In order to compete with Campa by Reliance Consumer Products, PepsiCo and Coca-Cola are looking into the possibility of launching more affordable soft drink types in local markets.
The present market leadership is being severely challenged by Campa’s competitive price and attractive trade margins.
In order to successfully address the competitive challenge posed by Campa, the two big cola firms are concentrating on preserving the integrity of their core brands and profit margins, developing regional pricing strategies, and implementing promotional campaigns.
Targeting regional markets, they will launch lower-priced soft drinks that are roughly 15% to 20% less expensive than their regional brands.
Reliance’s pricing strategy
In an attempt to disrupt the industry, Reliance Industries has been aggressively pricing its Campa brand through its consumer products division.
As it grows its distribution network, Reliance is giving retailers more trading margins than other companies in addition to lower costs.
With the exception of several regional competitors, Reliance’s growth presents a serious threat to PepsiCo and Coca-Cola’s dominance in the soft drink industry.
To stay competitive without sacrificing their market positions, this can involve launching secondary brands (B-brands) or more reasonably priced goods.
PepsiCo’s response
Ravi Jaipuria, the chairman of Varun Beverages, PepsiCo’s prominent bottling partner in India, stated that they are prepared to introduce a product line to compete with the pricing in the B-segment. Despite this, he emphasized that PepsiCo remains unaffected by Campa’s pricing strategy.
During a recent analyst call following the company’s earnings report, Jaipuria mentioned that Reliance has a unique strategy, specifically addressing a question regarding Campa’s pricing.
Campa was referred to as a “strong contender” by him. He mentioned, “In the future, they will capture a portion of the overall market. I can’t say who will be impacted first… It’s uncertain. However, we are enhancing our market approach,” stated Jaipuria.
Coca Cola’s Response
Coca-Cola is increasing the distribution of glass bottles that can be returned for Rs 10 and are mainly aimed at tier-2 markets, according to two informed executives.
Additionally, the business is planning to launch regional brands that can grow as needed.
One such brand is RimZim Jeera, which was first introduced as a temporary offering and is currently offered on a very limited basis.
The large cola corporation prioritizes protecting the profit margins of its key brands, which is what this action attempts to do.
Pricing and profit margins
Coca-Cola and PepsiCo sell 250 ml bottles for Rs 20, while Campa sells its 200 ml bottles for Rs 10. Similarly, a 500 ml bottle of Campa costs Rs 20, while Coke and Pepsi cost Rs 30 and Rs 40, respectively.
According to the report, Coca-Cola and PepsiCo are using tactical promotions at the local store level, such as cross-promotions and bundle discounts on quick-commerce platforms, even if they haven’t formally lowered their pricing.
Trade Margin
Distributors are being offered a margin of 6-8% by Reliance Consumer, which surpasses the 3.5-5% margin provided by other soft drink manufacturers.
This margin difference is proving to be a key factor in driving retailer interest in Campa over more established brands.
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