admin
May 25, 2025
Gargi Sarkar, Inc42
25 May 2025
SUMMARY: Swiggy and Zomato are scaling back non-core bets such as 10-minute food delivery, private labels, and event logistics to sharpen focus on core businesses and improve profitability. Both companies are betting on platform fees and selective verticals like quick commerce and ticketing, but analysts warn that financial discipline, not endless expansion, is key to long-term sustainability. The foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses
For foodtech giants Swiggy and Zomato (now Eternal), the last few years have been about engaging in a battle for expansion, so much so that it has become difficult to tell them apart.
From quick commerce and cloud kitchens to intercity food delivery and even selling tickets for events and concerts, the two companies appear to be aping each other’s every move to be everything everywhere all at once.
However, what began as a bold bet to dominate every possible vertical falling under the ambit of food, lifestyle and entertainment is now undergoing a major course correction.
For starters, both are reconsidering their blitzkrieg, and while at it, they are gracefully stepping away from non-core bets, diluting underperforming or experimental units to focus on core operations to drive profitability.
For context: Zomato, which once saw the future of food logistics in ultra-fast deliveries, gave up on its 15-minute food delivery service, Quick, four months after its launch in January. It has also pulled the plug on its home-made meal service, Zomato Everyday. Tailored for office-goers and budget-conscious consumers, the service was floated in January 2025.
Swiggy, too, has made similar retreats. It suspended Swiggy Genie, its courier and pick-up-and-drop service that had gained popularity during the pandemic. The company also gave up on its private label food business by entering a strategic agreement with Kouzina, a chain of virtual restaurants, granting it exclusive rights to operate Swiggy’s digital-first food brands.
So, what has triggered this metaphorical fission in strategy?
One possible reason could be the growing realisation that profitability hinges on diversifying smartly rather than untamed expansion.
A market analyst, who did not wish to be named, pointed out that the duo’s attempt to rule their customers’ wallets for everything from food to groceries and entertainment to lifestyle has been quite ambitious. “The course correction was overdue,” the analyst said.
He believes that foodtechs are now forced to burn the visceral fat in the form of non-core businesses because those have been slowing them down, also eating into the revenues of core businesses and impacting operational efficiencies.
“Moreover, the more the segments, the higher the chances of operational hiccups. Managing logistics, customer experience, and quality control across a wide array of verticals inevitably leads to fragmentation and strain on core operations,” he added.
State Of Eternal Affairs: Zomato’s Diversification Saga
Eternal’s push to transform Zomato into a broader lifestyle platform in 2024 was not only about ambition but also a strategic response to a slowing core business — food delivery, according to industry observers.
Also, a glance at the table below reveals how the company has seen a marginal QoQ increase in its monthly transacting users.
In terms of monthly transacting customers, Zomato’s food delivery growth began strong with a 6.84% QoQ jump in Q1, but momentum quickly slowed, and Q2 saw only a 1.97% sequential rise, followed by a slight decline of 0.97% in Q3. This dip signalled stagnation, and although Q4 showed a mild recovery (1.95%), overall FY25 growth of the company’s monthly transacting users (food delivery) was modest at just 2.96%
Interestingly, Eternal founder and CEO Deepinder Goyal, too, acknowledged a slowdown in the company’s food delivery business while announcing the company’s Q4 FY25 results. He said the slowdown was due to rising competition from quick commerce platforms and weak discretionary spending. Goyal added that services like Zepto Cafe, Swiggy Snacc, and Blinkit Bistro, too, were eating into demand for restaurant deliveries.
In terms of Zomato’s food delivery numbers, average monthly transacting numbers grew to 20.9 Mn in Q4 FY25 from 20.5 Mn in Q4 FY24. Net order value (NOV) growth also remained subdued at 14% YoY versus the 20% YoY growth guidance.
Hence, the company was under pressure to unlock new revenue streams. Blinkit’s success became the reference point, and the company started envisioning similar success stories with other verticals too, a former Zomato employee said.
