A cola price war is heating up as Reliance Consumer Products (RCPL) expands its Campa soft drink range—priced at half the cost of Coca-Cola and͏͏ PepsiCo—into͏͏ several͏͏ new͏͏ markets͏͏ in͏͏ time͏͏ for͏͏ the͏͏ festive͏͏ season.

Multinational͏͏ Brands͏͏ Ramp͏͏ Up͏͏ Promotions:

This͏͏ has͏͏ led͏͏ Coca-Cola͏͏ and͏͏ PepsiCo͏͏ to͏͏ ramp͏͏ up͏͏ consumer͏͏ promotions͏͏ across͏͏ grocery͏͏ stores͏͏ and͏͏ quick-commerce͏͏ platforms,͏͏ even͏͏ as͏͏ they͏͏ continue͏͏ to͏͏ avoid͏͏ lowering͏͏ their͏͏ prices.

Continue͏͏ Exploring:͏͏ Coca-Cola to͏͏ target͏͏ regional͏͏ growth͏͏ in͏͏ India͏͏ with͏͏ new͏͏ cluster͏͏ strategy

“The͏͏ multinational͏͏ brands͏͏ haven’t͏͏ reduced͏͏ prices͏͏ yet͏͏ but͏͏ are͏͏ increasing͏͏ tactical͏͏ promotions͏͏ at͏͏ local͏͏ retailers,͏͏ along͏͏ with͏͏ cross-promotions͏͏ and͏͏ bundling͏͏ on͏͏ quick-commerce͏͏ platforms,”͏͏ said͏͏ a͏͏ beverage͏͏ industry͏͏ executive.

However,͏͏ they͏͏ risk͏͏ losing͏͏ market͏͏ share.

“There͏͏ are͏͏ discussions͏͏ about͏͏ either͏͏ reducing͏͏ prices,͏͏ which͏͏ could͏͏ impact͏͏ profitability,͏͏ or͏͏ risking͏͏ market͏͏ share͏͏ to͏͏ a͏͏ lower-priced͏͏ competitor,”͏͏ said͏͏ a͏͏ second͏͏ executive.͏͏ “Any͏͏ pricing͏͏ decisions͏͏ will͏͏ also͏͏ need͏͏ to͏͏ be͏͏ agreed͏͏ upon͏͏ with͏͏ independent͏͏ bottling͏͏ partners,”͏͏ they͏͏ added.

In͏͏ 2022,͏͏ the͏͏ FMCG͏͏ arm͏͏ of͏͏ Reliance͏͏ Retail͏͏ entered͏͏ the͏͏ Indian͏͏ soft͏͏ drinks͏͏ market,͏͏ traditionally͏͏ dominated͏͏ by͏͏ Coca-Cola͏͏ and͏͏ PepsiCo,͏͏ by͏͏ launching͏͏ the͏͏ Campa͏͏ range͏͏ in͏͏ various͏͏ pack͏͏ sizes͏͏ and͏͏ flavours͏͏ at͏͏ significantly͏͏ lower͏͏ price͏͏ points͏͏ than͏͏ established͏͏ competitors͏͏ in͏͏ select͏͏ markets.

Following͏͏ a͏͏ slow͏͏ start,͏͏ RCPL͏͏ is͏͏ now͏͏ expanding͏͏ the͏͏ Campa͏͏ brand͏͏ across͏͏ multiple͏͏ markets,͏͏ including͏͏ the͏͏ southern͏͏ states,͏͏ West͏͏ Bengal,͏͏ Bihar,͏͏ Odisha,͏͏ and͏͏ parts͏͏ of͏͏ Uttar͏͏ Pradesh,͏͏ at͏͏ disruptive͏͏ prices,͏͏ according͏͏ to͏͏ executives͏͏ familiar͏͏ with͏͏ the͏͏ developments.

RCPL’s͏͏ Consumer-Centric͏͏ FMCG͏͏ Strategy

“RCPL’s͏͏ FMCG͏͏ strategy͏͏ focuses͏͏ on͏͏ offering͏͏ affordable͏͏ pricing͏͏ across͏͏ categories͏͏ like͏͏ beverages,͏͏ biscuits,͏͏ confectionery,͏͏ and͏͏ detergents,͏͏ with͏͏ prices͏͏ 30-35%͏͏ lower͏͏ than͏͏ competitors,”͏͏ said͏͏ another͏͏ industry͏͏ executive.͏͏ “This͏͏ aligns͏͏ with͏͏ their͏͏ internal͏͏ policy͏͏ of͏͏ being͏͏ ‘consumer-centric’͏͏ rather͏͏ than͏͏ ‘competition-centric’.”

For͏͏ instance,͏͏ Campa͏͏ offers͏͏ 250͏͏ ml͏͏ bottles͏͏ at͏͏ INR͏͏ 10,͏͏ compared͏͏ to͏͏ INR͏͏ 20͏͏ for͏͏ a͏͏ 250͏͏ ml͏͏ bottle͏͏ from͏͏ Coca-Cola͏͏ or͏͏ PepsiCo.͏͏ Additionally,͏͏ Campa͏͏ sells͏͏ 500͏͏ ml͏͏ bottles͏͏ at͏͏ INR͏͏ 20,͏͏ while͏͏ its͏͏ larger͏͏ competitors͏͏ price͏͏ their͏͏ 500͏͏ ml͏͏ bottles͏͏ at͏͏ INR͏͏ 30͏͏ or͏͏ INR͏͏ 40.

