Running On Fumes — CO2 Shortages, Higher Prices Add to Breweries’ Rising Costs — Good Beer Hunting

The shortage has multiple causes which, taken together, have reduced supply and increased costs:

  • Contamination in the supply of CO2 from the Jackson Dome area of ​​Mississippi has rendered this critical region unable to supply the quality of gas brewers need.

  • High summer demand for CO2 has coincided with both planned and unplanned maintenance shutdowns at several ammonia plants nationwide, which are major suppliers of food-grade CO2, according to the Brewers Association.

  • High fuel costs and a shortage of truck drivers means many gas suppliers are tacking on surcharges, or are unable to meet regular delivery schedules.

The Compressed Gas Association does not foresee any improvement in CO2 supply until at least October, potentially sticking breweries with higher prices for another three months. Breweries can conserve and sometimes repurpose CO2, but they can’t make beer without it, so the prospect of running out of gas has some breweries feeling panicked. Still, some report no problems at all: Arizona Brewers Guild director Rob Fullmer says there had been no widespread issues among the group’s member breweries, but that the guild is “following [the situation] with concern.”

For many, prospects have become a challenge taken day-by-day.

“If you had called me yesterday, I’d say we’re in very dire straits but our CO2 company miraculously showed up today and filled our tanks,” says Chris Tkach, owner of Idle Hands Craft Ales in Malden, Massachusetts. He estimates this delivery should last the brewery six to eight weeks. “I want to go out there and hug the driver.”


Higher costs and long delays in obtaining CO2 this summer take place amid beer’s busiest sales season, making any slowdown in production especially difficult. According to the National Beer Wholesaler Association, 40% of annual beer sales occur between May and August, making these the prime months for breweries to maximize their output.

In New Hampshire, a number of breweries are delaying canning runs for a week or debating whether to temporarily close their taprooms as a result of the shortage, according to New Hampshire Brewers Association executive director CJ Haines. That potentially leaves revenue on the table at a time when beer ingredients cost more across the board.

“They’ve told me they’re on fumes and can’t [beer],” Haines says. “They’re starting to ask ‘Am I going to have to close my tasting room today because I’m going to run out of [carbonated beer in] cake?’ If you’re a super small-scale brewery, that’s going to impact you even more because that’s your entire livelihood.”

At Urban South Brewing in New Orleans, CO2 costs have more than tripled in recent months. Brewery founder and CEO Jacob Landry notes that this comes on top of other cost increases for the business like:

And the hits keep coming: There’s little for the company to do to change processes that could reduce its use of CO2. Landry’s current gas supplier doesn’t have the equipment to clean the gas coming out of the Jackson Dome area, and other companies he’s contacted aren’t taking on new clients. “We feel fairly exposed given the uncertainties,” Landry says.

Many breweries, like Urban South, are simply choosing to pay much higher costs for CO2. But Malloy cautions that this can be dangerous in the long term.

“Some breweries will say ‘I guess I have to pay that,’ but no, you can’t afford to,” Malloy says. “If people buy gas at eight times [their budget for it]all of their margin on that beer is now gone.”

At Idle Hands, Tkach says he was so desperate to get his CO2 delivery that he didn’t notice that the company hadn’t invoiced him for the delivery yet; he’s not sure what that delivery will end up costing his company. The brewery had already made changes to its processes to reduce its CO2 use in recent weeks, including moving beer from tank to tank with nitrogen rather than CO2 in order to preserve it solely for carbonation. Even so, before the delivery arrived, Idle Hands was down to its last backup cylinder of the gas.

Haines says the New Hampshire Brewers Association has been in touch with state lawmakers about the issue, but it is not clear what can legislatively be done to improve the situation. As disruptions to supply drag on, her concern grows that the CO2 shortage will turn into what she calls “another toilet paper situation,” referencing the early months of the COVID pandemic in which people worried about toilet paper shortages and began stock pilingcausing panic-buying and actual shortages.

“My fear is that bigger breweries are going to gobble up all the supply that’s left, and that’s a trickle-down effect,” Haines says.

The current state of the CO2 supply chain has caused an increase in interest in CO2 recapture systems manufactured by Earthly Labs, a division of Chart Industries. CO2 recapture allows a brewery to filter and repress the CO2 naturally generated during fermentation and use it to carbonate beer. Amy George, president of Earthly Labs, says the company is currently doubling production of its systems to meet demand caused by the CO2 shortage.

Austin Beerworks in Austin, Texas was one of the earliest breweries to install an Earthly Labs system in 2018, and currently uses it to supply 10-15% of its CO2. If run at maximum use, the system is capable of providing more than half of the CO2 the brewery requires, but brewery co-founder and co-owner Adam DeBower says running the system consistently requires more employee labor than the brewery has been able to dedicate to it, due to staffing difficulties.

The systems are also costly for a small brewery—starting around $90,000 for breweries producing between 5,000 and 20,000 BBLs annually—and aren’t always easy to retrofit to existing buildings. Still, DeBower believes the technology is something the industry should pay attention to as supply chain issues continue and as the US potentially transitions away from extractive industries that supply CO2.

“It’s incredible technology and I truly believe it’s the future of our industry,” DeBower says. “But trying to integrate it into everybody’s brewery at this time, it’s just not possible.”

Time will tell whether this current shortage creates other ripple effects for the industry. This summer, news coverage across the country has highlighted the business challenges facing breweries, from difficulty finding employees thaw aluminum can headaches. CO2 ice cream just the latest example to make headlines. Could this cumulatively have a chilling effect on new brewery openings?

Data from Brewers Association chief economist Bart Watson shared during his annual mid-year report earlier this month showed that the rate of brewery openings on a rolling 365-day basis has slowed since the end of 2018, from a high of 1,200 in 2018 to less than 600 in mid-June 2022. Watson’s modeling indicates that, given current trends , the number of breweries in the US is likely to plateau in early 2024 at a peak of roughly 9,500.

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