This was when the company got engulfed in the wave of diversification, paving the path for Zomato’s yet another bold move (besides Blinkit) — the INR 2,078 Cr acquisition of Paytm’s movies and events ticketing business, Insider, in August last year.
The acquisition that was planned with the launch of the ‘District’ app meant but one thing — declaration of war against BookMyShow, the lone behemoth in the realm of the entertainment ticketing segment. Even the company knew the path wouldn’t be all rainbows and sunshine.
In its Q4 FY24 earnings call, the management acknowledged that while the gross order value (GOV) of the going-out vertical continues to grow at over 100% YoY, the business still operates at an adjusted EBITDA loss of -2 to -2.5% of net order value (NOV).
Besides, given that the transition of users from Paytm’s ticketing business and Zomato’s dining out platform to the District app requires sustained investment, the company doesn’t expect the business to turn profitable in the near term.
But Zomato expects losses to eventually see stability at current levels.
“However, even with plateauing losses, the company will have to keep spending on creating supply. This means: curating new event experiences, forging partnerships and acquiring new users for the District app… and all of this translates into one thing — prolonged burn,” the market analyst added.
Moving on, Zomato’s ambition to become a lifestyle super app didn’t just manifest into flashy verticals like events, entertainment, and ticketing — it also showed up in its renewed aggression in food delivery, the very space where it first made its name.
Therefore, Zomato began piloting a 15-minute food delivery service in select parts of Mumbai and Bengaluru early this year.
But the company now finds the initiative extremely difficult to operationalise as it has failed to generate incremental demand.
“Customers do not necessarily want food fast, they just want it reliably. A 10-minute turnaround without full control over the supply chain leads to poor customer experiences, operational stress, and negligible upside. Instead of delighting users, it makes the company vulnerable to inconsistent quality and frequent delays,” a Zomato insider added.
Satish Meena, the founder of Datum Intelligence, opined that without controlling the entire supply chain, delivering food items within 10 to 15 minutes cannot be a profitable proposition.
Swiggy’s U-Turns
In 2024, also the year of its public listing, Swiggy aggressively expanded its service offerings, launching several new verticals to diversify beyond its core food delivery business.
Among the most prominent launches was Bolt, a 10-minute food delivery platform. Initially launched in Bengaluru, Chennai and Mumbai, Bolt quickly expanded to over 400 cities, with over 40,000 restaurants, including KFC, McDonald’s and Starbucks.
To complement Bolt, Swiggy introduced Snacc, a separate app for instant delivery of snacks, beverages, and small meals within 15 minutes.
Continuing to diversify its portfolio, Swiggy launched Pyng, an AI-powered platform that bridges users with verified experts like yoga teachers or chartered accountants.
With this, Swiggy marked its entry into the on-demand services marketplace, making professional services easier to access.
Apart from these customer-facing services, Swiggy also entered events via Scenes and the B2B space with Assure, to keep pace with Zomato.
Interestingly, Swiggy, too, has begun consolidating its operations. The company has shut down Genie, its hyperlocal courier business, which competed with Porter, Borzo and Uber.
According to a competitor, sourcing delivery riders specifically for packages is a challenge, particularly in cities like Bengaluru. For Swiggy, which was already managing fleets for food delivery and quick commerce through Instamart, sustaining a separate rider network for Genie only added to the complexity.
In another such move, Swiggy exited its private label food business by transferring exclusive rights for its digital-first brands, including The Bowl Company and Homely, to cloud kitchen operator Kouzina.
Balance Sheet Blues
Imperative to highlight that the rollbacks by Zomato and Swiggy are rooted in the growing pressures on their respective balance sheets.
After diversifying at a breakneck speed, they are now faced with the hard realities of cost structures that don’t always align with revenue potential.
