Italian fizzy drinks risk falling flat as C02 runs short

By Elvira Pollina

MILAN (Reuters) - Italian drinks companies are facing a shortage of the carbon dioxide (CO2) they need to put the fizz into their cans and bottles this summer as some gas producers cut output in response to rising energy costs.

CO2 is a byproduct of the ammonia produced by chemicals groups for use in the manufacturing of fertiliser, engineering plastics and diesel exhaust fluid.

Major chemicals companies have scaled back their operations in the face of soaring energy costs. These include Norway's Yara, which has put a brake on its ammonia and urea output at its site in the northern Italian city of Ferrara.

"Our suppliers have informed us they are struggling to find CO2 because the Ferrara plant operations are curtailed due to high energy costs," said Alberto Bertone, CEO and chairman of Italian mineral water firm Acqua Sant'Anna.

Number three in the country's mineral water market, Acqua Sant'Anna, based near Turin in northwest Italy, had to suspend part of its usual production in response to dwindling CO2 supplies, Bertone said.

The shortage has become more acute over the past three weeks, he added.

"Sometimes we manage to intercept some (CO2) shipments around Europe, but the task is getting increasingly difficult as many industry peers are facing the same problem."

Spared from the initial impact of shortages, Sanpellegrino, part of international consumer goods group Nestle, has also now been forced to trim its production, the company said.

"With regard to the problems experienced by companies in the beverage sector due to the lack of CO2, the Sanpellegrino Group informs that it has noticed decreases in the supply of carbon dioxide and has taken steps to adjust production," it said in a statement to Reuters.

Sanpellegrino is a familiar name across Europe with its eponymous water and fizzy orange and lemon-flavoured drinks.

TEMPORARY SHORTAGES?

Britain suffered shortages of CO2, also used in the meat industry, last autumn after one of its major fertiliser makers cut production.

Italian soft drink industry lobby Assobibe, whose members include global players such as Coca-Cola and PepsiCo, paints a picture which is compounded by a seasonal spike in demand for drinks over the summer months.

"An increased number of beverage groups, including big and medium ones, have flagged their concerns about the current situation in the CO2 market", said Assobibe chairman Giangiacomo Pierini.

"It's hard to say whether some beverages will temporarily disappear from supermarket shelves. But at some point companies may be forced to make their choices," he added.

Pierini, an executive at bottling company Coca-Cola HBC, said at present his firm is not experiencing any issues at its sites in Italy where it produces some of the carbon dioxide it needs, while its suppliers have confirmed their deliveries.

(Reporting by Elvira Pollina; Editing by Keith Weir and Janet Lawrence)