Return Of The Cola Wars: Coca-Cola Cuts Prices To Fight Campa Blitz

The revised sticker price has been implemented in Coke across the Southern markets of Tamil Nadu, Telangana, Karnataka and Kerala, at least five distributors told NDTV Profit. It would be rolled out in other states as well, in a few weeks.

For its existing stock, the company has introduced new packaging, promoting the brand as offering 250 ml plus an additional 150 ml for free.

The other fizzy drinks brands such as Thums Up, Sprite, Fanta and Limca will also see similar pricing, with their repackaged 400 ml bottles set to hit the market in the next 2-3 weeks, three of the five distributors quoted above said.

India is the fifth largest market by volume for the Atlanta-headquartered Coca-Cola Company.

The traditional cola rivalry between two giants, Coca-Cola and PepsiCo, faces new competition from Campa Cola, owned by Reliance Consumer Products Ltd. Since its re-entry in 2022, Campa has capitalised on nostalgia and disruptive pricing, with its 200 ml PET bottle priced at just Rs 10. In contrast, Pepsi sells a 250 ml PET bottle for Rs 20.

Coca-Cola, on the other hand, stopped the production of its 250 ml bottles priced at Rs 20, the distributors said. The distributors were asked to liquidate all their stocks, and now they are rolling out only the 400 ml bottles, one of them said.

Some distributors said that Coca-Cola may look at launching a cheaper pack size in a bid to compete with Campa's existing entry point of Rs 10. But it remains unclear what Coca-Cola's pricing and marketing strategy going ahead will be.

Currently, Coca-Cola offers a range of sizes in the general trade, including 400 ml, 600 ml, 1 litre, and 2.25 litres. In modern trade, however, the availability of PET bottles tends to focus more on the 750 ml and 1.25 litre options. Notably, for the larger 2 litre bottles, Campa is priced Rs 20 lower than Coca-Cola's 2.25 litre offering.

Rival PepsiCo is also closely watching Campa as it makes deeper inroads. Following Coca-Cola, PepsiCo may need to lower its prices to protect its market share even if that hurts profitability, said an industry executive.

In the meantime, however, a few distributors told NDTV Profit that PepsiCo is engaged in negotiations with distributors to increase trade margins and ramp up promotions in a bid to boost sales.

“India is a priority growth market for PepsiCo and we are focussed on catering to a wide range of consumer needs," said a PepsiCo India spokesperson in response to NDTV Profit's queries. "We play in multiple products and packages across various beverage categories including value, mainstream and premium segments.”

During a post-results call, Ravi Jaipuria, chairman of RJ Corp, said, "Campa is a formidable competition. They are in the market, but we are improving our go-to market. It has not affected us at the moment and going forward, they may take a part of the share of the total market."

RJ Corp's group company Varun Beverages bottles and distributes PepsiCo products

Beyond Cola, Campa's aggression is impacting even the juices and glucose-based drinks categories. Recently, companies such as Dabur and Tata Consumer Products pointed out that Campa has disrupted the beverage segment by offering retailers a much higher margin on its Rs 10 bottle.

Reliance Consumer Products is actively expanding the Campa brand across multiple markets, including southern states, West Bengal, Odisha, Bihar and parts of Uttar Pradesh. In FY24, the FMCG business reported sales of Rs 3,000 crore. 

Queries sent to Coca-Cola and Reliance Consumer, however, remained unanswered till press time.

Analysts maintain a cautious outlook on the beverage space.

"Some investors often dismiss the impact of Campa Cola, citing taste as a primary concern. We believe that in the Indian FMCG industry, pricing, packaging, branding, distribution play a more significant role than taste," according to Abneesh Roy, executive director, Nuvama Institutiontal Equities. "We forecast Campa Cola having a substantial impact on incumbent beverage players over the next 2-4 years."