In Q4 FY25, Zomato and Swiggy both reported robust top-line growth. Zomato’s revenue surged to INR 5,833 Cr, largely buoyed by its three core pillars — the food delivery business (INR 1,739 crore), Blinkit’s quick commerce arm (INR 769 Cr), and Hyperpure, its B2B supply chain vertical, which posted a 99% YoY growth in revenue to INR 1,840 Cr.
However, despite the momentum, the company’s net profit declined sharply to INR 39 Cr in the quarter, largely thanks to ongoing investments in Blinkit and newer bets like the ‘District’ lifestyle app.
Meanwhile, Swiggy clocked INR 4,410 Cr in revenue in Q4, up 45% YoY, but saw its net loss nearly double to INR 1,081 Cr. The widening losses were fuelled by surging operational expenses.
“All of this explains the strategic pullbacks witnessed lately, Swiggy exiting Genie and private labels, Zomato pulling the plug on services like Quick and Legends. The rationalisation marks a reset, indicating that while growth via diversification was necessary, financial discipline and profitability are in the spotlight,” the market analyst said.
Platform Fee To The Rescue… But For How Long?
While it won’t be easy for Zomato and Swiggy to suddenly change course, the future of these two foodtech giants is all about heading towards a more focussed set of revenue streams driven by value rather than FOMO.
In the process, both foodtech giants appear to have struck gold with the platform fee, which has grown from just INR 2 in 2023 to INR 10 today.
But the real question is: Can rising platform fee help the duo neutralise the impact of aggressive expansion? Or is rationalisation the only way forward?
Devangshu Dutta, the founder of Third Eyesight, thinks otherwise. He believes that the companies will not stop looking for new revenue streams, even as they will continue to amputate the ones that offer little value.
“All of these companies have to look for growth, which is a given. If their existing businesses are not delivering the kind of growth they need to justify their stock price or valuation, then they have to look at new avenues.”
According to him, we are bound to see a flurry of experiments, trials of different services and new verticals as these companies attempt to expand their addressable markets.
At the end of the day, the foodtech duo is stuck in a balancing act of rationalising what works and doesn’t. However, going ahead, this rationalisation game is only going to get more pronounced as they will strive to shield their core bread and butter businesses.
[Edited by Shishir Parasher]
(Published in Inc42)
admin
March 5, 2025
Nisha Qureshi, Afaqs
5 March 2025
Bournvita, a chocolate-flavoured malt drink produced by Cadbury under Mondelez, is a household name in India. Marketed as a health drink that supports children’s growth and development, it holds a 15-16% share in the Indian health food drink sector, second only to Horlicks, which dominates with nearly 50%.
Its advertising has traditionally centred on themes of health, confidence, and mental strength, with campaigns such as Tayyari Jeet Ki resonating strongly with consumers.
The Food Pharmer controversy
Despite its strong market presence, Bournvita has faced criticism over its high sugar content and other ingredients, sparking public debate and legal scrutiny. The controversy escalated last year when health influencer Revant Himatsingka, known as Food Pharmer, called out Bournvita for its excessive sugar levels.
Himatsingka’s video criticised Bournvita for its high sugar content and potentially harmful additives, such as caramel colouring agents. His claims triggered widespread consumer backlash and prompted Mondelez India to issue a legal notice, dismissing his allegations as “unscientific” and “distorted”.
However, the legal action only intensified public scrutiny. In response to mounting pressure, Bournvita reduced its added sugar content by 14.4%, from 37.4 grams to 32.2 grams per 100 grams of powder.
Can influencers salvage Bournvita’s reputation?
More than a year after the controversy, Bournvita has launched a large-scale influencer campaign to highlight its lower sugar content and nutritional benefits. The campaign features influencers visiting Bournvita factories to vouch for its authenticity and health benefits.
While the concept of factory tours is not new—brands such as Parle and Havmor use it as an extensive strategy to build consumer trust even in the absence of any controversy.
The concept has since been adapted by several brands. ID Fresh, known for its packaged idli and dosa batter, faced allegations of contamination with animal bones.
