A supply chain crisis linked to the Strait of Hormuz is impacting consumer goods markets thousands of miles away in India. On May 7, it was reported that Coca-Cola has begun rationing supplies of Diet Coke in India due to disruptions in shipments of aluminum cans from the Gulf region caused by Middle East conflicts, with some distributor orders going unfulfilled. Diet Coke is sold exclusively in aluminum cans in India, making it particularly vulnerable to supply chain interruptions.

India is a key growth market for Coca-Cola, with the sugar-free beverage category experiencing rapid expansion. News of the supply restrictions has sparked widespread discussion among Indian consumers on social media, with numerous users posting memes expressing dissatisfaction on Instagram. One video showed a man rushing into a supermarket to purchase over ten cans of Diet Coke in one go, reflecting market anxiety over potential stockouts.

**Freight Disruptions and Energy Shortages Create Supply Chain Gridlock** The Gulf region accounts for approximately 9% of global aluminum production. Since late February, disruptions to key shipping routes have brought exports of aluminum and aluminum products to a standstill.

Two Indian Coca-Cola distributors revealed that the company has notified them that some orders cannot be delivered on time due to an aluminum can shortage caused by the conflict, and supplies are being rationed. Distributor Sanjay stated, "We have been placing orders but are being told supplies are tight."

An industry executive confirmed that the shortage is partly due to shipping delays for imported aluminum cans. Concurrently, domestic energy shortages in India have also increased production costs for canned and bottled beverages. "Some production is still ongoing, but the company is rationing because it cannot meet the full demand," the executive said.

**Sugar-Free Beverage Growth Momentum Hits Supply Bottleneck** The Diet Coke shortage comes during an expansion cycle for Coca-Cola's business in India.

In the 2024-25 fiscal year, sales in the Indian market reached 50 billion rupees (approximately $533 million), the highest level since at least 2021. Sugar-free products are a key growth category—Grand View Research projects that India's low-sugar food and beverage market will reach $4.7 billion by 2030, more than doubling from 2023.

However, the strategy of selling Diet Coke exclusively in aluminum cans in India has become a significant weakness under supply chain pressure. In contrast, supplies of Coke Zero, which uses plastic bottle packaging, remain relatively stable. Ashish Saxena, a grocer in Uttar Pradesh, said delivery times for Diet Coke have significantly lengthened. "It used to arrive in five or six hours; now the company is recommending Coke Zero instead, which is also more affordable."