According to reports, PepsiCo and Coca-Cola intend to launch less expensive soft drinks aimed at local markets that are roughly 15% to 20% less expensive than their flagship brands. According to a report, this strategic move is intended to fight the increased rivalry from Reliance Consumer Products' Campa brand.

The pricing strategy of Reliance

In an attempt to disrupt the industry, Reliance Industries has been aggressively pricing its Campa brand through its consumer products division. As it grows its distribution network, Reliance is giving retailers more trading margins than its rivals in addition to lower costs. With the exception of several regional competitors, Reliance's growth presents a serious threat to PepsiCo and Coca-Cola's hegemony in the soft drink industry.

According to the report, PepsiCo and Coca-Cola are thinking about introducing less expensive alternatives, known as B-brands, in order to preserve the premium positioning of their flagship goods and preserve profit margins.

PepsiCo's reaction: Getting ready for the B-segment compitetion

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. Jaipuria, however, said that it is confident in PepsiCo's approach to the market, claiming that the business is "improving its go-to market."

Coca-Cola's approach

Additionally, Coca-Cola is intensifying its efforts in reaction to Campa's pricing approach. Especially in Tier-II cities, the business is increasing the distribution of glass bottles that may be returned and cost Rs 10. According to the source, Coca-Cola is also thinking about introducing new regional brands, which it may expand based on consumer demand.

The company's limited-edition RimZim jeera is one example; if needed, it may be reissued on a bigger scale. The goal of these actions is to safeguard the profits and reputation of Coca-Cola's mainstream products.

According to the report, Coca-Cola and PepsiCo are using tactical promotions at the local store level, such as cross-promotions and bundle discounts on quick-commerce platforms, even if they haven't formally lowered their pricing.

Important participants in the soft drink market include well-known regional rivals like Gujarat's Sosyo Hajoori Beverages, in which Reliance Consumer owns a 50% stake, Rajasthan's Jayanti Cola, and Chennai's Bovonto.

The key to competition is trade margins

Other soft drink firms give trade margins of 3.5–5%, but Reliance Consumer offers distributors trade margins of 6–8%. One of the main reasons why retailers are choosing Campa over more well-known brands is this margin gap.