Aluminum Can Shortage Hits India's Beverage Industry Amid Rising Demand

India's packaged beverage industry is grappling with a shortage of aluminum cans, as domestic production fails to meet rising demand. Companies lack sufficient capacity, with expansions potentially taking up to a year. Some firms are redirecting supplies to more profitable markets and prioritizing higher-margin products, according to industry executives.

The surge in demand for low-sugar and sugar-free beverages has intensified the pressure, with sales in this category doubling over the past year.

Chain Challenges Consumers are turning to quick commerce platforms for bulk purchases amid limited availability. Social media posts highlighting shortages, such as “Diet Coke: missing,” have gained traction on platforms like Instagram and X. An executive at a quick commerce platform noted that people are resorting to bulk buying where stocks remain available.

The industry has sought government intervention. Earlier this month, an industry body representing European businesses in India requested a temporary suspension of customs duties on imports of aluminum cans and glass bottles, citing supply challenges from ongoing global disruptions.

“This is peak demand season, and just a month ago, we were optimistic that availability would improve. Other packaging materials are 20-25% more expensive, with freight and insurance costs increasing overall expenses by 12-15%. The Rs 60,000-crore packaged soft drinks industry faced challenges last year due to unseasonal rains from March to September. Companies anticipated a rebound this summer, but ongoing shortages could hinder sales despite strong demand. The shortage follows market disruptions, including those linked to global conflicts. Firms are prioritizing limited inventory for profitable segments, leaving some producers to source from alternative markets like Sri Lanka at higher costs.”

The industry body's communication highlighted escalating costs across the supply chain. Members include major brewers facing these issues during the peak demand period. Executives expressed concerns over the mismatch between demand and supply. The situation has led to stock-outs, potentially dragging down sales in the sector.

Domestic manufacturers such as Ball Beverage Packaging and Canpack are cited for lacking capacity. The push for imports aims to alleviate immediate shortages.