Billionaire Ambani adopts familiar playbook in India cola battle vs Coke, Pepsi

CHENNAI/NEW DELHI: Indian industrial giant Reliance is reviving a historic local cola brand with plans to use its vast retail network, slash prices and tap nationalist sentiment to challenge US beverage giants PepsiCo and Coca-Cola in a key market.

Controlled by billionaire Mukesh Ambani, Reliance this month launched revamped Campa drinks, sugary sodas popular in India in the 1970s and 1980s before disappearing from shelves as the US giants expanded rapidly in a liberalising economy.

At first glance it may seem that Ambani will find it tough to loosen Pepsi’s and Coca-Cola’s stranglehold of a market Euromonitor estimates is worth $4.6 billion and set to grow 5% a year until 2027. Other well known tycoons have tried to go toe-to-toe with the drinks giants, and failed, most notably Richard Branson with his Virgin Cola.

But Asia’s richest person has famously disrupted India’s telecoms market seven years ago with cut-throat pricing to make Reliance the leading player in that industry. And he’s applying some of that same strategy in his soft drinks venture.

“Coca-Cola and Pepsi are unused to a nationwide challenge, and Reliance has the financial muscle 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 take the soda to hotels, restaurants and in-flight sales.

Production of Campa is currently outsourced, after its $2.7 million acquisition of the brand last year.

The company is heavily discounting in-store prices. A two-litre Campa Cola bottle is priced at 49 rupees (60 US cents) in stores, a near 50% discount on its label price, and around a third lower than 2.25-litre Coke and Pepsi variants, a Reuters check showed.

The smallest bottles of Campa Cola and Coke both cost 10 rupees, while Pepsi starts from 12 rupees.

“The price will be disruptive across,” said the person, who added Reliance is planning an advertising spree during the upcoming popular IPL cricket tournament and is in talks with at least three teams to make Campa their refreshment 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 doesn’t comment on competition as a policy.

Coca-Cola said it has broadly kept prices of its small bottles unchanged since last year and was focused on expanding distribution.

“Having new players in the market presents a great opportunity for investments to develop the market further,” it said.

Reliance, India’s top retailer, will supply Campa to its 2,500 grocery outlets and thousands of smaller non-network stores as part of its new consumer goods push from which it has set an internal target of $6.5 billion in annual revenues 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 tap for Campa sales.

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