Beverage companies are facing a challenging summer as rising production costs threaten to dampen their seasonal sales. Coca-Cola and Sleepy Owl are among those affected by a 15% increase in aluminium can prices, primarily due to supply chain disruptions from West Asia.
Supply Chain Disruptions
The ongoing geopolitical tensions have led to significant supply chain disruptions. Companies like Sleepy Owl are now sourcing aluminium cans from South-East Asia, but this has resulted in a 15% cost increase. Ajai Thandi, CEO of Sleepy Owl, noted that cans constitute 25-30% of their product portfolio, making this a significant challenge.
Impact on Beer Makers
Beer manufacturers, including United Breweries, which produces Heineken and Kingfisher, are also feeling the pinch. Despite sourcing 80% of their supplies locally, the cost of aluminium cans and glass bottles has spiked. Vinod Giri, director general at the Brewers Association of India, reported a 15% increase in can prices and a 20% rise in glass bottle costs.
"We don't have a supply issue on cans because we have the global network....we have an inflation issue, a cost issue," said Vivek Gupta, MD & CEO at United Breweries.
Consumer Price Adjustments
With old stock of 300 ml Diet Coke cans still priced at Rs 40, distributors anticipate a Rs 10 increase for new stock. This reflects the broader industry trend of passing increased production costs onto consumers.
| Material | Price Increase |
|---|---|
| Aluminium Cans | 15% |
| Glass Bottles | 20% |
Future Outlook
The beverage industry is bracing for continued cost pressures as the summer progresses. Companies are exploring alternative sourcing strategies and considering price adjustments to mitigate the impact on their bottom line.