In response, it launched TransparenSee, a trust-building initiative that allowed consumers to take virtual tours of its production facility via live streaming, offering an unfiltered view of its operations.
However, marketing experts argue that Bournvita’s approach may not be enough to restore its credibility, as it relies heavily on influencer testimonials rather than direct consumer engagement. Crisis communication, they caution, must be handled with transparency and genuine action.
Bournvita’s strategy bears similarities to Shein’s controversial influencer-led factory tour campaign, which backfired. In June 2023, the fast-fashion retailer invited US influencers on a paid trip to its ‘Innovation Factory’ in Guangzhou, China, to counter allegations of labour exploitation.
Instead of improving Shein’s reputation, the trip sparked further backlash, with critics dismissing it as a PR stunt designed to manipulate public perception.
Mondelez defends the campaign
Speaking about the campaign, a Bournvita spokesperson says, “At Mondelez, our unwavering commitment to quality, transparency, and consumer trust defines everything we do. This campaign is a testament to our ongoing efforts to engage meaningfully with consumers.”
He further emphasises that Mondelez aims to go beyond influencer marketing by engaging directly with key stakeholders such as mothers and nutritionists, offering deeper insights into the product’s quality and nutritional benefits.
The need for authenticity over promotion
Krishnarao Buddha, a former senior category head of marketing at Parle Products, remains sceptical of Bournvita’s approach, arguing that credibility issues cannot be resolved through influencer endorsements alone.
“Instead of relying on paid influencers, brands should adopt a transparent and action-driven approach. In today’s digital age, where public scrutiny is at an all-time high, authenticity is the key to earning and retaining consumer trust,” he explains.
Devangshu Dutta, CEO, Third Eyesight, echoes similar concerns, stressing that once trust is broken, it takes time to rebuild.
“A single influencer campaign cannot erase past controversies. Brands need to engage in consistent and transparent communication about real improvements. Bournvita highlights its nutritional benefits, but consumers need more than promotional content—they need tangible proof of change, such as independent testing and direct consumer engagement,” he asserts.
Sandeep Goyal, chairperson and MD of Rediffusion, critiques Bournvita’s approach as an “MBA (Marketer’s Belly Ache) strategy” that prioritises corporate messaging over authenticity. “In today’s digital landscape, consumers are highly aware of paid promotions, making traditional marketing tactics less effective. Instead of attempting to control the narrative through influencers, brands should focus on rebuilding credibility through transparency and honest communication,” he advises.
Lessons from Cadbury’s past crisis management
This is not the first time Mondelez has had to navigate a brand crisis. In October 2003, just before Diwali, Cadbury Dairy Milk faced a major scandal when customers in Mumbai discovered worms in chocolates. The Maharashtra FDA seized stocks from its Pune plant, leading to widespread concern and a 30% drop in sales.
To regain trust, Cadbury launched Project Vishwas, an initiative to educate 190,000 retailers and reassure consumers. It invested Rs 15 crore in improved packaging without raising prices and enlisted Amitabh Bachchan as a brand ambassador. The campaign successfully restored consumer confidence.
Will Bournvita’s efforts be enough?
While Bournvita has taken steps to address consumer concerns, relying on influencer marketing alone may not be sufficient to rebuild its credibility. As past examples show, true reputation recovery requires more than just strategic campaigns—it demands tangible action, consistent transparency, and genuine consumer engagement.
(Published on Afaqs)
admin
March 4, 2025
Kashmeera Sambamurthy, Storyboard18
4 March 2025
A growing number of health advocates and industry watchdogs in India are raising concerns over misleading food advertisements, challenging brands on their claims and pushing for stricter regulations in an industry where marketing often outpaces oversight.
