As the ongoing CO2 shortage continues to impact the UK drinks industry, the implications for brands and businesses in the sector are significant. Jonathan Stott, general manager of CO2Sustain, considers the challenges and overall impact of one of the most difficult economic scenarios to arise in decades, and looks at some of the other recent trends affecting the sector.
The CO2 shortage is a crisis that isn’t going to relent any time soon.
What we are seeing is far worse than the CO2 shortage that hit the UK during the summer of 2018. In fact, I’d even go as far as saying that the issues resulting from the CO2 shortage in 2018 are almost insignificant compared to the problems being experienced now.
We have seen a 200% increase in enquiries since the start of this year, as many soft drinks manufacturers and bottling businesses look to protect their CO2 stocks.
With CO2 supplies currently only available from one UK source, costs are multiple times higher than they were just a couple of years ago and a raw material that was often not even accounted for is suddenly at the top of the shopping list.
Manufacturers are looking for new ways to mitigate the risks associated with this shortage and are consequently exploring all avenues.
Plastic Packaging Tax
Manufacturers and brands in the soft drinks sector are making more concerted efforts to reduce the volume of plastic packaging they use.
This has never been a more important consideration, especially since the introduction of the Plastic Packaging Tax, a new Government led legislation that came into effect on April 1st.
The levy is designed to provide incentives to businesses to use more recycled plastic in the production of plastic packaging.
‘Lightweighting’ is a technique that aims to drastically reduce plastic consumption in the beverage industry by using thinner plastic in the packaging manufacturing process.
Reducing the amount of CO2 in carbonated beverages contained inside plastic bottles further enables the lightweighting process, helping businesses not only to reduce CO2 usage and associated increased costs but also hit their environmental targets.
Carbon neutrality
Another key business driver that has come to prominence in recent years is the issue of carbon neutrality. The addition of CO2 to a beverage or as part of the manufacturing process can negatively impact environmental credibility.
A more recent trend to emerge is the creation of dedicated CO2 task forces in many businesses. Specifically assembled to eliminate areas where CO2 is used in the supply chain or manufacturing process, their aim is to reduce reliance on the gas and replace it with options that are cheaper and more readily available, such as nitrogen.
An evident trend in the soft drinks market of late – and a direct consequence of the CO2 shortage – is reduced innovation in new product development (NPD). We assume that brands are holding back on innovation in carbonated beverages as they feel the need to preserve CO2 stocks to service their existing product ranges.
Cost and availability of CO2 has seemingly hit NPD and innovation in the carbonated category very hard and for the first time in a long time, we are seeing fewer exciting new carbonated beverages and variations joining the market. The focus appears to have switched to innovation in the still beverage product category.
This is a challenging time for UK beverage manufacturers and the support businesses around them. By seeking out innovation the industry should be confident it can overcome these challenges.
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