Reliance Consumer May Stop Direct Supply Of Campa Beverages To Udaan — BQ Exclusive

"We contacted the top management of Reliance Consumer, who apprised us that it has not signed Udaan as national distributors for soft drinks brand—Campa," Dhairyashil Patil, president of the All India Consumer Products Distributors' Federation, told BQ Prime.

"It was an issue at the local level and Reliance has already asked the team to immediately stop the current dispatches of Campa to Udaan," Patil said.

Reliance Consumer and Udaan are yet to respond to BQ Prime's queries.

Reliance Consumer will always prioritise traditional distributors and after that, if some stock is left, then they might consider giving it to other large players like Udaan, according to a person with knowledge of the matter, who spoke on condition of anonymity.

This comes a day after Udaan released a statement, saying it has entered into a partnership with Reliance Consumer for pan-India distribution of beverage brand Campa's range of products.

Under this partnership, Reliance has made available three new Campa flavours—cola, orange and clear lime—under various consumption ranges and price points.

"The large retailer base combined with a cost effective distribution network places Udaan in a unique position to serve the needs of RCPL for deeper market penetration for the 'Campa' range across Bharat," said Vinay Shrivastava, head for FMCG business, Udaan.

The Campa beverages will be initially available in over 50,000 mom-and-pop stores, which will gradually expand to over 1 lakh retailers and grocery stores in the next two months, the Bengaluru-based unicorn startup said.

Udaan said it would work on various retailer promotions to drive expansion of Campa and increase the buyer base on the platform.

The company has launched Project Vistaar to expand the fast-moving consumer goods and food category by tapping into the rural area. Udaan claims to be reaching rural markets up to a population of 3,000 under the project, which is currently being implemented in rural Uttar Pradesh.

"The company aims to expand its reach to over 10,000 towns and villages in the next 10–12 months," Udaan said.

In 2022, the company said it shipped over 1.5 lakh tonne of FMCG products, with a large volume of orders for the products coming from Uttar Pradesh, Delhi, Karnataka, Maharashtra, and Telangana.

According to another person familiar with the matter, who spoke on condition of anonymity, it would be surprising if Reliance prioritises any other platform over traditional distributors, which is the backbone of India's retail trade.

If new-age platforms like Udaan start supplying to retailers, that too on cheaper terms, then it amounts to undercutting, souring the partnerships with existing distributors. And no companies will want to do that, given that the general trade accounts for a bulk of FMCG sales, according to the person.

Over the past several months, the traditional distributors have had a rub with consumer goods companies that have added a stream of revenue by partnering with e-commerce players, who directly buy the products from the companies instead of buying it from a distributor.

While this gives e-commerce players a pricing and discounting power, distributors have alleged that the e-commerce players are latching on to deep discounting, thus creating a dent on their revenues.

Amul and Parle Products had also earlier stopped supplying stocks directly to Udaan, alleging that Udaan was monopolising distribution to retailers.

Earlier, Udaan had filed complaints with the Competition Commission of India against Parle Products Pvt. and Britannia Industries Ltd. on different occasions as the consumer goods makers refused to supply their products directly to the startup. The national competition regulator, however, dismissed both the pleas, citing lack of objective justification.

The coronavirus lockdowns disrupted the $110-billion FMCG industry, impacting the channels of distribution and store-level inventory. Since then, firms like Hindustan Unilever Ltd., Nestle Ltd., Marico Ltd. and Dabur India Ltd. have been adding direct distributors to expand the reach in underpenetrated markets.

"The traditional distributors, some of whom have been doing business for three generations, have built a significant infrastructure to reach a large number of outlets," Patil said. "This offers them an edge over newer firms, such as Udaan, who may not have the same amount of reach."

The general traders have a distribution strength of 80 lakh outlets across the country, Patil said. This compares with Udaan's network of 30 lakh grocery stores, retailers, pharmacies, hotels, restaurants and catering, and others.