continue to drive demand for healthier products like kombucha.
By all accounts, there will be plenty of opportunity for growth for suppliers of gases and related equipment in the Beverage Market in the year ahead. As we emerge and adapt to a post pandemic world, consumer demand for a warm cup of cold brew coffee, a health-boosting sip of kombucha, or a toast to good health with a beer should keep business brisk for companies that supply beverage producers.