The beverage industry in India faces an unexpected crisis as retail and quick-commerce stores have started to remove soft drink cans which include Diet Coke from their shelves. A global aluminium shortage caused by conflict in West Asia has created production problems for both domestic and imported production.
Retail analytics firm Bizom, which monitors over 8 million stores, shows canned beverage sales fell 19.4% year-on-year in April due to the unavailability of stock. Meanwhile, the display of cans at stores fell 22% year-on-year, reflecting a steep decline in supply.
“The problem may worsen at the retail end if supply-chain problems continue to persist," said Harshit Bora, head of analytics at Bizom.
The shortage has resulted in increased costs for beverage producers. The conflict in Iran has led to a 14% rise in aluminium prices on the London Metal Exchange and a 25-30% increase in the cost of imports for cans.
India is a big importer from regions like the UAE and Southeast Asia, which account for almost a third of its canned beverage consumption. But logistical issues, increased freight rates and insurance costs have made supplies expensive and highly uncertain.
Local manufacturers such as Ball Beverage Packaging and Canpack are already working at close to full capacity and according to industry experts, it will take 10-12 months to install new production lines, which makes it unlikely to provide immediate relief.
Retail prices have also surged due to the shortage. Best sellers like Diet Coke have increased in price by as much as 25% from Rs. 40 to around Rs. 50 for a 300 ml can in some regions.
Canned beverages constitute only 2-3% of beverage consumption, but are growing in popularity among Gen Z consumers for their convenience, visual appeal, and low-sugar variants.
Surprisingly, the scarcity is driving chatter on the social media platform X and turning it into a buzz. Tweets and memes are circulating around the unavailability.
“Just an ‘Out of stock’ did crazy marketing for Diet Coke at just Rs. 0,” said Anubhav Dubey, founder of Chai Sutta Bar. He also said that "scarcity created desire" and "absence created conversation" and how scarcity has increased brand awareness.
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The aluminium shortage is impacting soft drinks, beer and other canned beverages, with manufacturers reportedly favouring profitable products due to the shortage.
As material costs rise, imports struggle to keep up and domestic production is limited, the crunch is likely to continue for some time. Unless the supply chain normalizes, it could mean higher prices and scarcity for canned drinks in India.