With all the unprecedented events that occurred in the world in the last couple of years, the last word anyone would probably want to read in a headline is “volcano.” However, you can shelve some of that fear, as the rest of that headline is probably the farthest thing from what you would expect: that a long-extinct volcano may be partially responsible for increases in beer cost this fall.

The Jackson Volcano, to be specific, sits 2,900 feet beneath the city of Jackson, Mississippi, and serves as a significant supply of carbon dioxide for commercial use in the US. Unfortunately, during the summer, contamination of the volcano by gas from a nearby mine effectively made the source unusable. As a result, experts have discussed the potential implications of a carbon dioxide shortage since 2020. Still, the loss of the Jackson Hole source has only exacerbated the issue and left breweries and food processors to figure out how to implement necessary adjustments in their businesses to survive.

Carbon dioxide is a staple in the brewing industry. It is used to give the beer its carbonation, remove air to protect the product from oxidation, and maintain tank pressures, to name some uses. Some suppliers do what they can to keep the supply steady for their existing customers by not accepting any new accounts, while others deliver what they can as the supply ebbs and flows. The food and beverage industry is no stranger to supply issues these last couple of years, with breweries already having had to deal with shortages in aluminum for cans, certain grains, and even label print-run backlogs.

This issue is poised to have the most significant impact on small breweries, that don’t have the same capital or physical space, to implement alternatives to combat rising prices. One such alternative, which comes with a hefty price tag of $70,000 to $150,000, is a CO2 recovery system. Carbon dioxide is created naturally during fermentation but not in a clean and usable form, which is where the CO2 recovery system comes into play. Given the supply shortages and cost increases, the recovery system could theoretically pay for itself over time, but it is a high cost to pay up-front.

Another alternative is to migrate to using nitrogen instead of carbon dioxide. These “nitro-beers” are already becoming more commonplace in the market due to nitrogen being a plentiful inert gas and, more importantly, cheaper. However, switching to nitrogen will result in a difference in product, as nitrogen bubbles that form after pouring these beers are smaller than CO2, creating a foamier head and slightly different mouth-feel while drinking.

Experts are not entirely sure whether an industry-wide beer shortage is on the horizon but are cautioning all small and large breweries to keep an eye on the issue as it develops to ensure more brewery doors don’t close as a result.

If you have any questions, please don’t hesitate to email us.

About the Author

Evan Georgett, Senior in the Assurance Practice at SobelCo working with mid-sized, privately held businesses in the food and beverage industry. Evan assists clients with their inventory and financial statement needs, as well as providing strategic planning for their corporations. His goal is to consistently provide excellent client service and tailor the firm’s services to the company’s needs, while taking into account the unique challenges and opportunities for closely-held business owners.

For more information contact Evan Georgett at evan.georgett@sobelcollc.com.