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