Dr. Pepper took to social media to apologize to its loyal customers for the shortage that they are facing. Many customers are having a hard time finding the product in local stores. The main culprit for the lack of supply of aluminum cans. As fewer customers are dining out in restaurants, demand for fountain sodas is falling and being substituted for store-bought soda. Consumers are also increasingly purchasing canned sodas over the less environmentally friendly plastic bottles.
Small breweries are also struggling with this shortage. Under normal conditions, these breweries generate a significant share of their sales from draft beer consumed in the taproom. However, as bars and restaurants have been forced to shut down or lower their capacity, their sales have increasingly shifted toward package sales. Due to the aluminum can shortage, many breweries have had to slow their production lines until they can get more cans.
Discussion Questions:
- Would you expect the supply of aluminum cans to be elastic or inelastic in the short-run? What factors contribute to the elasticity of supply and how does that influence your answer?
- In the market for canned beverages, based on the stories above, would you expect supply, demand, or both to change? How will that effect equilibrium price and quantity?
Sources: Food & Wine “America Is Facing a Dr Pepper Shortage This Summer”; THV11 “Aluminum can shortage causing Arkansas breweries to slow production on popular beers”