Why Is the Diet Coke Always Out of Stock?

As a purchaser of Diet Coke in the medium-sized bottles, I have come to notice that all the other Coke products are often fully stocked, but the Diet Coke is sold out.  In hotels, when I hit the vending machine, if one type of soda is sold out, it will be the Diet Coke.   Here is my grocery store this morning, with a sight I have seen many times at each of the three stores where I shop.  Note that there is full stocking of all the Coke SKU's with a huge gap where the Diet Coke should be.

diet-coke

I like business analysis conundrums like this, so I can think of three explanations:

  1. Observer bias:  It could be all the other SKU's are out of stock an equal amount of time, but since I am not looking for them I do not notice.  I will say that I began thinking about this years ago and over the last year I have tried to pay special attention each time to what is and isn't stocked, but this is still a very likely possibility.
  2. Diet Coke loses money:  It is possible that Diet Coke has the lowest margins for the local distributor.  They are committed to stocking it by Coca-Cola, but they intentionally keep the shelf stock short to minimize sales of a bad product for them.
  3. Lack of granularity in distributor stocking plans:  By this I mean, if a distributor uses one stocking plan and set of product ratios in all stores, it may be that certain products sell out in areas that are over-weighted towards liking that product.  My gut feel is that Diet Coke, vs. Coke, skews more suburban and affluent.   So if they stock to a single standard plan across Phoenix, there may not be enough Diet Coke inventory in suburban grocery stores and fancier hotel vending machines.  This is a sort of variation of the observer bias issue -- Coke has a stocking problem only in a few locations, but I preferentially shop in those locations.
  • mckyj57

    It is always out of stock for the same reason that things you lose are always found in the last place you look. In other words, when it is in stock you don't examine the inventory levels of other items.

  • GA

    As someone who designs planning and replenishment software for a living (Coca Cola is not a customer), I can say that a likely culprit is bad history. When the category manager for the store builds their forecast, they will tend to vastly overweight the same period from the previous year.

    Despite living in the 21st century, a lot of the way things like this are bought and allocated tends to be remarkably unsophisticated.

  • Is this the appropriate place to remind everyone that Walmart empowers and equips its "low-paid associates" to notice these very things, and gives them responsibility to place new orders to match local demand? And that such distributed intelligence for logistics has more to do with the company success than "lowball monopsony leverage?"

  • GoneWithTheWind

    For the same reason that my size clothing is typically sold out. It is purchased more often then the other options. Obviously the co-answer is that they don't stock enough of the product that historical sales have shown are in higher demand.

    Let me digress a little. I grew up back East in/near a large city. Most of the not big name stores where owned and run by Jews. They worked long hours and were dedicated and very aware of every facet of their business. Not perfect but aware of what sells and what they wanted to stock. Today we have mostly employees with no real connection or understanding of business requirements.

  • Ike Evans

    So a hike in pay will fix the problem and make Wally World more competitive? That's it! I'm off to write a letter to my congressman... wait... no...

  • Christopher Michael

    Mormons.

  • Ward Chartier

    The Grinch.

  • What I notice is that very few garages etc sell chilled fizzy water 🙁

  • poitsplace .

    Hat tip to Ike Pigott there...did not know that. Anyway, it may well be the problem of an automated system. I used to have a similar problem with the store brand of one soda that I liked. Because of an issues caused by your problem #3, local demand was being grossly miscalculated. They simply could not show the true representative sales because the product always ran out, ending sales. I finally got the point across to the management who added one row...which still ran out, then two rows...which also still ran out.

  • SamWah

    Is diet Coke sugar AND caffeine free?

  • SamWah

    Next time, see if diet Pepsi is also gone. They are comparable (for those without taste or company preference), and the comparative stocking spaces.

  • Jerryskids

    I suspect that you may have it on the answer there - the retailer's sales figures don't reflect the demand for the product because once it sells out they stop selling it. It may also involve "standard pack" where you get so many of each product per pallet at per pallet pricing and customizing the order for the particular store costs more. I know I've seen that with T-shirts, a case of T-shirts has a certain number of each size That explains why the clearance rack at the store is 95% sizes elfin, tiny, and extra small and only one or two size large, the standard pack doesn't reflect actual sales but it costs more to order just one size.

  • Sorry to bust the IkeCeption here...

    I was saying nothing of the sort. Merely reinforcing Warren's thesis with an observation: The problem appears to be one of central planning -- and one does not need to be a genius to see that Hayekian distributed decision systems will more efficiently distribute the products to best meet consumer needs.

  • thanks -- the associates are all given their own little spot in the store to monitor and maintain. When they see a dramatic shift in demand, they can place an instant order, and impact future orders to ensure that periods of un-met demand are minimized.

    Those who do a great job at that are promoted. Go figure.

  • McThag

    It's diet Mountain Dew that's always out around here.

  • Not Sure

    I buy 2 liter bottles of the store brand diet coke and at least a couple times a month, they're either completely or nearly out of it while all the other flavors appear to be well stocked. Just an observation- don't know what it means.

  • Heresiarch

    I'm rather sure that Diet Coke does not lose money, for the simple reason that Coca-Cola's margins are pretty amazing to begin with. That would mean that it doesn't have to sell all that much of the stuff to break even on the capital employed to make it. I do wonder if Coke Zero has been cannibalizing DC's market to such an extent that they don't make that much Diet Coke to begin with, which might make it easier for places to run out of it (per #3).

