As Duopoly between Coca Cola and PepsiCo prevails, Reliance Industries Campa Cola has entered the Indian soft drink market with a disruption strategy to shake it up.
Reliance Industries, through its FMCG arm Reliance Consumer Products Ltd (RCPL), has revived Campa Cola.
Once a beloved household name in India, the reintroduction of Campa Cola positions it as a strong contender against industry giants Coca-Cola and PepsiCo. How? With an aggressive pricing strategy.
The Disruption Strategy
The key to Campa Cola’s resurgence lies in its pricing strategy. Campa Cola’s aggressive pricing, especially the Rs 10 pack in a PET bottle, has challenged major players like Coca-Cola, PepsiCo, and even Tata Consumer Products Ltd (TCPL), forcing them to reconsider their pricing structures.
TCPL’s Managing Director and CEO, Sunil D’Souza, acknowledged the disruption, noting that Campa Cola’s entry has pressured competitors to lower prices to retain market share. Tata’s Gluco Plus drink, for instance, was priced at a 30% premium to rivals, a margin D’Souza admitted was unsustainable. As a result, Tata has adjusted prices to remain competitive.
Reliance’s pricing strategy isn’t just about offering low prices to consumers. By offering higher trade margins to retailers, particularly small local stores, Campa Cola has secured prime shelf space in India’s fragmented retail market. This approach aligns Reliance’s interests with those of local retailers, enabling Campa Cola to gain traction across urban and rural areas.
Reliance’s Unique Position
What makes Campa Cola’s resurgence particularly threatening to incumbents is Reliance’s ability to scale quickly. With the backing of Mukesh Ambani’s vast financial resources, Reliance has been able to implement a robust marketing and distribution strategy, leveraging its retail networks, such as Reliance Fresh, Smart, and Jiomart. Campa Cola’s pricing advantage, along with higher margins for retailers, gives it a strong presence, even in markets traditionally dominated by Coke and Pepsi.
The company’s approach taps into consumer nostalgia. Once a beloved homegrown brand before the entry of the American giants, Campa Cola is being marketed as a nostalgic alternative, appealing to Indian consumers who value local products. This emotional connection is further supported by the brand’s affordability, which resonates deeply in price-sensitive markets.
Competitors’ Response
Coca-Cola, PepsiCo, and other competitors have quickly reacted to Campa Cola’s aggressive pricing. Tata Consumer Products Ltd, for example, initially sold its Gluco Plus product at a higher price than both multinationals and local competitors. However, as Campa Cola gained traction, Tata was forced to reduce prices to maintain its market position. D’Souza acknowledged the need for “corrective actions” to prevent losing market share, especially with the festive season underway.
During the recent Durga Puja celebrations in West Bengal, Campa Cola capitalized on its low pricing to capture a significant share of the market. While Coca-Cola and PepsiCo sold their 600 ml bottles for Rs 40, Campa Cola offered 200 ml and 500 ml bottles at Rs 10 and Rs 20, respectively, making it a popular choice for budget-conscious consumers.
Despite the strong initial impact, Campa Cola’s availability remains limited in some regions. However, Reliance’s investment in bottling plants and expanded production capacity indicates that the company is planning for sustained growth. RCPL, which recorded Rs 3,000 crore in sales in its first full year, is set to invest between Rs 500 crore and Rs 700 crore to increase production. This investment is expected to address supply constraints, positioning Campa Cola to capture an even larger share of the market in the coming years.
Industry analysts believe that Campa Cola’s potential impact will only grow. Nuvama Institutional Equities forecasts a substantial disruption to incumbents over the next two to four years. While some investors express concern over Campa Cola’s taste, analysts argue that in the FMCG sector, factors like pricing, packaging, and distribution are more influential than taste in driving consumer choices.
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