The summer of 2024 was exceptionally hot, with most of India reeling under an intense heatwave. There has been a different kind of pressure building up for the soft drink giants famous for the Cola Wars. A third formidable competitor is rising to make India love its own ‘Apna thanda’!
There was a lot of debate and noise on news of Reliance’s foray into the soft drink category. How has Campa Cola performed in its first two summers? Should Pepsi Cola and Coca Cola be worried? Can a desi thanda spin magic in the glamorous world of multinational fizzy drinks?
Scepticism abounds despite Reliance’s reputation
Reliance is now known for breaking into new categories and taking bold steps that end up changing the game for all established players. We have all witnessed how Reliance disrupted the mobile market by introducing Jio with unprecedented low-cost data plans and free voice calls, which drastically reduced the cost of mobile services for consumers. The move led to a massive surge in data consumption and internet penetration across the country and today Reliance Jio leads the category with an estimated 40% market share (Source: Telecom TV; Apr 15, 24).
Despite its massive success in other sectors, Reliance faced huge scepticism when it indicated its intent to enter the ready-to-drink (RTD) market. Ruled by multinational giants like Pepsi Cola and Coca-Cola, breaking into the soft drinks category is notably challenging due to many entry barriers. These companies have invested for years to create a massive distribution network. Coca-Cola boasts a formidable presence with nearly 4 million retail outlets across India (Source: PRNewsWire.com, July 1, 2024). Furthermore, companies must invest in building a robust chiller infrastructure. Varun Beverages, one of PepsiCo's largest global franchisees, is estimated to maintain approximately 1 million Visi coolers throughout the country (Source: ICICI Direct Research; March 17, 2023).
Reliance bought Campa Cola from Pure Drinks, and in 2023, it declared its intent to revive the Campa Cola brand, which ruled the Indian beverage market until the 1980s, to break into this category that has many love mark brands from the Pepsi Cola and Coca-Cola stables apart from many local favourites in the juice and juice drinks category.
Summer of 2023-2024
Early reports suggest that Reliance has had a good start since launching in 2023. Reliance Consumer Products Limited (RCPL) reported ₹3,000 crore in sales for FY24, of which Campa Cola is reported to have contributed an impressive ₹400 crore. Generating nearly one-tenth of Coca-Cola’s revenue is no small feat, especially given Coca-Cola India’s entrenched position in these markets. Market reports suggest that Campa has already crossed nearly 2.25 lakh outlets, particularly in the south, and is poised for further growth and market penetration
(Source: ET; Apr 22, 2024)
3. Turning on the heat!
Elevate Insights' work suggests that the heat is on for the big players, especially Coca-Cola, this summer! Campa Cola seems to have played its cards well. Ah, is this is the new right choice, baby?
A. The right choice of market
Reliance prioritized Campa’s launch in Andhra Pradesh and Telangana. According to Nielsen Retail Audit data, this market contributes almost a fifth of the total sales in India and is the largest market for fizzy drinks in the country. Furthermore, this market is dominated by Campa Cola, with a limited presence of PepsiCo, while most other large markets would see a three-way fight with both multinationals in the fray.
Campa Cola is said to have already established a presence in about 100,000 Kirana outlets to ensure widespread availability. A year later, its combined sales in Andhra Pradesh and Telangana are estimated to be around ₹150-200 crore, making APT the biggest win for Campa (Source: Financial Express; April 30, 2024). This win also indicates both Campa Cola’s intent and ability to succeed for the long term by building a robust and deep retail presence market by market.
B. The right price point
Reliance’s best strategy in enabling a great comeback for Campa Cola is its aggressive pricing. The entry point of Rs. 10, which was 33% cheaper than established competitors, encouraged all potential consumers to try it, not just the price-sensitive ones. This also helps Campa gain traction in rural markets. Coca Cola has already responded by reducing the price of glass bottles to Rs. 10 and asking its distributors to focus on glass bottles versus the small PET bottles that have been the focus in the last few years.
