Rising CO2 costs 'hugely challenging'

By Rebecca Weller

- Last updated on GMT

Turbulent times: Northern Monk Founder Russell Bisset says rising CO2 costs make budgeting and planning challenging for breweries (Credit: Getty/Monty Rakusen)
Turbulent times: Northern Monk Founder Russell Bisset says rising CO2 costs make budgeting and planning challenging for breweries (Credit: Getty/Monty Rakusen)

Related tags Beer Brewing Craft beer

Uncertainty regarding rising CO2 costs has created “hugely challenging” and “turbulent” operating conditions for breweries, according to Leeds based craft brewery Northern Monk co-founder Russell Bisset.

Bisset stated while costs had stabilised somewhat more recently, the company’s CO2 prices increased by some 500% on Thursday 1 September, costing 15 times more than 2021 and around £2,500 a tonne, making it “incredibly difficult” to plan for the business.

He added: “One of the most crucial things [for businesses] is to be able to plan and budget and forecast.

“In September alone, we had additional cost of around £60,000 for our CO2 usage that weren't budgeted for.

“The amount of uncertainty we're operating in at the moment is hugely challenging for ourselves and anyone else in the industry.

“A lot of businesses are in this boat; all industries are going through some period of real turbulence and uncertainty and this just exacerbates it.”

Not feasible 

Despite Northern Monk sales increasing by 20% year-on-year, hitting £12.9m in the 12 months to September, according to MCA Insight, the craft brewery founder explained there was a “cash impact” and “some fallout”, particularly for the first quarter of 2023, to come in the aftermath of CO2 cost increases. 

However, to combat this, Northern Monk has been trying to reduce its CO2​ usage as much as possible, substituting with nitrogen where possible, and fast-tracking planned works regarding CO2 efficiency.

Though Bisset explained this was more difficult for smaller breweries which may not find “super expensive” solutions accessible.

He said: “Smaller breweries are more adversely impacted or disproportionately impacted versus large breweries on this.

“We're kind of in medium scale category of craft brewers these days, but the big guys that are able to put CO2 recapture solutions in place, which is something we really want to do and [are part of] our ESG plans, but the solutions are super expensive and not really feasible for accessing by [smaller breweries].

“Beer has been around for thousands of years; I don't think it's going anywhere.

“As long as you are making truly world class beer, then I think we'll be okay. But certainly, there probably will be some fallout and it will be really challenging.”

Unprecedented headwinds

To help breweries through this turbulent time, Bisset urged the Government to be understanding and offer more sector specific support, whether it be working with the CO2 industry to discover solutions or providing financial assistance.

Furthermore, Bisset added if CO2 costs were to be maintained at this level, he feared a lot of brewers would no longer be able to operate, but he was trying to find positivity and growth in the “headwinds” while keeping “quality at the forefront” of the business.

He said: “We've had three years of real unprecedented headwinds at this point, but we saw opportunities and ways in which we could pivot the business. I think at this time it is more difficult to see silver linings, but our focus is just to keep quality at the forefront of everything we do.”

This comes as the Energy and Climate Intelligence Unit (ECIU) last week revealed the price of a tonne of liquid CO2​​ had risen by almost 3,000% compared with a year ago.

British Beer & Pub Association (BBPA​​) chief executive Emma McClarkin said: “A guaranteed supply of CO2 is essential for operations across pub and brewing businesses, but currently extreme volatility in wholesale energy prices is resulting in unprecedented price fluctuations and uncertainty of supply for our industry.

“Alongside extreme energy costs and other inflationary pressures our pubs and brewers are being forced to make extremely tough business decisions, with many not being able to plan even a week or two in advance and at a point where such preparation is vital to prepare for the festive trading period.”

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