Nisha Qureshi, Afaqs
28 Oct 2024

Reliance Industries last year made a strategic move into the soft drink sector by acquiring the iconic carbonated beverage brand ‘Campa Cola,’ which gained prominence in the 80s and 90s.

The conglomerate intends to strengthen its brand by employing its classic pricing disruption strategy. Reliance is expanding its presence nationwide by focussing on affluent regions and utilising e-commerce and quick commerce platforms.

Recent reports suggest that Campa Cola is providing retailers with more favourable trade margins than its rivals Coca Cola and Pepsi, aiming to challenge the existing duopoly in India’s soft drink market.

In the Q2FY25 earnings call, Reliance Industries reported that its consumer brands, particularly Campa Cola and Independence, are experiencing robust growth, with general trade increasing by 250% year-on-year.

“We are taking several marketing initiatives to grow consumer brands and will leverage the festive period to drive demand,” the company’s representative said during the call, adding that the company was “very optimistic about the next few quarters”.

Experts now believe that the soft-drink beverage market will witness an increase in advertising initiatives by the competitors to mitigate the disruption.

Saurabh Munjal, co-founder and CEO of Archian Foods, the makers of Lahori Zeera, asserts that Reliance’s entry into this sector will only expand the market for soft-drink beverages.

“The consumption will increase, accompanied by a corresponding rise in marketing efforts,” he adds.

Devangshu Dutta, the founder of Third Eyesight, a management consulting firm engaged with the retail and consumer products ecosystem, asserts that both Coca-Cola and Pepsi will undoubtedly endeavour to safeguard their market share.

He says the emphasis will particularly be on domestic consumption, and we can anticipate an increased investment in share-of-mind campaigns to proactively counter Campa’s expansion.

Business strategist and independent director Lloyd Mathias believes that the current circumstances are conducive to market expansion and disruption. “Other players will likewise increase their visibility through marketing strategies and retail initiatives to counter this. So what we will see in the next year is that the categories of soft drinks will grow quite dramatically,” he adds.

The classic Reliance move

Experts suggest that Reliance’s approach to Campa Cola involves competitive pricing, reflecting a strategy akin to its disruptive tactics in the telecom sector with Jio and JioCinema. For instance, a two-litre bottle of Campa Cola’s lemon flavour is priced at Rs 53 on a quick commerce platform, whereas a leading competitor offers it for Rs 74.

Besides competitive pricing, Reliance also has the significant advantage of owning a large retail and media network to scale Campa Cola.

“Reliance has earlier disrupted markets with the aggressive pricing strategy and it has the resources to follow-through on its pricing strategy for Campa as well. It can build significant volumes across its own stores prior to having to compete for shelf space in the broader distribution channels,” says Dutta.

As per Mathias, in addition to possessing deep pockets, Reliance benefits from its extensive media and entertainment wing that will be leveraged for the promotion of Campa Cola.

“I think the combined strength of Reliance in terms of distribution, media, and retail, alongside its capacity to maintain pricing integrity, are quite formidable. I think they are going to make a significant impact in the market,” says Mathias.

Impact on smaller players

Experts also suggest that the introduction of Campa Cola at its current price point will primarily affect smaller local competitors who function within the same pricing bracket, particularly in tier-2 and tier-3 markets.

Mathias asserts that Campa Cola will initially expand the soft-drink beverage market, while also emphasising that given the price point of the soft drink, the immediate impact will be felt by smaller local players who operate at similar price points. Introduction of numerous Indian innovations within the soft-drink category could significantly impact relatively smaller competitors.

Similarly, Dutta observes that the market for carbonated beverages largely hinges on the intangible qualities associated with the brands. In India, however, brand preferences are not as hard coded as they are in the United States.

“Consumers do switch between brands, and price-sensitive customers can be swayed by visible pricing differences. This gives deep-pocketed Reliance an opportunity to carve out a significant market share.”

However, according to Munjial of Lahori Zeera, there appears to be no direct impact on his brand, given that Campa Cola has thus far only introduced the well-known flavours of carbonated beverages. “As far as Lahori Zeera is concerned, there is no impact because the target consumer, the flavours are all very different.”

“This development will merely add to the market and increase the number of people consuming carbonated beverages,” he says.

(Published in Afaqs)

Nandini Singh, Business Standard

11 October 2024, New Delhi

Reliance Retail, the country’s largest retailer, has officially entered the booming quick commerce space, intensifying competition for players like Zomato-owned Blinkit, Swiggy Instamart, and BigBasket. The company began offering quick commerce services through its e-commerce platform JioMart in select areas of Navi Mumbai and Bengaluru last weekend, a move that signals its intent to disrupt the segment, as reported by The Economic Times.

Initially, Reliance would start with selling grocery items from its network of 3,000 retail stores nationwide. However, the company has ambitious plans to extend its offerings to value fashion and small electronics, such as smartphones, laptops, and speakers, according to a senior executive at the company. The quick commerce services will be fulfilled through Reliance’s existing network of stores, including Reliance Digital and Trends outlets.

Reliance plans to scale up its quick commerce operations across India by the end of this month. The company aims to deliver most orders within 10-15 minutes, with the remaining fulfilled in under 30 minutes. Reliance will leverage its logistics arm, Grab, which it had previously acquired, to facilitate timely deliveries.

Unlike other quick commerce operators that rely on dark stores or neighbourhood warehouses, Reliance will use its existing retail infrastructure for fulfilment. Analysts have pointed out that this strategy might pose challenges in delivering within the 30-minute window, especially in cities that experience traffic congestion during peak hours.

