World News

Mukesh Ambani adopts familiar playbook to disrupt Coke and Pepsi’s grip

Reliance, India’s largest retailer, will supply Campa to its 2,500 grocery stores. (To file)

New Delhi:

Industrial giant Reliance is reviving a historic local cola brand with the intention of using its extensive retail network, cutting prices and exploiting nationalist sentiment to challenge US beverage giants PepsiCo and Coca-Cola in a key market.

Controlled by billionaire Mukesh Ambani, Reliance this month launched revamped Campa drinks, sugary sodas popular in India in the 1970s and 1980s before disappearing from shelves as the American giants expanded rapidly in a deteriorating economy. liberalization.

At first glance, it may appear that Ambani will struggle to loosen the grip of Pepsi and Coca-Cola in a market estimated at $4.6 billion by Euromonitor and expected to grow 5% per year through 2027. Other well-known tycoons have attempted to forge ahead. with the feet with the giants of the drinks, and failed, in particular Richard Branson with its Virgin Cola.

But Asia’s richest person upended India’s telecom market seven years ago with rampant pricing to make Reliance the industry’s biggest player. And he’s applying some of that same strategy in his soft drink business.

“Coca-Cola and Pepsi are not used to a national challenge, and Reliance has the financial muscle and reach to challenge them with a nostalgic high-value local brand,” said Amulya Pandit, consultant at Euromonitor International.

A person with direct knowledge of Reliance’s plan said it aimed to open its own factories or as joint ventures to manufacture Campa and bring the soda to hotels, restaurants and in-flight sales. Campa’s production is currently outsourced, following its acquisition of the brand for $2.7 million last year.

The company sharply reduces prices in stores. A two-litre bottle of Campa Cola costs 49 rupees (60 US cents) in stores, almost 50% off its tag price and around a third less than the 2.25 Coke and Pepsi variants. litres, a Reuters check showed. The smaller bottles of Campa Cola and Coke both cost 10 rupees, while Pepsi starts from 12 rupees.

“The price will be disruptive,” said the person, who added that Reliance was planning a publicity frenzy at the upcoming popular IPL cricket tournament and was in talks with at least three teams to make Campa their refreshment partner.

The person did not want to be identified because the strategy is confidential. Reliance did not respond to a request for comment, while Pepsi said it does not comment on competition as a policy.

Coca-Cola said it has generally kept prices for its small bottles unchanged from last year and is focused on expanding distribution. “Having new players in the market presents a great opportunity for investments to further develop the market,” he said.

Reliance, India’s top retailer, will supply Campa to its 2,500 grocery stores and thousands of small off-grid stores as part of its new consumer goods push from which it has set an internal target of 6.5 billion dollars in annual revenue within five years.

The company also has a grocery app and a wholesale segment under which it supplies consumer goods to 500,000 mom-and-pop stores, which it will also operate for Campa sales.


Reliance’s foray into cola and consumer goods is led by T. Krishnakumar, an executive who spent nearly 17 years at Coca-Cola in various executive roles.

Pepsi and Coca-Cola will also be cautiously watching Reliance’s marketing strategy after targeting nationalist sentiment and nostalgia by promoting Campa as a local brand with “Great Indian Taste” and a “rich heritage.”

A former Pepsi executive who did not want to be identified due to the sensitive nature of the subject said the US firm has always been concerned about local products being marketed with an “India First” agenda, especially at a time when the Prime Minister Narendra Modi himself supports autonomy.

The rivalry is already playing out in the market.

At five Reliance outlets that Reuters visited in Mumbai in western India, Chennai in the south and Lucknow in the north, plastic bottles of Campa cola or lemon were displayed at the entrance doors main ones or placed on shelves right next to rivals.

At a Chennai outlet, a Reliance store manager said this year that he was placing Campa at the entrance for his promotion, with rivals hidden behind and not visible at first glance. Another city store employee said 30 bottles of Campa sold for 100 of Pepsi and Coca-Cola.

For now, the American rivals have the upper hand. Pepsi and Coca-Cola drinks are available in at least 3 million Indian outlets and the companies have an extensive logistics network, dozens of factories and the advantage of a taste preferred by many, said Alok Shah, consumer analyst at Ambit Capital in India.

“We will have to wait and watch to see if consumers switch to Campa,” he said, adding that Pepsi and Coke remain aspirational foreign brands for many Indians, offered at broadly similar small-pack prices.

Srinivas Rao said he still loves Coca-Cola’s Thums Up, a national brand acquired in 1993 that is the top-selling brand in India, unlike the United States where coke dominates.

“We buy Thums Up every time we eat biryani or meat at home. We are not attracted to discounts from other brands, including Campa,” Rao said outside a Reliance store in Chennai.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)


Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
Back to top button