Recently, lifestyle guru Luke Coutinho called out quick-commerce platform Zepto over what he described as a misleading advertisement for garlic bread on Instagram. Sharing a screenshot of the ad on his social media, Coutinho criticized its promotion of refined carbohydrates as a bedtime snack, calling it “unethical” and a product of corporate greed. Tagging regulatory bodies including the Food Safety and Standards Authority of India (FSSAI) and the All India Institute of Medical Sciences (AIIMS), he urged authorities to take action.
Similarly, Dr. Arun Gupta, convenor of Nutrition Advocacy in Public Interest (NAPi), a national think tank of medical experts, pediatricians, and nutritionists, highlighted a full-page advertisement in Delhi Times for Amul TRU, a fruit drink brand. The ad, published on February 14, emphasized the “goodness of real fruits in every pack,” but Gupta pointed out that the listed ingredients contained concentrated fruit rather than fresh produce.
These instances reflect a broader pattern of misleading advertising in India’s food and beverage sector. While such controversies have long existed, it was only on February 7 this year that the Indian government announced the formation of a 19-member committee, led by Union Minister of Food Processing Industries Chirag Paswan, to address deceptive marketing practices and introduce more stringent regulations.
India’s struggle with misleading food advertisements dates back years. The Advertising Standards Council of India (ASCI) and FSSAI signed an MoU in 2016 to curb deceptive advertising in the food and beverage sector. Two years later, the Ministry of Information and Broadcasting (MIB) issued an order restricting junk food advertisements on children’s television channels, though they remained permissible on mainstream networks.
Despite these measures, misleading claims persist. In 2023 alone, FSSAI flagged 32 instances of food business operators violating the Food Safety and Standards (Advertisements & Claims) Regulations of 2018. That same year, actor Amitabh Bachchan faced criticism for endorsing Britannia Milk Bikis in a Kaun Banega Crorepati Junior commercial, where the biscuits were equated with the nutritional value of atta roti and a glass of milk.
Health influencer Revant Himatsingka, widely known as ‘Food Pharmer,’ also took on the industry, calling out Cadbury Bournvita for its high sugar content. Mondelez International reduced the product’s sugar levels by 15 percent and dropped its ‘health drink’ label from marketing materials.
The regulatory landscape includes four key frameworks to combat misleading food advertisements: the Food Safety and Standards Act (FSS Act), the Food Safety and Standards (Advertising and Claims) Regulations, 2018, the Consumer Protection Act (CPA), 2019, and the ASCI Code of Self-Regulation.
However, Gupta argues that these regulations require amendments to better define misleading claims. In 2024, NAPi lodged a complaint with FSSAI against advertisements for Parle-G Royale biscuits, which allegedly misrepresented their sugar content. The response? “There is no FSS regulation which says that nutrients will be declared in the advertisement,” authorities stated.
Gupta further highlighted that when FSSAI initially flagged 150 misleading advertisements in 2023, that number was later reduced to 32, with no clear updates on enforcement actions. “When the Kaun Banega Crorepati ad equated Britannia Milk Bikis with atta roti and milk, NAPi protested. The ad was pulled, but no fines were imposed,” he noted.
Celebrity endorsements add another layer to the issue. The 2024 TAM AdEx report found that food and beverage advertisements accounted for 28 percent of all celebrity-endorsed ads in India. The Consumer Protection Act, 2019, prohibits celebrities from endorsing banned products but allows promotions unless explicitly prohibited by law.
In a telling 2006 interview with journalist Karan Thapar, Bollywood superstar Shah Rukh Khan defended his endorsement of soft drinks, arguing, “If soft drinks are bad, ban their production. If production is not stopped due to revenue concerns, don’t stop my revenue.”
ASCI CEO Manisha Kapoor observed that influencers frequently promote foods without disclosing financial ties to brands, making endorsements appear organic rather than paid sponsorships. Sweta Rajan, a partner at Economic Laws Practice, expressed concerns that celebrity-backed marketing distorts public perception of healthy eating. “The continuous exposure to such ads makes it difficult for consumers to make informed choices,” she said.
