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

Leading Indian distributors have expressed their concern over the price war between fast-moving consumer goods (FMCG) companies. They fear that the ongoing tussle between these companies will negatively impact their margins. The protest comes after Reliance Consumer Products launched Campa Cola at prices lower than all national brands, according to a report by The Economic Times (ET).

Dhairyashil Patil, the president of the All India Consumer Products Distributors Federation (AICPDF), representing 400,000 distributors, said that the competition between large companies with lower consumer prices and promotions directly harms the margins of lakhs of distributors. Patil added that this price war could escalate and foray into other FMCG domains like biscuits and confectionery, and Reliance is already planning to enter this space. All of this, he said, will hurt distributors’ margins severely.

Reliance Consumer Products launched Campa Cola with three flavours – cola, lemon, and orange – last week 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.

According to the report, the AICPDF president said, “the price war has begun.” He added that they are closely monitoring the situation and taking up this matter with the government entities concerned. The federation is taking the matter to the Competition Commission of India (CCI) to raise the unethical actions of these companies.

A spokesperson for Coca-Cola has stated that the company has maintained the same prices for its entry packs since last year, despite the entry of new players in the market. The spokesperson sees this as an opportunity to invest in the development of the market and bring innovations to the category, which would ultimately benefit consumers.

It should be noted that Reliance Consumer Products has a diverse portfolio of FMCG products, including Sosyo Hajoori, a soft drink maker, as well as Lotus Chocolates and Sri Lanka’s Maliban biscuits. In addition, Reliance has its own brands, such as Independence and Good Life.

With the entry of new players in the market, competition is likely to increase, leading to a more dynamic and evolving market. This could lead to the introduction of new products and innovations that benefit consumers. Additionally, it is possible that established players like Coca-Cola may increase their investments in marketing and research to maintain their market share in the face of increased competition.

Overall, the entry of new players in the FMCG market, including the soft drink category, presents an opportunity for growth and development. As companies compete to provide the best products and innovations, consumers are likely to benefit from a wider range of choices and improved quality.

In summary, the ongoing price war between FMCG companies in India has raised concerns among distributors. The launch of Campa Cola by Reliance Consumer Products at lower prices than national brands has escalated the situation. The distributors fear that this price war will eat up their margins and negatively impact their businesses. The matter has been taken up with the government entities concerned, and the Competition Commission of India is being approached to raise the unethical actions of these companies.