Cola war looms as Campa returns; distributors fear for their margins

In an announcement last week, Reliance Consumer Products launched Campa with three flavors: cola, lemon, and orange. The drinks have been launched in Andhra Pradesh and Telangana

Leading Indian distributors have registered their protest against the price war between FMCG companies. The distributors fear that the tussle between these companies will eat up their margins. The development has followed the launch of Campa Cola by Reliance Consumer Products at prices lower than all national brands, The Economic Times (ET) has reported.

 

"This competition between large companies with lower consumer prices and promotions directly hurts the margins of lakhs of distributors," Dhairyashil Patil, president of the All India Consumer Products Distributors Federation (AICPDF), told ET. The federation represents 400,000 distributors.

 

Patil said that this price war could escalate and foray into FMCG domains like biscuits and confectionery. He added that Reliance is already making plans to enter this space. All of this, he said, will hurt distributors' margins severely.

 

In an announcement last week, Reliance Consumer Products launched Campa with three flavours: cola, lemon, and orange. The drinks have been launched in Andhra Pradesh and Telangana. Notably, Coca-cola's Thums Up dominates the market in Andhra Pradesh, and rival Pepsico has a relatively insignificant presence in the state, the report said.

 

The report quoted the AICPDF president as saying that "the price war has begun." He added that we are monitoring the situation closely and taking up this matter with the government entities concerned. He said that we are taking the matter to the Competition Commission of India (CCI) to raise the unethical actions of these companies.

 

Quoting a Coca-Cola spokesperson, ET reported, "We have broadly kept the same prices since last year for all our entry packs. Having new players in the market presents a great opportunity for investments to develop the market further and bring innovations to evolve the category and ultimately benefit the consumers."

 

It is important to note that Reliance Consumer Products' FMCG portfolio includes various other names, including soft drink maker Sosyo Hajoori, Lotus Chocolates, and Sri Lanka's Maliban biscuits. Moreover, Reliance has its own brands, like Independence and Good Life, among others.