CO2 shortage curtails revenue growth at Britvic
A lack of CO2 prevented Britvic from fully capitalising on the sales opportunity provided by the summer heatwave that has given Brits a raging thirst.
The Pepsi and Robinsons supplier grew UK sales by 8% in Q3, a strong performance, but it said “the well-documented shortages of carbon dioxide impacted the wider food and drink industry”.
Despite this, the soft drinks giant said it was “leverage its broad portfolio of brands to deliver growth in the UK and Ireland despite the disruption”.
The star performers were J2O and Robinsons, which both enjoyed double-digit growth on the back of innovation and ad campaigns.
But supermarket stocks of Pepsi Max ran low and some shelves were barren after unplanned ammonia plant closures across Europe led to a CO2 shortage.
Chief executive Simon Litherland said: “Britvic has delivered a strong underlying performance in the third quarter, through continuing outstanding execution of no sugar carbonates and substantial growth from our stills brands.
“Whilst the industry-wide shortage of carbon dioxide held back our ability to fully capitalise on the exceptional weather in GB and Ireland, we leveraged the breadth and strength of our portfolio to moderate the impact. Consequently, we remain confident of achieving market expectations for the full year.”
Multiple industries, including soft drinks, beer, cider and food, have been impacted by the European CO2 shortage, and BWS sales during the World Cup were seriously threatened.
It could become a “longer-term” problem as “fragile” supply arrangements struggle to cope in outages, according to City analyst firm Liberum.
“Outside of the ammonia industry there are two possible sources of long-term merchant CO2 but at this stage no obvious prospect of a major source in Europe,” Liberum said.
“Whilst this year’s supply problems will ease as ammonia plant maintenance shutdowns come to an end, the source of the problem is unlikely to be resolved quickly.”
A Swiss technology firm has responded by launching a new scheme to capture carbon dioxide straight from the air.
Climeworks’ new plant is a world first and it plans to roll them out with a view to supply drinks producers.
Chief executive and co-founder Jan Wurzbacher said: “Ten years ago people said it's not possible and it's too expensive, today we've proved it's possible and people still say it's expensive.
“Give us another five years and they will also stop saying that. It’s clear that industries are striving for CO2 at the moment so there is clearly a market for it.”