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Coca-Cola sponsors Reliance Retail sale, and rival PepsiCo’s products in it!

Ratna Bhushan, The Economic Times
New Delhi, 2 May 2015

In an unprecedented move, beverage maker Coca-Cola is sponsoring Reliance Retail’s ongoing five-day ‘Big Jackpot’ sale across its 600-plus food and grocery stores and has ended up promoting rival PepsiCo’s products.
The sale across categories includes foods, beverages, shampoos, detergents and fruits and vegetables. The ad-sharing, co-promotion deal, being run nationally across Reliance Retail stores, is a rare example of a large brand sponsoring a sale at a retailer, including a rival’s products.
"When a brand sponsors a big sale, which would run across as many as five days on a long weekend, in normal circumstances it would be rival-exclusive. That’s the purist approach," said Harish Bijoor, founder of consultancy Harish Bijoor Consults Inc.

"When a brand and retailer are expecting to create big buzz, the brand would normally be very careful not to include competition in the same basket."

Emails to Reliance Retail seeking details of the association with Coca-Cola elicited no response till the time of going to press. Coca-Cola and Reliance Retail will be tying up for future co-promotions as well, according to two people with knowledge of the matter.

"The deal factors in a larger contractual arrangement between the two companies and would involve the brand supplying the retailer at big discounts in return for high-decibel branding in ads and upfront placement of products and visibility across all its stores," one of the people said.

The April-June quarter is peak season for beverage makers, contributing 40 per cent to annual soft-drink sales, and the companies spend aggressively on marketing and trade promotions. Although they are trying to achieve uniform sales levels across seasons, both Coca-Cola and PepsiCo depend heavily on this quarter to drive volumes.

"While we are unable to comment on the specifics of our partnership terms with Reliance Retail, we do value our long-standing association with Reliance Retail and are always mutually exploring opportunities that are to the advantage of the consumers," a Coca-Cola spokesperson said. "We hope that consumers will exercise choice and opt for the best deals and discounts at the Big Jackpot sale." The spokesperson did not comment when asked why Coke is sponsoring the sale that clearly shows rival PepsiCo’s products in the basket of items.

"Generally, such tie-ups would be drive footfalls for the retailer and in-store visibility for the brand. It’s a market-share game and shelfspace game," said Devangshu Dutta, chief executive at retail and consumer products consultancy, Third Eyesight. Unlike restaurants and hotels, which associate with either of the beverage partners exclusively, there is no such product or brand restriction in modern trade stores.

Almost all big retailers including Big Bazaar and Spencer are running discount sales to cash in on the current extended weekend, though these are not sponsored. Retailers have been banking on ‘big days’ such as long weekends and Republic Day to increase sales as online rivals Flipkart, Snapdeal and Amazon widen their heavily discounted offerings across categories including apparel and home accessories.

Reliance Retail operates 616 value food and grocery stores across formats such as Reliance Fresh, Reliance Super and Reliance Mart. Revenue at India’s largest retailer increased 21 per cent to Rs 17,640 crore in the year ended March 31.

Big Bazaar, which pioneered the ‘big days’ concept, has previously partnered with Axis Bankand others for co-promotions, mostly linked to cash-back offers or additional discounts on payments through specific credit or debit cards.

(Published in The Economic Times.)

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