Beer and soft drink makers struggle to source aluminium cans as demand outpaces supply

Companies that make beer and soft drinks in India are having difficulty getting cans for packaging. This could affect the supply of some products in the market. The question is why the shortage has arisen and how much it will affect customers.

Three main reasons have been cited. First, demand for cans keeps rising. Second, the country's capacity to make cans is limited. Third, the war in West Asia has disrupted supply. Even so, this does not mean beer is disappearing from the market altogether.

The use of aluminium cans for packaging beer and soft drinks has grown rapidly in India. Over the past two years, the share of cans in sales has doubled. Cans now account for more than a quarter of the total annual sales of beer and soft drinks.

The biggest problem is that can production has not grown in line with rising market demand. On top of that, the disruption to international supply caused by the war in West Asia has added to the companies' difficulties. As a result, beer and soft drink makers are struggling to gather enough cans to package their products.

According to Vinod Giri, director general of the Brewers Association of India, companies had expected an additional 60 crore aluminium cans to be made in the country, but only half that figure could be reached. India's leading can manufacturers have already used their existing production capacity in full.

Raising production generally requires installing new machinery and production lines, which can take up to a year. For this reason, the can shortage cannot be remedied immediately despite the rise in demand.

With cans in short supply in the domestic market, companies are importing them from other countries. The United Arab Emirates (UAE), Sri Lanka and other countries of South-East Asia are being relied upon to make up the shortfall. Imported cans cost about 25 to 30 per cent more than those made in India, which is raising companies' packaging costs.

Will beer vanish from the market, then? No. The aluminium can shortage does not mean beer will disappear from the country altogether. The real problem at present is not a shortage of beer and soft drinks but of the cans to pack them in. The supply of some brands may be affected.