MUMBAI: Beverage companies are facing significant challenges this summer due to rising costs and supply chain disruptions, exacerbated by an El Niño event that typically boosts consumer demand. Notably, companies like Coca-Cola, which produce soft drinks in aluminium cans—particularly popular 300 ml options—are experiencing supply constraints primarily because a significant portion of these cans is imported from West Asia. Packaged coffee firms, including the direct-to-consumer brand Sleepy Owl, are also feeling the heat; their costs for aluminium cans have surged by about 15% as they seek alternatives in South-East Asian markets while facing delays in procurement.
Ajai Thandi, CEO of one such company, indicated that rising costs will necessitate price increases for consumers, although he noted that glass bottles are less costly to procure; however, logistical challenges persist. Cans represent roughly 25-30% of their product assortment.
Beer manufacturers are not faring any better, as both aluminium can and glass bottle prices have escalated. Despite around 80% of their materials being sourced locally, the recent war has disrupted production when the industry typically ramps up inventory, resulting in a backlog that is yet to be resolved. The shortage of liquefied petroleum gas (LPG) has further hindered manufacturing capabilities, leading to 15% price hikes for can suppliers and 20% for glass bottles, according to Vinod Giri, director general of the Brewers Association of India.
Vivek Gupta, MD and CEO of United Breweries, which produces Heineken and Kingfisher beers, stated during a recent earnings call that while there are no supply issues with cans due to their global network, the industry is grappling with inflation and rising costs. Distributors report that remaining old stock of 300 ml Diet Coke cans priced at Rs 40 may soon be joined by new stock priced approximately Rs 10 higher. Queries sent to Coca-Cola and PepsiCo India regarding these developments went unanswered.
