West Asia Conflict Disrupts Aluminium Supply, Threatening Cola Industry Can Shortage

Aluminium Can Shortage Hits India's Beverage Industry

The ongoing West Asia conflict has disrupted the supply chain for aluminium cans in India, leading to a shortage of popular canned cola drinks on the shelves of retail stores and quick-commerce platforms in leading cities.

Cola companies in India, including Coca Cola and PepsiCo, rely heavily on the import of aluminium cans from West Asian countries, such as the UAE, Bahrain, and Qatar. However, due to the supply chain constraints, companies are now facing a shortage, according to industry observers. While PET bottles are widely used in India, popular products like Diet Coke, which are available in a can version, are now scarce in many markets.

The shortage has been attributed to the disruption of supply from CANPACK, a key supplier of aluminium cans to cola companies, which was impacted by the Iran-US war. Coca-Cola, in particular, had relied on CANPACK for its supply of aluminium cans from West Asia.

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The shortage has forced consumers to look for alternatives, such as Coca-Cola Zero Sugar and other healthy beverages. However, the brewing industry, which also uses aluminium cans for its beer, is relatively unaffected, as around 80% of the 500 ml cans it uses are manufactured domestically.

The brewing industry has diversified its sourcing of cans from countries like Thailand and Indonesia, among others. The non-alcoholic beverage industry, on the other hand, uses 330 ml cans, while the brewing industry uses 500 ml packs.

The shortage has been exacerbated by restrictions on imports due to mandatory quality control norms. However, the government eased conditions in January by extending the implementation timeline for these norms to the beer brewing industry. Despite this, domestic production of 500 ml cans remains a challenge due to an LPG shortage, which has led to continued supply constraints in the market.

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However, as the gas supply to LPG lines is being restored, domestic manufacturers are gradually getting back on track. Industry observers also expect the domestic production of 500 ml cans to increase in the country, as Hindalco, the leading producer of aluminium, has increased production of the special kind of sheet required for the production of cans.