© Reuters. FILE PHOTO: A bird flies past a Reliance Industries logo installed at its shopping mall in Ahmedabad, India, January 16, 2017. REUTERS/Amit Dave
By Praveen Paramasivam and Aditya Kalra
CHENNAI/NEW DELHI (Reuters) – Indian industrial giant Reliance is reviving a storied local cola brand with plans to use its vast retail network, cut prices and harness nationalist sentiment to challenge US beverage giants PepsiCo (NASDAQ: ) and Coca-Cola (NYSE). 🙂 in a key market.
Controlled by billionaire Mukesh Ambani, Reliance this month launched revamped Campa drinks, sugary soft drinks popular in India in the 1970s and 1980s before disappearing from shelves as American giants expanded rapidly in a liberalized economy.
At first glance, it may seem that Ambani will find it difficult to loosen the grip of Pepsi and Coca-Cola in a market that Euromonitor estimates is worth $4.6 billion and will grow 5% a year through 2027. well-known tycoons have tried to go hand in hand. heads up with the beverage giants and failed, most notably Richard Branson with his Virgin Cola.
But Asia’s richest person disrupted India’s telecom market seven years ago with cutthroat pricing to make Reliance the leading player in that industry. And he’s applying part of that same strategy at his soft drink company.
“Coca-Cola and Pepsi are not used to a national challenge, and Reliance has the financial power and reach to challenge them with a local brand with high nostalgic value,” said Amulya Pandit, a consultant at Euromonitor International.
A person with direct knowledge of Reliance’s plan said it aims to open some factories of its own or as joint ventures to make Campa, and bring the soda to hotels, restaurants and shipboard sales. Campa’s production is currently outsourced, following the brand’s $2.7 million acquisition last year.
The company is making deep discounts on store prices. A two-litre bottle of Campa Cola is priced at 49 rupees (60 US cents) in stores, a discount of almost 50% off the sticker price, and around a third less than Coca-Cola variants. and a 2.25-litre Pepsi, showed a check from Reuters. The smallest bottles of Campa Cola and Coca-Cola cost Rs 10, while Pepsi starts at Rs 12.
“Price will be disruptive across the board,” the person said, adding that Reliance is planning a publicity spree during the upcoming IPL popular cricket tournament and is in talks with at least three teams to make Campa their soft drink partner.
The person did not want to be identified as 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 broadly kept prices for its small bottles unchanged from last year and 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 leading retailer, will supply Campa to its 2,500 grocery outlets and thousands of smaller off-grid stores as part of its new consumer goods push from which it has set an internal target of $ 6.5 billion in annual revenue within five years.
The company also has a grocery shopping app and a wholesale vertical under which it supplies consumer goods to 500,000 mom-and-pop stores, which it will also leverage for Campa sales.
‘GREAT INDIAN TASTE’ VS FOREIGN BRANDS
T. Krishnakumar, an executive who worked for nearly 17 years at Coca-Cola in various leadership roles, is driving Reliance’s foray into colas and consumer goods.
Pepsi and Coca-Cola will also watch Reliance’s marketing strategy with a grain of salt after it targeted 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 named due to the sensitive nature of the issue said the US firm has always been concerned about local products being marketed with an “India First” agenda, especially at a time when Prime Minister Narendra himself Modi endorses self-reliance
The rivalry is already developing in the market.
In five Reliance outlets that Reuters visited in Mumbai in western India, Chennai in the south and Lucknow in the north, plastic Campa-Cola or lemon bottles were displayed at the main entrance doors or placed on shelves right next to rivals.
At a Chennai outlet, the manager of a Reliance store said earlier this year that Campa would be placed at the entrance to promote it, with rivals hidden behind and not visible to the naked eye. Another clerk at a store in town said 30 bottles of Campa were sold for every 100 bottles of Pepsi and Coke.
For now, US rivals have the upper hand. Pepsi and Coca-Cola drinks are available in at least 3 million Indian outlets and the companies have a vast logistics network, dozens of factories and the advantage of a flavor preferred by many, said Alok Shah, a consumer analyst at Ambit Capital of India.
“We’ll have to wait and see if consumers switch to Campa,” he said, adding that Pepsi and Coke remain aspirational foreign brands for many Indians, offered at largely similar small-pack prices.
Srinivas Rao said he still loves Coca-Cola’s Thums Up, a national brand he bought in 1993 and is the best-seller in India, unlike the United States, where Coca-Cola dominates.
“We buy Thums Up every time we eat biryani or meat at home. Discounts from other brands, including Campa, don’t appeal to us,” Rao said outside a Reliance store in Chennai.
