Dive Brief:

• A shortage of commercial-grade carbon dioxide (CO2) supply in Europe is straining supply chains. In the past week, several food and beverage industry stakeholders — from Heineken to Tesco — reported a lack of supplies, The Guardian reports.
• At least in the U.K., the shortages are caused by a lack of CO2 producers with currently open plants. Gas World explains shortages are routine in the summer due to scheduled plant maintenance, but this year, more facilities in Western Europe closed — or closed for longer — to avoid selling supply at unattractive margins.
• Some firms with their own sources of CO2 — AB InBev, for example, extracts the input from its own brewing process — are less affected. But companies without internal options are suffering. The shortage could halt 60% of poultry processing plants in the U.K. "within days" if it continues, The Grocer reports.

Dive Insight:

It may just be the worst time for soccer fans in Europe: just as their teams vie to secure spots in the knockout stage of the World Cup, supporters may find themselves unable to celebrate their goals with a beer.

Perhaps, since the Netherlands are not playing this year, Heineken saw it fit to deprive its neighbors of its Amstel and John Smith's Extra Smooth brands. Call it a national crisis.

Europe may be trying to control greenhouse emissions, but it needs commercial-grade CO2 as an input for many of its food supply needs. The gas helps do everything from fizzling soft drinks to wrapping raw chicken in just the right environment to prevent spoilage.

We are aware of issues with the current supply of CO2 across Europe. CO2 is an important input in food processing and retailers are working hard along with suppliers to ensure food availability is maintained. The majority of food products are unaffected by the shortages in CO2.

— BRC (@the_brc) June 21, 2018

Behind the shortages, however, lies a story of a supply crunch aggravated by a surge in demand.

On the demand side, heat waves and the World Cup have increased the demand for beers at pubs and grocery stores. But the real issue started before the Cup, as the rise of craft breweries boosted the demand for the critical CO2 ingredient, The Grocer explains.

But the supply-side evidently did not catch up. Commercial-grade CO2 in Europe, after all, is but a byproduct for many of the key suppliers, which primarily produce ammonia for fertilizers, Gas World notes. If ammonia prices fall (as they did), production tends to follow suit, and so does the waste that turns into sellable gas.

The dynamic is aggravated for island countries like the United Kingdom, where a channel and a sea limits the amount of CO2 imports typically sent to the country. Spain, France and Portugal may receive shipments by truck if their domestic plants close, but a seaborne order takes longer to coordinate.

It's a perfect storm at just the wrong time for Europe. Soccer fans at home can rest easy, however, knowing even restaurants in Moscow are running out of beer.