Fears have arisen over a shortage of carbon dioxide production in Europe, which could have trading implications for a number of stock market-listed food and beverage names, whose beer, fizzy drink and barbecue-related sales could end up falling flat over the summer.
A shortage of CO2 among some of the largest suppliers in north-western Europe has emerged, endangering an expected boost to beer and soft drink sales stimulated by interest in the World Cup in Russia over an expected balmy summer.
One of the largest sources of food-grade CO2 in Europe has traditionally been ammonia plants. The shortage is the result of at least five gas producers across northern Europe shutting down for maintenance during the early summer months.
Major liquid CO2 suppliers including Praxair, Messer, Air Liquide and Linde have all been affected by the issue, according to Gasworld, the first to report this troubling issue, which said the UK was the hardest hit with only one major CO2 plant operating.
WHICH STOCKS COULD BE AFFECTED?
Accordingly, the British Retail Consortium (BRC) has written to major retailers to warn them that drink and meat supplies may be affected, as at least one UK gas supplier has had to ration orders.
Retailers’ fresh food supplies would be affected as CO2 is used in packing fresh meat and salads, as well as in the slaughtering process for poultry and pigs. Publicly-listed suppliers ranging from Cranswick (CWK) and Hilton Food (HFG) to Greencore (GNC) and Bakkavor (BAKK) may be worth monitoring over the months ahead.
Others ranging from lager leviathan Heineken and soft drinks groups Britvic (BVIC), A.G. Barr (BAG) and Coca-Cola HBC (CCH), grocers Tesco (TSCO) and Morrison (MRW) and pubs groups Fuller, Smith & Turner (FSTA), Greene King (GNK) and Marston’s (MARS), could potentially be impacted if meat and drink supplies run short for a prolonged period.
THE INDUSTRY'S RESPONSE
British Beer and Pub Association CEO Brigid Simmonds says that ‘given the time of year and the World Cup, this situation has arisen at an unfortunate time for the brewing industry’.
She adds: ‘The BBPA has been made aware of a situation affecting the availability of CO2 across Europe, which may already have impacted beer producers nationally and which now threatens to impact pubs.’
Meanwhile, Gavin Partington, director-general at the British Soft Drinks Association, explains the CO2 shortage across northern Europe is impacting a wide range of businesses across the food and drink sector.
Partington adds: ‘Soft drinks producers in the UK are taking active steps to maintain their service to customers, including working with their suppliers to mitigate the impact as well as looking at alternative sources.'