Reliance enters the soft drink market

Reliance Retail has made an astounding entry into the beverage market. It has acquired the desi soft drink brand Campa from the Pure Drinks Group. Reportedly, the deal is estimated at Rs 22 crore. The organization is planning to nationally relaunch the desi drink – Campa flavors by this Diwali. In the initial phase, it will be launched in three mouth-watering flavors – the iconic original (Cola), and lemon and orange variants.

The red-brick building near Shankar Market is in a dilapidated state. But if you look hard enough, you can still see the image of a big bottle on the wall, and a faint five-letter word emblazoned next to it: “Campa.”

“Do you know Campa Cola was quintessentially a Delhi brand,” says Kamal Jain, who sells stationery and cold drinks across the road from the red-brick building where the carbonated drink was manufactured, and which also served as the company’s headquarters.

“I sold hundreds of bottles of Campa Cola every day, and they were manufactured right there in that building. I bought directly from the factory,” Jain adds.

Production of the drink stopped at this location in 1999. But Campa Cola was back in the news this week with Reliance acquiring Campa from the Pure Drinks Group, and planning to relaunch it nationally by Diwali in three flavours -- the iconic original, and lemon and orange variants. The brand, a report in the Economic Times said, will be distributed through the chain’s own stores as well as local grocery shops.

This acquisition is a part of Reliance Retail’s strategy to scale up its FMCG business. The deal will bring back India’s once-favorite desi cola in the market. As per a report in the Economic Times, Campa soft drinks will be initially launched in Reliance Retail stores, Jio Marts, and over 15 lakh Kirana shops linked with Reliance’s Business to Business (B2B) network.

It is important to note, that after Mukesh Ambani’s resignation, his daughter Isha Ambani is leading the Retail arm of the wider Reliance group. She took over the reign of Reliance Retail at the Annual General Meeting (AGM). Recently, she announced that Reliance Retail will foray into the FMCG segment.

This is great news for Indian consumers especially those who are already feeling nostalgic for the drink. However, this is a dangerous sign for foreign brands like Pepsi, Coca-Cola, and Sprite. Campa Cola’s entry will force them to change its market strategy. They may be forced to slash down their prices fearing a takeover by people’s favorite desi drink.

Soft drink market: Ups and Downs of Campa cola and its other rivals

In 1949, American soft drink company Coca-Cola partnered with Indian company Pure Drinks Group for the Indian market’s business. They launched and flooded the Indian market with Coca-Cola. The Pure Drinks Group was the only licensed manufacturer and distributor in India. Everything was going great for Coca-Cola till the Indian government introduced Foreign Exchange Regulations Act (FERA).

In 1976, the Coca-Cola company turned down requests to share its secret formula. This prompted the then Janata party government to refuse a license to the company for violation of FERA law and the company withdrew its operations from India. Back then, these foreign brands were seen as a symbol of Western cultural imperialism.

Pure Drinks Group, which was producing Coca-Cola till then, launched Made in India soft drink Campa Cola for the first time in 1977. Gradually, Campa Cola popularised itself as “Great Indian Taste”. The brand was an instant hit and it became people’s drink in a very short period of time. Its only competition was soft drinks developed by Mumbai-based Parle — Gold Spot, Limca, and Thumbs Up.

Apart from these other local brands like Bovonto and Sosyo captured regional markets. Campa Cola conquered the North Indian markets, Bovonto ruled the south and Sosyo established itself in the western parts of the country.

However, the great liberalization changed everything for these companies. Coca-Cola made a comeback in 1993 and acquired all three brands of Parle. Other foreign brands too started pushing these desi brands out of the market. By the year 2012, Campa went into the abyss.

However, this new acquisition by Reliance retail will revive ‘The Great Taste of India’. The road ahead for foreign soft drink brands may be bleak but the consumers seem to be elated at this revival of their favorite soft drink brand.

Reliance is famous for routing out its rival. It has virtually dipped its fingers in every sector, ranging from petrochemicals to fashion, and textiles to telecommunications. Now, with this acquisition, it has made its presence felt in the FMCG sector. If the past trend continues, Indian consumers will relive the nostalgia of 1980-90s. However, this has a tremendous capability to shatter the market dominance of American brands like Pepsi or Coca-cola.

References:

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