The recently formed 19-member government committee has been met with skepticism from experts who believe it may lack independence. “The committee does not include a public health expert. Half its members belong to industry bodies. It should form a subcommittee to define what constitutes healthy food,” Gupta said.
Himatsingka called for stringent penalties against brands found guilty of misleading advertisements, suggesting that companies be publicly named on a weekly basis. Rajan, meanwhile, warned against excessive regulation, arguing that it could stifle creativity. “A balance must be struck between regulation and creative advertising,” she said. Instead, she proposed incentives for brands that adopt honest marketing practices.
Some experts advocate for clearer front-of-pack labeling. “Currently, most food labels prioritize regulatory compliance over consumer awareness. Since literacy levels in India are lower than in many Western nations, labels should be simple and easy to understand,” said Devangshu Dutta, chief executive of consultancy firm Third Eyesight.
Taxation has been another approach. Many processed foods in India attract an 18 to 28 percent GST rate, yet brands such as Coca-Cola, Lays, and Haldiram’s continue to thrive. “While taxes have some impact, they are not enough on their own,” Rajan noted.
Gupta suggested replacing FSSAI’s ‘Health Ratings’ – which he says benefit the industry more than consumers – with clear warning labels on ultra-processed foods. He said, “Consumers should be alerted to the risks, not misled by arbitrary ratings.”
(Published on Storyboard18)
admin
November 14, 2024
Economic Times
14 November 2024
The Swiggy IPO is making news for being the most successful in a decade in its category. The food and grocery delivery firm yesterday listed at a 5.6% premium to its IPO price of Rs 390, making it the first company with an issue size of over Rs 10,000 crore in the past decade to have listed above its offer price, ET has reported. The stock closed 17% above its issue price at Rs 455.95 in a weak market, surpassing analysts’ expectations of a tepid debut. The company’s market capitalisation at close on Wednesday was Rs 1.02 lakh crore.
Swiggy’s impressive debut also indicates the incoming deluge of cash in an emerging business, quick commerce. Swiggy plans to plough more cash into its quick-commerce business, Swiggy Instamart. Swiggy’s bigger rival, Zomato, is also planning to fatten its war chest. Zomato plans to raise fresh funds through a qualified institutional placement (QIP) despite sitting on $1.5 billion, or about Rs 12,600 crore. The money will also fuel its quick commerce business, Blinkit. Zepto, another quick commerce player, is also raising money. ET reported last month that Zepto is in talks to raise $100-150 million from a group of domestic family offices and wealthy individuals. It last raised $340 million in August. Swiggy Instamart, Blinkit and Zepto are the top three players with over 85% market share.
The floodgates of capital opening into the quick commerce sector would worry the big e-commerce platforms which have already started feeling the heat from quick commerce.
The quick rise of quick commerce
While quick commerce becomes the preferred medium for immediate needs and impulse purchases, e-commerce is favoured for more planned purchases like home, beauty and personal care. But now quick commerce firms are diversifying beyond groceries, small-value items, etc. and invading the home turf of e-commerce players.
Quick commerce is already conquering kirana, the neighbourhood small retail business, as well as hitting modern retail. As consumer preferences shift towards the convenience of last-minute grocery deliveries, quick commerce companies are outpacing traditional retailers, with 46 per cent of consumers surveyed reporting a cut in purchases from Kirana shops, a recent report has said. The quick commerce market size is expected to reach $40 billion by 2030, a jump from $6.1 billion in 2024, according to the report by Datum Intelligence.
Quick-commerce operators such as Blinkit, Swiggy Instamart and Zepto are aggressively trying to lure away consumers from large ecommerce platforms like Amazon and Flipkart by matching their prices across groceries and fast-selling general merchandise, triggering a price war in the home delivery space, ET reported a few months ago. This is a departure from the earlier pricing strategy of quick-commerce players who typically charged 10-15% premium over average ecommerce marketplace prices for instant deliveries, industry executives had told ET.
