How is the CO2 shortage impacting food and beverage businesses?
An international shortage of carbon dioxide gas (CO2) is starting to bite the European food and drink industry.
The common gas improves the shelf life of packaged foods and is used to create dry ice for transporting frozen food.
It is also used in guns for killing farm animals and adds fizz to carbonated drinks.
At least five CO2 producers in Europe have paused production to conduct maintenance, which has led to shortages in the UK and abroad.
Speaking of the shortage, the British Poultry Council said that it could have a “potentially huge effect” on food production.
Meanwhile, the Food and Drink Federation also said it would affect much of the “farm-to-fork supply chain.”
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Booker, the UK’s biggest wholesaler which supplies many independent bars, shops and restaurants, said that it has begun rationing beer and cider supplies amid the ongoing CO2 gas shortage.
The firm - which was bought by Tesco earlier this year - said it will restrict customers to 10 cases of beer and five cases of cider and soft drinks per visit, blaming the "international shortage of CO2."
In a statement, Booker added: “We are currently working hard with our suppliers to minimise the impact for our customers and to optimise availability with the stock that is available.”
Dutch beer maker, Heineken, said that its John Smith's Extra Smooth and Amstel brands had also been hit.
Coca-Cola is also facing disruption to its supply chain. The world’s largest beverage company said that it has "temporarily paused” the production of some soft drinks due to the shortage of CO2 gas in the UK.
Supermarkets have also been impacted by the CO2 crisis. Online grocer Ocado said that the gas shortage is “limiting its ability” to deliver frozen food as they have a shortage of dry ice.
In an online warning, Ocado said: “We’re sorry! Like other retailers, the UK-wide CO2 shortage is limiting our ability to deliver frozen items. The problem should be sorted very soon.’
Alex Saric, smart procurement expert at Ivalua, said: "This CO2 shortage couldn’t have come at a worse time for the UK. It's summer, and Brits have got World Cup fever, which will be driving higher than usual demand for soft drinks and beer.
“The likes of Coca-Cola and Amstel have paused production due to the shortage, meaning this could have an impact later in the summer. These shortages come as a result of too many European CO2 production facilities closing for maintenance, something that could have been better planned for.
“It’s not clear how long the shortage will last, so organisations affected need to work closely with their suppliers to find a solution or try to find an alternative short-term supply to ensure that this doesn’t impact on consumers,” he added.
“Organisations must enable proactive and scalable supplier collaboration and visibility to ensure such supply challenges don't occur again.”
Pandora and IBM digitise jewellery supply chain
Pandora has overhauled its global supply chain in partnership with IBM amid an ecommerce sales boom for its hand-finished jewellery.
The company found international success offering customisable charm bracelets and other personalised jewellery though its chain of bricks and mortar retail destinations. But in 2020, as the COVID-19 outbreak forced physical stores to close, Pandora strengthened its omnichannel operations and doubled online sales.
A focus on customer experience included deploying IBM’s Sterling Order Management, increasing supply chain resiliency and safeguarding against disruption across the global value chain.
Pandora leverages IBM Sterling Order Management as the backbone it its omnichannel fulfilment, with Salesforce Commerce Cloud powering its ecommerce. Greater automation across its channels has boosted the jeweller’s sustainability credentials, IBM said, streamlining processes for more efficient delivery. It has also given in-store staff and virtual customer service representatives superior end-to-end visibility to better meet consumer needs.
Jim Cruickshank, VP of Digital Development & Retail Technology, Pandora, said the digital transformation journey has brought “digital and store technology closer together and closer to the customer”, highlighting how important the customer journey remains, even during unprecedented disruption.
"Our mission is about creating a personal experience and we've instituted massive platform changes with IBM Sterling and Salesforce to enable new digital-first capabilities that are much more individualised, localised and connected across channels and markets,” he added.
Pandora’s pivot to digital
The pandemic forced the doors closed at most of Pandora’s 2,700 retail locations. To remain competitive, it pivoted to online retail. Virtual queuing for stores and virtual product trials via augmented reality (AR) technology went someway to emulating the in-store experience and retail theatre that is the brand’s hallmark. Meanwhile digital investments in supply chain efficiency was central to delivering on consumer demand.
“Consumer behaviour has significantly shifted and will continue to evolve with businesses needing to quickly adapt to new preferences and needs,” said Kareem Yusuf, General Manager, AI Applications and Blockchain, IBM. “To address this shift, leading retailers like Pandora rely on innovation to increase their business agility by enabling and scaling sustainable supply chain operations using AI and cloud.”
Yusuf said Pandora’s success was indicative of how to remain competitive by “finding new ways to create differentiated customer experiences that protect their enterprises from disruptions to help mitigate risk and accelerate growth”.