A fee-free strategy to woo customers

In a bid to attract customers, Reliance has chosen not to charge delivery fees, platform fees, or surge fees, regardless of order size. This contrasts sharply with competitors like Blinkit, Swiggy Instamart, and BigBasket, which levy additional charges for deliveries. A key part of Reliance’s strategy is targeting smaller cities and towns, where quick commerce operators are yet to make significant inroads. By focusing on these untapped markets, Reliance aims to create a strong foothold and gain a competitive edge over its rivals.

The company is also positioning itself as a provider of a more extensive range of products, linking its entire inventory to the quick commerce platform. With 10,000-12,000 stock keeping units (SKUs), Reliance’s offering will far exceed the typical range available on competing platforms.

Targeting 1,150 cities and 5,000 pin codes

Reliance’s goal is to expand its quick commerce service to 1,150 cities, covering 5,000 pin codes where it already operates grocery stores. This extensive reach, combined with its focus on smaller towns and cities, is expected to give Reliance a significant advantage over its competitors, many of which are still focused on metro areas.

“Reliance has overhauled the JioMart delivery model. Previously, deliveries took 1-2 days, with small trucks delivering multiple orders sequentially. Now, the focus is on quick commerce. Each order will be delivered individually by a bike or cycle, and each grocery store will cover a 3-kilometre radius,” the senior executive told The Economic Times.

Refining delivery processes

Earlier this year, Reliance attempted to reduce delivery times for JioMart to just a few hours, or at least the same day, as part of its hyperlocal delivery initiative. This process has now been fine-tuned further to offer deliveries within 10-30 minutes — a key market demand, according to the executive.
Although a spokesperson for Reliance Retail declined to comment on the developments, industry experts believe the company’s aggressive push into quick commerce could significantly alter the competitive landscape.

Blended delivery model could be the future

Devangshu Dutta, chief executive at consultancy firm Third Eyesight, told The Economic Times that Reliance might adopt a blended approach in the long run, offering quick commerce deliveries in areas close to its stores and scheduled deliveries in areas further away.

“Reliance is clearly in market share acquisition mode in the quick commerce space, and waiving transaction fees while offering higher discounts is part of that strategy. There is ample opportunity for deep-pocketed players like Reliance to dominate this fast-growing segment. Their track record in retail suggests that they are willing to experiment aggressively once they find a model that works,” Dutta said.

For fast-moving consumer goods companies, quick commerce is rapidly becoming a vital channel, accounting for 30-35 per cent of total online sales, making it a lucrative area for major players like Reliance to tap into.

(Published in Business Standard)

Writankar Mukherjee, Economic Times
7 October 2024

Reliance Retail has initiated efforts to enter the thriving quick commerce market in a move that is set to escalate competition for Zomato-owned Blinkit, Swiggy Instamart and BigBasket, among others. The country’s largest retailer has started offering quick commerce services in select areas in Navi Mumbai and Bengaluru through its ecommerce platform JioMart since last weekend.

It will initially sell grocery items from its retail stores totalling about 3,000 nationwide, eventually adding value fashion and small electronic products such as smartphones, laptops and speakers, a senior executive said. All orders will be fulfilled from its own network of stores including Reliance Digital and Trends.

The retail arm of Reliance Industries plans to rapidly scale up its quick commerce venture pan-India by this month-end with the aim to deliver most orders in 10-15 minutes and the rest within 30 minutes, the executive said. The company will use its acquired logistics service Grab for the fulfilment.

Reliance, however, doesn’t have any plan to set up dark stores or neighbourhood warehouses, unlike other quick commerce operators, the executive said. Analysts said this may become a challenge in delivering orders within 30 minutes in large cities where traffic is high during peak hours.

To entice customers, Reliance won’t charge any delivery fee, platform fee or surge fee irrespective of the order value, and keep a major focus on untapped smaller cities and towns where quick commerce operators like Blinkit are yet to enter, the executive said. Other platforms have a delivery fee and platform fee.

Reliance plans to offer a wider choice of products of 10,000-12,000 stock keeping units by linking its entire store inventory to the quick commerce business, which too is much more than rivals.

Eventually, the company aims to cover 1,150 cities spanning 5,000 pin codes where it runs grocery stores. The executive said the company would target a bigger share of business from towns and smaller cities hitherto untapped by quick commerce firms.

“Reliance has reworked the way orders are delivered for JioMart. Earlier, orders had a scheduled delivery taking 1-2 days by small trucks who would take multiple orders and deliver them one by one. Now, all grocery orders will be quick commerce where one delivery bike or cycle will deliver one order. Each grocery store will cover a 3 KM radius,” the executive said.

Earlier this year, the company tried to reduce JioMart delivery timings to a few hours or at least the same day under its hyperlocal initiative. It has fine-tuned the process further to 10-30 minute delivery. “This has become a top-of-the-kind requirement in the market right now,” the executive said.

A spokesperson for Reliance Retail didn’t respond to ET’s queries.

Devangshu Dutta, chief executive at consulting firm Third Eyesight, said Reliance can ultimately use a blended approach of quick commerce deliveries in areas near its stores and scheduled deliveries a bit far away.

“Since they are in a market share acquisition mode in quick commerce, charging no transaction fees and offering higher discounts on products is a given. There is significant scope for deep-pocketed players like Reliance to strengthen presence in quick commerce. They have aggressively backed other experiments in the retail business once they worked, and may do it again,” said Dutta.

For fast-moving consumer goods companies, quick commerce is the fastest growing channel, accounting for 30-35% of total online sales.

(Published in Economic Times)