A Diet Coke shortage is currently unfolding across India.
This isn't a random supply hiccup; it's a direct consequence of a shortage of aluminum cans. What makes India particularly vulnerable is that Diet Coke is sold exclusively in cans there. Unlike other sodas available in plastic (PET) bottles, if the cans run out, the product simply disappears from the shelves. Coca-Cola's distributors have been rationing orders since April, pointing to war-related disruptions.
The root cause of this can shortage traces back to the ongoing war in Iran, which has effectively shut down the Strait of Hormuz. This narrow waterway is a critical chokepoint for global trade, and its closure has triggered a cascade of problems for the aluminum industry.
First, there's the logistical paralysis. Hundreds of ships carrying everything from raw materials to finished goods are stuck, unable to pass through the strait. This gridlock has choked off the flow of both imported aluminum sheets and finished cans into India, right as the country entered its peak summer demand season.
Second, the conflict has directly hit production. Iranian strikes damaged two major aluminum smelters in the Gulf region: Emirates Global Aluminium (EGA) and Aluminium Bahrain (Alba). These facilities are responsible for about 8-9% of the world's primary aluminum. With their output severely curtailed—one facility declared force majeure and said repairs could take a year—the global market for aluminum tightened significantly.
This supply shock sent prices soaring on the London Metal Exchange (LME) to four-year highs, making each can more expensive. But the bigger issue for India is the physical unavailability of the cans themselves. Compounding the problem are India's own quality control regulations on imports, which, while well-intentioned, can make it slower and more difficult to pivot to alternative suppliers in a crisis.
While this is a major headache for Coca-Cola in India, it's unlikely to significantly impact the company's global bottom line. The Indian market represents just over 1% of Coca-Cola's total revenue. The real story here is how a geopolitical event can ripple through complex supply chains, turning a distant conflict into a tangible problem for consumers at their local store.
[Glossary]
- Strait of Hormuz: A strategically important, narrow sea passage between the Persian Gulf and the Gulf of Oman, through which a significant portion of the world's oil and other goods pass.
- Force Majeure: A common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs.
- London Metal Exchange (LME): The world's largest market for industrial metals futures and options contracts. Its prices are used as the global benchmark.