Hyderabad: Diet Coke has become an unlikely casualty of the Iran war, with the sugar-free soft drink disappearing from shelves in several major Indian cities amid a deepening shortage of aluminium beverage cans triggered by supply disruptions in the Gulf.
The shortage, which first surfaced in Mumbai, has since spread to Bengaluru, Pune and parts of Delhi-National Capital Region, just as the summer is driving double-digit growth in cola and beer sales, the Economic Times (ET) reported.
The Gulf accounts for around 9 per cent of global aluminium production, much of which has been trapped since the end of February by Iran’s blockade of the Strait of Hormuz, Reuters reported.
Why Diet Coke is hit hardest
While can shortages are affecting all soft drinks, Diet Coke has been particularly hit by the supply crunch because it is sold almost entirely in aluminium cans, unlike rivals such as Coke, Thums Up and Pepsi, which are also available in PET bottles and glass bottles, a leading Coca-Cola bottling partner told ET.
“We are facing acute Diet Coke stock-outs since the weekend. If supplies do come, they are being immediately picked by consumers,” a grocery retailer in Delhi-NCR said.
Two Coca-Cola distributors told Reuters that the company had notified them it was rationing supplies or not fulfilling some orders due to the can shortage. “We’ve been placing orders but have been told there is a shortage due to war,” said one distributor.
Costs surge, capacity stretched
Companies are being forced to import aluminium cans from the United Arab Emirates (UAE), Sri Lanka and Southeast Asia at prices 25 to 30 per cent higher than usual, the ET reported. An industry executive told ET that some beverage units are operating at just one-fourth of their capacity or shutting down temporarily due to shortages of aluminium cans and LPG used in glass manufacturing.
Major can manufacturers Ball Beverage Packaging and Canpack lack sufficient production capacity, and adding new lines would take 10 to 12 months, industry executives said.
“Supply constraints are worsening, especially for aluminium cans and LPG used in glass manufacturing furnaces, forcing some units to either operate at just one-fourth of their capacity or shut down temporarily,” a senior executive at a global beverage maker told ET.
Industry seeks duty relief
The Federation of European Business in India, whose members include Heineken, Anheuser-Busch InBev and Carlsberg, has written to the government seeking a temporary suspension of customs duty on imported glass bottles and aluminium cans. The body said input costs have surged sharply, with glass bottle prices up about 20 per cent, paper carton costs nearly doubling and total costs swelling 12 to 15 per cent due to higher freight charges and insurance premiums.
“This is peak demand season, and just a month ago, we were optimistic that availability would improve,” Aditya Ishan Varshnei, CEO of Goa-based craft beer maker Latambarcem Brewers, told ET. “That hasn’t materialised and we now have little choice but to source from markets such as Sri Lanka, which is pushing up our costs.”
An industry executive told Reuters that Diet Coke production is being rationed as the company cannot meet all demand. In northern Uttar Pradesh, grocer Ashish Saxena said that orders had been delayed and that Coca-Cola was pushing Coke Zero, which is sold in plastic bottles, as an alternative.
Meanwhile, some buyers are resorting to bulk purchases on quick commerce platforms.
