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Cola price war intensifies with Reliance's Campa expansion
Cola price war intensifies with Reliance's Campa expansion
新闻详情:最后更新时间: 2024-09-19 18:26:49
New Delhi: A cola price war is brewing, with Reliance Consumer Products (RCPL) taking its Campa range of soft drinks - sold at half the price of Coca-Cola and PepsiCo brands - to multiple new markets ahead of the festive season. This has prompted Coca-Cola and PepsiCo to accelerate consumer promotions across grocery stores and quick-commerce platforms even as they have so far resisted a price cut. "The multinational brands have not dropped prices immediately, but are stepping up tactical promotions at local retailers and cross-promotions and bundling on quick-commerce platforms," a beverages industry executive said. But, they are facing the risk of losing market share . "There are talks of either dropping prices which could hurt profitability, or risk losing market share to a lower-priced rival," a second executive said. "Any pricing decisions, however, will also have to be in agreement with independent bottling partners," the person added. 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Gupta, Professor: Department of Finance and Business Economics, University of Delhi View Program The FMCG arm of Reliance Retail forayed into the Indian soft drinks market dominated by Coca-Cola and PepsiCo in 2022 by launching the Campa range in multiple pack sizes and flavours at significantly lower price points than established rivals in select markets. After the slow start, RCPL is now scaling up the Campa brand across various markets including the southern states, West Bengal, Bihar, Odisha and parts of Uttar Pradesh at disruptive prices, executives in direct knowledge of the developments said. "RCPL has hinged its FMCG strategy on affordable pricing across categories including beverages, biscuits, confectionery and detergents, at price points 30-35% lower than rivals," another industry executive said. "This is in line with an internal policy of being 'consumer-centric' and not 'competition-centric'." Campa, for example, is selling 250 ml bottles at Rs 10 each against Rs 20 for a 250 ml bottle of Coca-Cola and PepsiCo. Campa also sells 500 ml bottles at Rs 20, while the two bigger rivals sell 500 ml bottles at either Rs 30 or Rs 40. Emails sent to offices of RCPL and Coca-Cola remained unanswered till press time on Thursday, while PepsiCo said it will be unable to comment. Responding to an analyst question about the potential impact of Campa, RJ Corp chairman Ravi Jaipuria, whose group company Varun Beverages bottles and sells PepsiCo's products, had recently said the market is growing at a pace where there is enough room for new players to come in. "We think every new person coming in has a chance to grow the market. Reliance is a formidable competition but they will have to put more investments, more plants, more visi-coolers and we are sure being Reliance, they will do a good job. The market is so large in India, with more investments the market will only grow much faster," Jaipuria had said during an earnings call. While the peak summer April-June quarter remains the biggest in terms of sales for soft drinks annually, companies have been trying to de-seasonalise the products with new promotions and campaigns specially during the festive months of October-December. The consumption of bottled soft drinks breached an annual penetration of 50% of Indian households in 2023-24, global research firm Kantar said in a report released in June. "The bottled soft drink category grew 41% by MAT (moving annual total) in March '23 and continued to add more households and expanded 19% in MAT in March '24," the report said. In its last reported financials, Coca-Cola India reported a consolidated profit of Rs 722.44 crore in FY23, an increase by 57.2% over the previous year, according to financial data accessed by business intelligence platform Tofler. Varun Beverages reported consolidated net profit of Rs 1,262 crore for the June '24 quarter, growing 26% over the year-ago quarter, which it attributed to volume growth and improved margins. (You can now subscribe to our Economic Times WhatsApp channel )