A recent ET study of prices of 30 commonly used products in daily necessities, discretionary groceries and other categories, including electronics and toys, in both ecommerce and quick-commerce platforms reveal the pricing disparity has been bridged. “The pricing premium which quick commerce used to charge for instant deliveries is gone with these platforms now joining a race with large ecommerce to offer competitive pricing to shift consumer loyalties,” B Krishna Rao, senior category head at biscuits major Parle Products had told ET.
The increasing competition is putting pressure on ecommerce majors to reduce delivery time.
“Price matching by quick commerce is to acquire market share and is part of market acquisition cost even when it might not be profitable at a per unit transaction level,” Devangshu Dutta, CEO of consulting firm Third Eyesight, had told ET. “They may have to sacrifice margins in the short term to get customers shopping more frequently.”
After challenging kirana and modern retail, e-commerce is the next frontier for quick commerce companies.
The challenge shaping up for e-commerce giants
With Swiggy, Zomato and Zepto raising a huge amount of money, the war between quick commerce and e-commerce is likely to turn bloody, besides increasing internecine competition among quick commerce players themselves.
Quick commerce, which began with the delivery of groceries and essential items, has now expanded to include a diverse range of products. This includes electronics, clothing, cosmetics, household goods, medicines, pet supplies, books, sporting equipment, and more.
E-commerce sector offers a vast opportunity for growth of quick commerce business. The Indian e-commerce market is projected to grow at a compound annual growth rate (CAGR) of 21% and reach $325 billion in 2030, as per Deloitte’s report released on Monday. This huge potential is luring big players. The Tata group’s ecommerce venture Neu is set to enter the quick commerce segment branded as Neu Flash, rolling it out to select users selling grocery, electronics and fashion, ET reported last month. Mukesh Ambani’s Reliance, leveraging its vast network of supermarkets, is expanding into the 10–30 minute delivery segment. Ambani wants to ensure quick commerce helps bolster its business ahead of an IPO of Reliance Retail, which was last year valued at $100 billion, and has backers including KKR, sources told Reuters recently.
Besides entry of big ones like Tata and Ambani, the deluge of fresh investment into business by the incumbents such as Swiggy, Blinkit and Zepto will pose a big threat to large e-commerce players Amazon and Flipkart. Swiggy has recently hired two Flipkart executives to boost its senior leadership. They have joined two other executives that Bengaluru-based Swiggy had hired from the Walmart-owned ecommerce major in the past few months.
Swiggy and Zomato are both assessing several new services as they diversify beyond their core businesses, ET has reported a few days ago. Swiggy is all set to launch a pilot programme for a services marketplace, labelled ‘Yello’, which will host professionals such as lawyers, therapists, fitness trainers, astrologers, dieticians, according to sources. It is also testing a premium membership service called ‘Rare’, for affluent customers providing them access to high-end events such as Formula 1 races, music concerts, upscale art exhibitions, in addition to VIP hospitality and priority reservations at luxury restaurants.
Zomato has previously been bold in its diversification moves by buying Paytm’s events and ticket business for Rs 2,048 crore. It is now trying out a concierge-like service to help users place online food orders over WhatsApp. Human customer relationship agents will provide the Gurgaon-based company’s new service instead of its usual approach of deploying chatbots, a person familiar with the move has told ET recently.
Apprehending challenges by quick commerce players, Flipkart has already started its own quick commerce business Flipkart Minutes. While still far behind its established rivals, Flipkart Minutes hit daily orders of 50,000-60,000 during its Big Billion Days sales, people with knowledge of the matter told ET last month.
Further investment and bigger players entering the sector will heat up competition among the quick commerce companies even as they will grapple with new challenges such as logistics as they expand. But a bloody war could soon be seen on the e-commerce battlefield as emboldened by huge popular response the quick commerce companies start invading on the well-guarded turf of Flipkart and Amazon.
(Published in Economic Times)
admin
October 28, 2024
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)
