New Delhi: Mukesh Ambani’s Reliance Industries (RIL) has created a stir in the Indian soft drinks market. It has done this by relaunching Campa Cola through its FMCG company RCPL. With the return of Campa Cola, giant companies like Coca-Cola and PepsiCo are expected to face tough competition. Campa Cola’s strategy is to offer aggressive pricing and higher margins to retailers. This is helping it to gain a better hold in the market compared to Coca-Cola and PepsiCo. Experts believe that Campa Cola will have a huge impact on these companies in the next two to four years. Reliance Industries has re-launched Campa Cola through its FMCG company Reliance Consumer Products Limited (RCPL). Campa Cola was once a popular brand in India. Now its comeback is expected to give tough competition to big companies like Coca-Cola and PepsiCo.
The strategy is to set aggressive pricing
Campa Cola’s strategy is aggressive pricing. The company is selling its beverages at low prices. Besides, it is also giving higher margins to retailers. This is helping it to gain a better hold in the market compared to Coca-Cola and PepsiCo.
Campa Cola’s biggest strength is its low price. The company has launched its soft drink in PET bottle for Rs 10. This has put pressure on big companies like Coca-Cola, PepsiCo and Tata Consumer Products Limited (TCPL) to reduce their prices.
TCPL MD and CEO Sunil D’Souza admitted that the entry of Campa Cola has increased competition in the market. He said that companies have to reduce prices to maintain their market share.
Reliance is not just focusing on low prices. The company is also offering higher margins to retailers, especially small local stores. Due to this it is getting a good place in the retail market of India. Due to this strategy of Reliance, Campa Cola is gaining popularity in both urban and rural areas.
What is another big strength of Campa Cola?
Another major strength of Campa Cola is the strong financial position of Reliance. Mukesh Ambani-led Reliance has a strong marketing and distribution network. The company is promoting Campa Cola through its retail networks like Reliance Fresh, Smart and JioMart. With its strategy of low prices and giving high margins to retailers, Campa Cola is making its place even in those markets where Coke and Pepsi have traditionally dominated.
With the return of Campa Cola, companies like Coca-Cola and PepsiCo have also come into action. Tata Consumer Products Limited initially sold its Gluco Plus product at a higher price than Coca-Cola and PepsiCo. But, after the entry of Campa Cola, it had to reduce its prices. D’Souza admitted that ‘corrective steps’ need to be taken to maintain market share.
Recently, during Durga Puja in West Bengal, Campa Cola took advantage of low prices and gained a good hold in the market. While Coca-Cola and PepsiCo sold their 600 ml bottles at Rs 40, Campa Cola sold its 200 ml and 500 ml bottles at Rs 10 and Rs 20, respectively. This made it very popular among low-budget customers.
However, the availability of Campa Cola is still limited in some areas. But, Reliance is investing in setting up bottling plants and increasing production capacity. This shows that the company is planning to grow further.
Company is ready for big expansion
RCPL has recorded sales of Rs 3,000 crore in its first full financial year. The company is going to invest between Rs 500 crore to Rs 700 crore to increase production. This will help in overcoming the supply shortage and Campa Cola will be successful in increasing its market share in the coming years.
Industry analysts believe that Campa Cola’s influence will continue to grow. Nuwama Institutional Equities estimates that Campa Cola will have a significant impact on giants like Coca-Cola and PepsiCo in the next two to four years.
Some investors are concerned about the taste of Campa Cola. But, analysts argue that in the FMCG sector, factors like price, packaging and distribution influence consumer decisions, not taste.