  • hecan

    I thought/heard coke zero purpose was to be diet coke for men. If that is true it could be true that the reason diet coke is out of stock more often is due to the same reasons girl variants, pink and so on, of products are more expensive; it is because it is way more socially acceptable for a woman/girl to use boys/mens products than the opposite. I believe marginalrevolution had a post about it a while back.
    For coke it's difficult to price diet coke and coke zero differently, seeing it basically the same product. However, retailers stock more of zero because customers probably chooses zero if diet is not available to a greater degree than if the situation was reversed. Diet is basically a variant of coke that you can stock on the margin of coke demand.

  • Jim Collins

    I have to wonder if there is a difference in margin between Diet Coke and Coke Zero? If Coke is making more on Coke Zero than it is on Diet Coke the shortage might be artificial.

  • herdgadfly

    Adults need to kick the diet soda habit because it only causes weight gain. Of course, regular sweetened soft drinks are not any better since the U.S. has switched sugar sweeteners from sugar-cane-based to high fructose corn syrup.

    Of more concern to me is the rationing going on at Krogers,WalMart and Sam's Club to prevent purchasing Tropicana Grovestand high-pulp Orange Juice in economic one-gallon jugs. These retailers no longer stock this size or for some odd reason Tropicana no longer bottles this size.

  • herdgadfly

    With all the data available to volume-sensitive super markets, it is inconceivable that shelves are not automatically planned based upon sales velocity to include how many product facings are presented to the consumer. If I had to guess, i would put shopping habits ahead of dumb stockers. If Warren goes shopping at the same time and on the same days every week, that and the habits of his fellow shoppers may create a temporary reduction in shelf stock. But that can easily be fixed by lodging a complaint with store management. Remember there is plenty of Diet Coke in the stockroom - even on Super-Bowl Weekend.

  • Ike Evans

    I was in agreement with you, actually. Robert Reich is fond of making this argument that we should increase the minimum wage on an idea that this in turn will make companies like Walmart more competitive - among other fallacious arguments. I was making this argument on the premise that the absurdity of it was self evident.

  • Phillip from Sydney

    I switched to Coke Zero - much better taste.

  • TJSawyer

    Perhaps it is like Sudafed. Someone has discovered a nefarious use for Diet Coke and it is all being scarfed up to manufacture a soon to be banned substance. Have you tried asking if they keep it hidden below the counter?

  • JTW

    yes, that was my suspicion too. The store can't just order diet coke, they have to order a pallet containing fixed percentages of every variety.
    Once diet coke runs out, they're now in a pickle, having to either buy more stock of things that don't sell as well or disappoint customers looking for a specific, popular, product.
    And because the sales figures at the end of the day don't quite reflect that (many will go home with something else or just go without until everything runs low enough the automated ordering of the next pallet gets initiated) the mostly automated demand estimation systems never notice and the makeup of the pallets does not get adjusted.

    That's what you get for minimising customer interaction by your staff, and not enabling the people on the floor to pass on remarks about some products being out of stock way too often into the system.

  • JTW

    in most stores, the staff doesn't have the ability to pass on information about low stock, and the local warehouse from which they stock the shelves isn't large enough to hold more than a day or two of most items.
    Customers end up buying something else when the item they were looking for is out of stock, which is sometimes/frequently used to drive demand towards other, more profitable products.
    E.g. many stores here deliberately keep very low stock of popular branded items with low margins for the store, then put their store brand equivalent (which has a higher margin) right next to that branded item. When the branded item runs out, the store brand gets more shelf space so the big gap doesn't show as much, people buy that instead, and over time the branded item gets permanently reduced shelf space, kept in the inventory only because big brands often require stores to carry their entire line (or predetermined packages out of their line).

  • Poe's Law. 👍

  • Diet Coke cures cancer. That's why Big Pharma wants to suppress it.

  • billyjoerob

    Diet Coke probably sells 20x Cherry Coke but ideally it occupies same amount of shelf space (ideally from retailers perspective). Then the challenge is constantly restocking the DC slot. So the retailer probably overestimates the efficiency of restocking and then loses some sales by being out of stock. Retailer should probably expand shelf space for DC but that would reduce SKUs and ultimately sales.

  • Craig

    I notice the same thing concerning Diet Coke. When the store is out, I am forced to buy Coke Zero, which tastes like rebranded Tab.

  • marque2

    Companies pay grocery stores for stocking rights. Coke could be paying to display the products they are displayed. Frequently it is Coke people who actually go in and do the stocking.

  • marque2

    Diet coke has 50% more caffeine. Also the sweetener is different

  • CapitalistRoader

    Diet Rite RC Cola has no aspartame. I'm not saying sucralose is any better but RC tastes pretty good. And no caffeine.

  • johnson85

    Is nobody else going to point out the irony that the guy that constantly promotes the idea that there is no difference between the party of Coke and the party of Pepsi, is obsessing over stocking practices of diet coke rather than just buying the diet pepsi?

  • Rick C

    When I worked at a convenience store years ago, many of the vendors--the Coke guy in particular--had the ability to assess apparent demand and adjust levels on the next order.

  • jhertzli

    Diet Coke come in varieties with and without caffeine.

  • Not Sure

    Got the last three bottles on the shelf today. All the other flavors? Pretty much fully stocked.

  • Brotio

    I don't think it's observer bias. I drink Coca-Cola Classic, and I can't remember going into a store that was out of it.

  • AtlantaDude

    Answer #1 - It is most likely observer bias

    Answer #2: Is it just at Walmart? I used to do some supply chain consulting for Coke, and they would get frustrated by Walmart, who would ignore bottler franchise territories, buy from the cheapest source and then ship it all over the country themselves. Because of this, Walmart is probably doing their own restocking, rather than the bottler doing it. The bottler's incentive is for the store to have zero stock-outs. The Walmart merchandiser's incentive is to maximize category profitability, which may not coincide with zero stock-outs.

    Answer #3: Are there corresponding shortages of Mentos?