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PepsiCo, Coca-Cola plan cheaper soft drinks to counter Reliance’s Campa

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PepsiCo and Coca-Cola are considering launching soft drinks 15-20% cheaper than their main brands to target regional markets and combat competition from Reliance Consumer Products’ Campa, according to industry executives.

Reliance’s better retailer margins spur B-Brands from PepsiCo

According to Economic Times, Reliance Consumer Products is aggressively pricing its Campa brand and offering retailers better margins as it expands distribution. This move pressures PepsiCo and Coca-Cola, which have mostly dominated the market, to develop counter strategies like launching cheaper products or B-brands to protect their core brands’ image and margins.

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“If need be, we will make a range which will fight that (B-segment) pricing also,” commented Ravi Jaipuria, chairman of Varun Beverages, PepsiCo’s largest bottling partner in India. He added that PepsiCo “is not affected” by Campa’s pricing strategy. “They (Reliance) have a different play,” Jaipuria said while talking to ET in response to a query about Campa’s pricing. He acknowledged Campa as “formidable competition,” saying, “Going forward, they will take share of the total market. Who will get affected first – I’m not sure … I don’t know. But we are improving our go-to market.”

Coca-Cola surges distribution of returnable INR 10 bottles

Two executives familiar with Coca-Cola’s plans said the company is increasing the distribution of returnable glass bottles at inr 10, especially for tier-2 markets. They also plan to launch regional brands that can be scaled as needed. One such brand is RimZim jeera, which was launched briefly and is now supplied on a limited scale. “This will protect margins of their mainstream brands which the cola major doesn’t want to compromise on, as well as not dilute equity of the brands,” one executive said.

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Meanwhile, Campa sells its 200 ml bottles for INR 10, while Coca-Cola and PepsiCo sell 250 ml bottles for INR 20. Campa’s 500 ml bottle is priced at INR 20, compared to INR 30 for Coke and INR 40 for Pepsi. Although PepsiCo and Coca-Cola haven’t officially lowered prices, they’re using local promotions and bundling deals on quick-commerce platforms, the report further stated.

Furthermore, prominent regional competitors like Chennai’s Bovonto, Rajasthan’s Jayanti Cola, and Gujarat’s Sosyo Hajoori Beverages (partly owned by Reliance Consumer) are also big players in the soft drink market.

Reliance Consumer offers a 6-8% margin to distributors, compared to 3.5-5% by other soft drink makers. Tata Consumer Products MD Sunil A D’Souza said to ET that the entry of a new player with a different price point disrupts the industry. “While on paper it (price) is ’10 versus ’10, the other piece that you have (it didn’t surface quickly enough) was that while the ’10 (retail price) was the same to the consumer, the trade price was dramatically different,” he said, referring to the trade margins.

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