(Source credit: Business Standard; Mar 2023)
C. The right platform
Building brand love is of utmost importance to win in this category. Coca-Cola and Pepsi have spent decades building their brands through celebrity endorsements and high-profile marketing campaigns, establishing strong brand identities.
Campa, too, was a greatly loved brand back in the 80s. However, it realizes that depending on nostalgia would not work in a market where consumption is dominated by the youth. Reliance did not delay in making Campa the official partner for BCCI’s India home cricket season from 2024-2026. Cricket remains the platform with the widest reach and popularity among Indian youth audiences.
(Source: TOI; Jan 9, 2024)
In it to win it!
History teaches us that Reliance plays for the long term. These are not flash-in-the-pan tactics but well-thought-out moves to towards a strong play in the market. We see the following pan out.
PRICE WAR: Reliance will continue to not just play aggressively at INR 10 but also put pressure on the multinationals with favourable retail and trade prices across price points. Campa’s pricing strategy to challenge Coca-Cola and Pepsi can boost its traction among the price-sensitive Indian masses, especially in the rural markets, as 68% of Indian consumers are extremely concerned about the impact of inflation on their household budget. The entry SKU at Rs. 10 and the 1L SKU are both discount plays. Distribution-wise, the large SKUs have the advantage of the Jio network. In response to Campa’s Rs. 10 SKU, Pepsi and Coca-Cola will have to bring focus back to RGB at Rs. 10.
BRAND LOVE: Reliance is leveraging its extensive media assets to rebuild the Campa brand, blending nostalgia with the aspirations of modern India. Their campaign's tagline, "Naye India ka Apna Thanda,” encapsulates this dual appeal. Launched during the high-visibility IPL season, the campaign spans television, digital platforms, outdoor advertising, and print media. To further solidify its cultural relevance, Campa has tapped into India's cricket fever with "Campa Cricket," leveraging its existing associations with IPL's Mumbai Indians and endorsing rising star Ishan Kishan.
(Source: ET; Sep 12, 2023)
Reliance will continue to ramp up distribution. Reliance's expansion strategy for Campa Cola is unfolding in stages, with the second phase targeting markets like Gujarat, West Bengal and Tamil Nadu which are also media isolated states. According to reports, RCPL is expected to raise Rs. 500-700 crore from its parent company to establish strategically located bottling plants to cater to consumers across the country easily. RCPL (Reliance Consumer Products Limited) is using a mix of contract manufacturing and partial ownership to produce Campa Cola. They have a 50% stake in a facility in Gujarat that produces Sosyo carbonated soft drinks and now also bottles Campa Cola. They work with contract bottlers in several states: Andhra Pradesh, West Bengal, Tamil Nadu, Uttar Pradesh, and Maharashtra. This model allows RCPL to scale up quickly in response to market demand without the need for large capital expenditures on wholly owned manufacturing facilities.
Additionally, Reliance has global ambitions for Campa, starting with expansion in Asia and Africa. A strategic partnership with Ceylon Beverages for co-packing and manufacturing is expected to support this international expansion, as announced by Isha Ambani last year.
2. Further, with high visibility in its own vast modern trade network, Campa Cola is poised to enhance consumer familiarity and trust, which is crucial for increasing household penetration. This presence not only positions Campa Cola favorably for impulse purchases but also facilitates larger purchase volumes for family and group consumption occasions.
PepsiCo and Coca-Cola haven’t faced a nationwide challenge in the fizzy drinks market, and Reliance has the financial muscle and reach to challenge them. These global giants, despite their international success, have found the unique dynamics of the Indian soft drink market challenging to navigate profitably.
In response to these difficulties, both companies have resorted to franchising their operations to local bottlers, a move that may have reduced direct costs but potentially leaves them vulnerable to a well-resourced and strategically agile competitor like Reliance. This shift in operational structure, coupled with Campa's aggressive market entry, signals a long and intense battle ahead in the Indian soft drink industry. Campa is indeed changing the game, once again!
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