Ocado Retail mulls dry ice alternatives as costs soar

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FILE PHOTO: An Ocado delivery van seen in Hatfield

LONDON (Reuters) -British online supermarket Ocado Retail is looking into alternatives to dry ice for its food cooling and storage needs as costs soar for the product, it said on Tuesday.

The business, an equal joint venture between Ocado Group and Marks & Spencer, uses dry ice when transporting frozen goods to customers.

However, the energy crisis has sent the cost of dry ice surging, adding a potential 15-20 million ($17-23 million) pounds in annualised costs compared with 2021.

"We are exploring alternatives," Ocado Retail chairman Tim Steiner told reporters after the business downgraded its full-year outlook, partly because of higher costs.

The company said it was looking at replacing dry ice with alternative cooling systems such as refrigeration units or frozen panels installed in the plastic containers, or totes, that it uses.

Steiner said installing permanent freezers in delivery vans was problematic.

"The reason that's less attractive is you have to put the freezer for (the hotter summer month of) August in the vehicle, and then you have to drive it around for the other 11 months of the year half empty."

Last week, Dutch online grocery delivery company Picnic, with annual sales of roughly 450 million euros, said it was halting deliveries of frozen goods.

"The energy crisis has hit our ice supplier so much that it can no longer make sustainable dry ice," Picnic said.

Customers will not be able to order frozen pizzas, meals or ice cream until it has found an alternative supplier, it said.

($1 = 0.8532 pounds)

(Reporting by James DaveyEditing by Bernadette Baum)