- The Washington Times
Friday, August 12, 2022

Matt Bailey, co-owner of Odell Brewing in Colorado, says it’s never been harder to keep his beer from going flat.

An industry shortage has driven the cost of carbon dioxide — the gassy compound that keeps his brew bubbly — 40% higher than what the beer-maker budgeted for this year. The price spike caused the Fort Collins brewery a 35% drop in beer production since June.

“It’s probably the worst we’ve ever experienced,” Mr. Bailey said. “It has the potential of bringing us to a screeching halt.”

The 41-year-old plant manager is substituting nitrogen for CO2 in the canning, kegging and packaging process. He also is selling more packaged beer, stored in coolers that he says will run dry in two-three months.

Odell is one of many small craft breweries facing extinction by the end of this year because inflation drove up the production costs of supplies such as grain, cardboard and cans.

According to the Brewers Association, the growing CO2 shortage stems from pandemic-driven supply chain issues — and from the recent contamination of an extinct volcano in Jackson, Mississippi, that contains much of the nation’s natural supply.

“While many of the specific issues in the market are new, CO2 has experienced various supply chain challenges since the beginning of the pandemic,” the small brewers’ trade group said in a statement. “This is one of many areas where small brewers are facing cost increases and availability issues.”

As CO2 demand spikes in the summer and production facilities shut down for routine maintenance in the fall, the Compressed Gas Association does not see any relief until at least October.

“Historically, there is always tightness in the summer because the demand for products like beer, soft drinks and dry ice, which all use CO2, increases in the warmer weather. This year’s record high temperatures have only intensified that demand,” the association said in an email.

Meanwhile, Boston-area Night Shift Brewing announced on Facebook this month that it’s planning for some layoffs in October as its CO2 shortage lasts “possibly more than a year.”

Jeff Ramirez, the co-founder of Denizens Brewing Co. in Maryland, says his two breweries in Silver Spring and Riverdale are also hurting. They have been unable to get the CO2 refills they require every two to three weeks to maintain normal production.

Denizens’ chief beer officer said the company is paying more for CO2 when they do get it, thanks to increased fuel costs and an 11-cent surcharge for each pound.

“Due to the increase in cost for CO2 and almost all other materials required for brewing we have to adjust the way we produce our beer,” Mr. Ramirez said.

Michelle Minton, a senior policy analyst at the free-market Reason Foundation, noted that small brewers are also competing with the fertilizer industry for CO2, which is widely used in food production.

“There is no simple fix for this or other supply-chain issues,” Ms. Minton said.

According to economists, some craft brewers may just have to raise beer prices to keep their bubbles — and their businesses.

“Nobody wants to drink flat beer,” said Victor V. Claar, an economist at Florida Gulf Coast University.

• Sean Salai can be reached at ssalai@washingtontimes.com.

Copyright © 2022 The Washington Times, LLC.