Aussies might go thirsty

Australia: Soft drinks lose their fizz as plants shut down

Plant shutdowns at Orica and Origin Energy have caused a shortage of carbon dioxide used for the carbonation of soft drinks at the height of summer.

Supply Chain Review,

10 January, 2012

Australia is in the middle of their peak holiday period, which just happens to coincide with the start of the summer heat wave, a time when the nation's $3.2 billion soft drink industry usually experiences its busiest period.

“Our trade doubles at this time of year,” says Mark Raynes, Manager of Ritchies Supa IGA in the Melbourne beachside suburb of Balnarring.

But a supply shortage of the gas used to carbonate soft drinks is causing havoc for soft drink companies. 

“I'm out of stock by 9.30 in the morning,” says Raynes. “Telling people you have no drink mixers is like saying there is no champagne on New Year's Eve.”

Ritchies isn't the only retailer affected by the shortage. Woolworths Ltd and Wesfarmers Ltd, two of the largest retail chains in the nation, have reported lower sales of soft drinks and mixers.

The shortage has been attributed to the closure, since August of Orica's Kooragang Island ammonia plant following an industrial accident.

The plant makes the raw gas required for carbonation as a by-product of explosives production. Carbon dioxide is often found in petroleum fields and is removed during processing into fuel.

In addition, the Origin Energy processing plant at Lang Lang southeast of Melbourne, which also produces carbon dioxide, could be shut for up to four months as part of a planned upgrade to its offshore natural gas project.

Schweppes Australia has already registered a loss in sales, with Coca Cola Amatil expecting similar losses if the Kooragang restart misses its deadline.

Woolworths has localised supply issues in Victoria and Tasmania, with Schweppes trying to source inventory from other plants.

“There are a few issues that have hit at once – industrial action, the shortage of carbon dioxide gas and some problems with our normal logistics supply into Tasmania,” says Woolworths spokeperson Clare Buchanan.

Wesfarmers Ltd, owner of the Coles supermarket chain, is making up for the Schweppes shortage with its own house brands.

“We still have product on the shelves but not our full range and not as much as we would like,” confirms Jon Church from Coles. 

Unless other supply channels can be found for the carbon dioxide, Australians can expect to see even greater shortages in their favourite soft drinks.

Not good news for those that enjoy a gin and tonic on a warm summer's night