PepsiCo, Coca-Cola eye budget soft drinks to compete with Reliance's Campa

PepsiCo and Coca-Cola plan to launch budget-friendly soft drinks, known as B-brands, to safeguard the premium status of their flagship products and preserve profit margins

PepsiCo and Coca-Cola are reportedly planning to introduce lower-priced soft drinks — around 15-20 per cent cheaper than their main brands — targeted at regional markets. This strategic move is aimed at countering growing competition from Reliance Consumer Products’ Campa brand, according to a report by The Economic Times.

Reliance's pricing strategy

Reliance Industries, through its consumer products subsidiary, has been aggressively pricing its Campa brand to disrupt the market. In addition to offering lower prices, Reliance is also providing retailers with higher trade margins than its competitors as it expands its distribution network. The expansion of Reliance poses a significant challenge to the dominance that PepsiCo and Coca-Cola have enjoyed in the soft drink market, barring competition from a few regional players.

 

 

To protect the premium positioning of their flagship products and maintain profit margins, PepsiCo and Coca-Cola are considering launching budget-friendly alternatives — often referred to as B-brands, the report said.

PepsiCo's response: Preparing for B-segment competition

The report quoted Ravi Jaipuria, chairman of Varun Beverages, PepsiCo’s largest bottling partner in India, as saying that the company is ready to introduce products to compete with this lower-priced segment.

 

He said that Campa presents "formidable competition" and is likely to capture a share of the overall market. However, Jaipuria expressed confidence in PepsiCo’s market strategy, stating that the company is "improving its go-to market."

Coca-Cola’s strategy

Coca-Cola is also stepping up its efforts in response to Campa’s pricing strategy. The company is expanding the distribution of returnable glass bottles priced at Rs 10, particularly in Tier-II markets. Coca-Cola is also considering launching more regional brands, which it can scale up depending on market demand, the report said.

 

One example is the company’s limited-edition RimZim jeera, which could be reintroduced at a larger scale if necessary. These moves aim to protect the margins and brand equity of Coca-Cola's mainstream offerings.

Regional competition

Campa is retailing its 200 ml bottles for Rs 10, while Coca-Cola and PepsiCo are selling 250 ml bottles for Rs 20. Similarly, Campa's 500 ml bottle is priced at Rs 20, compared to Rs 30 for Coke and Rs 40 for Pepsi. While neither PepsiCo nor Coca-Cola has officially reduced prices, they are implementing tactical promotions at the local retail level, including cross-promotions and bundling deals on quick-commerce platforms, the report said.

 

Prominent regional competitors such as Chennai-based Bovonto, Rajasthan’s Jayanti Cola, and Gujarat's Sosyo Hajoori Beverages, in which Reliance Consumer holds a 50 per cent stake, are also significant players in the soft drink market.

Trade margins: Key to competition

Reliance Consumer is offering distributors trade margins of 6-8 per cent, which is higher than the 3.5-5 per cent provided by other soft drink companies. This margin difference is proving to be a key factor in driving retailer interest in Campa over more established brands.