Aluminium price surge dents Coca-Cola’s India market share despite Diet Coke boom

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Beverage giant Coca-Cola Company has acknowledged losing market share in India during the April-June quarter (Q2). Rising aluminium and PET packaging costs, coupled with supply constraints, disrupted its pricing strategy in one of its most important end-use markets.

Although Coca-Cola reported stronger-than-expected global quarterly earnings and raised its full-year outlook, India emerged as one of the weaker performers in the Asia-Pacific region.

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Coca-Cola observed that the biggest setback occurred in the INR 11-40 (USD 0.11-0.42) price segment, where consumers typically choose drinks based on affordability rather than pack size. Higher raw material costs and gaps in its packaging portfolio reduced its competitiveness in this value-driven category.  

“Right now, the mid-tier (price pack of between 11 and 40 Indian rupees) is one where we do not yet have the pack price architecture that we need. We’re working on that,” said John Murphy, Chief Financial Officer of Coca-Cola.

The company remains optimistic that improving its packaging and pricing structure would help regain market share in one of the world’s fastest-growing beverage markets. Therefore, Murphy expects that “over time we’ll recover some of the share losses.”  

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Aluminium costs and Diet Coke demand jumps

Coca-Cola regarded the rally in aluminium and PET prices, which have risen more sharply this year than expected, thereby compelling price inflation across India while squeezing profit margins.

The pressure intensified after geopolitical tensions owing to the Middle East conflict disrupted shipping through the Strait of Hormuz, tightening aluminium can supplies. To maintain availability, Coca-Cola has begun sourcing larger 330 ml aluminium cans from Southeast Asia, replacing its standard 300 ml packs in some markets.

Murphy noted that the company continues to work on mitigating the impact of higher packaging costs while refining its pricing strategy for the Indian market.

While supply constraints created challenges, they also fuelled an unexpected surge in Diet Coke demand. Earlier shortages triggered consumer-led “Diet Coke parties,” significantly boosting interest in the brand.

Murphy described the situation as “a wonderful problem to have,” adding that the Coca-Cola company expects Diet Coke demand in India to increase nearly tenfold this year, albeit “off a ​very small base, I might add — but a 10x increase in demand for the brand.”

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