Pepsi and Coca-Cola Launch Budget Drinks as Reliance’s Campa Disrupts Regional Soft Drink Markets

PepsiCo and Coca-Cola are preparing to launch budget-friendly soft drinks aimed at regional markets. This move is a response to the growing competition from Reliance Consumer Products’ Campa brand, which is offering lower prices and capturing attention.

Reliance’s Campa Challenges Global Cola Giants

Reliance Consumer is using disruptive pricing and better trade margins to attract retailers for its Campa brand. Previously, PepsiCo and Coca-Cola enjoyed near dominance in the market, facing little competition apart from a few regional players. Now, they’re working on strategies to maintain their position without affecting their core brands.

PepsiCo’s Response

Ravi Jaipuria, chairman of Varun Beverages (PepsiCo’s largest bottling partner in India), acknowledged the threat from Campa but noted that PepsiCo has not been significantly impacted yet. However, he expects Campa’s strategy to shift the overall market share.

Coca-Cola Escalates Distribution

Coca-Cola is increasing distribution of Rs 10 returnable glass bottles, specifically for tier-2 markets. Additionally, the company is working on reintroducing regional brands like RimZim jeera to shield their mainstream products from price cuts.

Competition from Regional Soft Drink Brands

In addition to Campa, regional brands such as Chennai-based Bovonto and Gujarat’s Sosyo Hajoori Beverages are competing in the market. Reliance holds a 50% stake in Sosyo, further strengthening its position in the beverage sector.

Campa’s Pricing Disrupts the Market

Reliance Consumer is selling Campa at Rs 10 for 200 ml bottles, while Pepsi and Coca-Cola charge Rs 20 for 250 ml bottles. Similarly, a 500 ml bottle of Campa costs Rs 20, compared to Rs 30 for Coke and Rs 40 for Pepsi.

Rather than lowering prices directly, Pepsi and Coca-Cola are running tactical promotions and bundling offers with retailers. Lowering the prices of their core products could hurt profits, and pricing decisions also depend on independent bottling partners.

Higher Margins for Distributors Boost Campa’s Appeal

Reliance is offering distributors margins of 6-8%, compared to the 3.5-5% margins provided by PepsiCo and Coca-Cola. Tata Consumer Products’ MD, Sunil D’Souza, highlighted that while consumer prices may seem similar, Reliance is offering significantly better trade margins, further disrupting the market.