From the (Home) Business Desk ... COVID-19 threatens beverage industry

We live in a fragile economic ecosystem in which a change in one sector of the economy can have a devastating ripple effect in many other sectors.

We all know the COVID-19 pandemic has led to numerous business closures -- both permanent and temporary -- which has, in turn, contributed to an economic contraction and ballooning unemployment.

It has also interrupted the nation's food chain due to shutdowns of meat, pork and poultry production facilities, and there's been a run on toilet paper, paper towels, hand sanitizer and disinfectant wipes. Many grocers and other retailers have resorted to rationing to keep products on their shelves and make them available to as many customers as possible.

But did you know the coronavirus outbreak is a threat to the beer and soft drink industries?

That's because Americans aren't driving as much as they used to.

Wait. What?

That's right. Allow me to explain.

More than 30 million Americans (that's more than the population of Texas) filed for unemployment benefits between mid-March and the end of April. They aren't driving to work. Millions of others are working from home and thousands of school systems have shut down, meaning school buses aren't running. And, of course, most Americans have been under state-mandated "stay-at-home" orders for weeks as the nation "flattens the curve" of the coronavirus outbreak.

Because we haven't been driving as much as we used to, we aren't buying as much gasoline as we used to, either, despite prices that have fallen below a dollar a gallon in some places. That, coupled with overproduction in the Middle East, has led to historically low prices for crude oil and has spelled disaster for U.S. oil production. At one point a few days ago, West Texas intermediate crude was trading for negative (yes, I said negative) $37.63 a barrel.

In short, it is costing American oil producers more to stay in business than to shut down. Refineries have cut gasoline production because of reduced demand. That has also led to a decline in the production of ethanol, a bio fuel commonly derived from corn.

This has caused ethanol facilities in the United States to cut back or stop production. According to the U.S. Energy Information Administration (EIA), ethanol production is at its lowest level since the agency began reporting ethanol statistics in 2010.

So what does that have to do with beer and soda? The answer is a byproduct of ethanol production is carbon dioxide (CO2), which is used to put the "fizz" in carbonated beverages.

Ethanol producers sell carbon dioxide to beverage makers and because they're producing less of it, they're increasing the price. According to industry reports, beer brewers are paying 25% more for carbon dioxide now than they were a month ago.

By the way, I spoke last week to Courtland Kohlfeld, sales manager at Kohlfeld Distributing, and Kevin Patterson, business manager at River Eagle Distributing, and asked whether the rising cost of carbon dioxide is affecting beverage prices here. The answer, so far, is no. However, both said their sales to restaurants and bars have taken a hit because they've been closed for a month and a half.

Patterson and Kohlfeld said their distributorships have been taking a "proactive" approach with restaurant and bar owners helping them prepare to reopen -- even on a limited basis -- beginning this week.

"It will be nice when everything gets going again," Patterson told me. "But we've never dealt with something like this before. It's hard to make a plan when you don't know what's going on. We're kind of feeling our way, I guess."

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There are probably hundreds, possibly even thousands, of ways people in the area are reaching out to help each other cope with the COVID-19 pandemic. Most acts of kindness go unreported and many are anonymous, but when I hear of things businesses are doing to make the situation a little better, I like to give credit where credit is due.

Kudos, for instance, to John's Pharmacy in Cape Girardeau, which recently donated 100 face masks and hand sanitizer to the Cape Girardeau County Sheriff's Department.

The sheriff's staff also enjoyed a lunch recently courtesy of the Wills Insurance agency in Jackson. "We just can't communicate enough how much we appreciate the support from our local community," Sheriff Ruth Ann Dickerson wrote on the department's Facebook page.

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As a follow up to a news story I wrote a few days ago about area businesses that are reopening this week, I received a message from Dylan Max at Gordonville Grill that was too late to include in that story. Gordonville Grill, he said, is reopening its dining area this week but, like other eateries, will limit dine-in seating to 25% of capacity.

"I am hoping this week is the start of our restaurant going back to normal," he said, adding they'll continue carryout and curbside service for customers who aren't comfortable eating inside.

I also received updated information from Stacey Keating, senior director of public relations and corporate communications at CBL Properties in Chattanooga, Tennessee, which manages West Park Mall in Cape Girardeau. Stacey confirmed the mall will remain closed for the time being.

"The health of our community is our top priority," she told me in an email Friday. "As such, we want to be thoughtful in our approach to reopening. We are still reviewing the most recent information from (Gov. Mike Parson's) office and will make a determination on our reopening date soon. Upon reopening, our retailers will be required to follow applicable guidelines set forth by the governor, and we will implement a number of protective measures as well."

As soon as I receive word of the mall's reopening date, I'll pass it on.

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If you shop at Country Mart in Jackson, you'll want to know the store will close next Tuesday, May 12, for inventory. When it reopens the following day, the store will be known as Harps.

As we reported in March, the Jackson Country Mart is one of 20 grocery stores in Southeast Missouri and Northeast Arkansas that have been acquired by Harps Food Stores Inc. of Springdale, Arkansas, from Town and Country Grocers of Fredericktown, Missouri.

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