Continue͏͏ Exploring:͏͏ Reliance Industries’͏͏ FMCG͏͏ arm͏͏ rakes͏͏ in͏͏ INR͏͏ 3,000͏͏ Crore͏͏ in͏͏ FY24;͏͏ Campa Cola a͏͏ key͏͏ contributor

Emails͏͏ sent͏͏ to͏͏ the͏͏ offices͏͏ of͏͏ RCPL͏͏ and͏͏ Coca-Cola͏͏ went͏͏ unanswered,͏͏ while͏͏ PepsiCo͏͏ stated͏͏ it͏͏ was͏͏ unable͏͏ to͏͏ comment.

In͏͏ response͏͏ to͏͏ an͏͏ analyst’s͏͏ question͏͏ about͏͏ the͏͏ potential͏͏ impact͏͏ of͏͏ Campa,͏͏ RJ͏͏ Corp͏͏ chairman͏͏ Ravi͏͏ Jaipuria—whose͏͏ group͏͏ company͏͏ Varun͏͏ Beverages͏͏ bottles͏͏ and͏͏ sells͏͏ PepsiCo’s͏͏ products—recently͏͏ stated͏͏ that͏͏ the͏͏ market͏͏ is͏͏ growing͏͏ at͏͏ a͏͏ rate͏͏ that͏͏ allows͏͏ ample͏͏ room͏͏ for͏͏ new͏͏ players͏͏ to͏͏ enter.

“We͏͏ believe͏͏ every͏͏ new͏͏ entrant͏͏ has͏͏ the͏͏ potential͏͏ to͏͏ grow͏͏ the͏͏ market.͏͏ Reliance͏͏ is͏͏ a͏͏ strong͏͏ competitor,͏͏ but͏͏ they͏͏ will͏͏ need͏͏ to͏͏ invest͏͏ more͏͏ in͏͏ facilities,͏͏ plants,͏͏ and͏͏ visi-coolers.͏͏ Given͏͏ their͏͏ resources,͏͏ we’re͏͏ confident͏͏ they͏͏ will͏͏ succeed.͏͏ The͏͏ Indian͏͏ market͏͏ is͏͏ vast,͏͏ and͏͏ with͏͏ additional͏͏ investments,͏͏ growth͏͏ will͏͏ accelerate͏͏ even͏͏ further,”͏͏ Jaipuria͏͏ stated͏͏ during͏͏ an͏͏ earnings͏͏ call.

Although͏͏ the͏͏ peak͏͏ summer͏͏ quarter͏͏ from͏͏ April͏͏ to͏͏ June͏͏ is͏͏ the͏͏ largest͏͏ for͏͏ annual͏͏ soft͏͏ drink͏͏ sales,͏͏ companies͏͏ are͏͏ working͏͏ to͏͏ de-seasonalise͏͏ their͏͏ products͏͏ through͏͏ new͏͏ promotions͏͏ and͏͏ campaigns,͏͏ particularly͏͏ during͏͏ the͏͏ festive͏͏ months͏͏ of͏͏ October͏͏ to͏͏ December.

Bottled͏͏ Soft͏͏ Drink͏͏ Penetration͏͏ Surges:

According͏͏ to͏͏ a͏͏ report͏͏ released͏͏ by͏͏ global͏͏ research͏͏ firm͏͏ Kantar͏͏ in͏͏ June,͏͏ the͏͏ consumption͏͏ of͏͏ bottled͏͏ soft͏͏ drinks͏͏ exceeded͏͏ 50%͏͏ penetration͏͏ among͏͏ Indian͏͏ households͏͏ in͏͏ 2023-24.͏͏ “The͏͏ bottled͏͏ soft͏͏ drink͏͏ category͏͏ grew͏͏ by͏͏ 41%͏͏ on͏͏ a͏͏ moving͏͏ annual͏͏ total͏͏ (MAT)͏͏ basis͏͏ in͏͏ March͏͏ ’23͏͏ and͏͏ continued͏͏ to͏͏ attract͏͏ more͏͏ households,͏͏ expanding͏͏ by͏͏ 19%͏͏ in͏͏ MAT͏͏ by͏͏ March͏͏ ’24,”͏͏ the͏͏ report͏͏ stated.

In͏͏ its͏͏ most͏͏ recent͏͏ financial͏͏ report,͏͏ Coca-Cola͏͏ India͏͏ posted͏͏ a͏͏ consolidated͏͏ profit͏͏ of͏͏ INR͏͏ 722.44͏͏ crore͏͏ for͏͏ FY23,͏͏ marking͏͏ a͏͏ 57.2%͏͏ increase͏͏ compared͏͏ to͏͏ the͏͏ previous͏͏ year,͏͏ according͏͏ to͏͏ financial͏͏ data͏͏ obtained͏͏ from͏͏ the͏͏ business͏͏ intelligence͏͏ platform͏͏ Tofler.

Varun͏͏ Beverages͏͏ reported͏͏ a͏͏ consolidated͏͏ net͏͏ profit͏͏ of͏͏ INR͏͏ 1,262͏͏ crore͏͏ for͏͏ the͏͏ June͏͏ ’24͏͏ quarter,͏͏ reflecting͏͏ a͏͏ 26%͏͏ increase͏͏ compared͏͏ to͏͏ the͏͏ same͏͏ period͏͏ last͏͏ year.͏͏ The͏͏ company͏͏ attributed͏͏ this͏͏ growth͏͏ to͏͏ volume͏͏ increases͏͏ and͏͏ improved͏͏ margins.