Reliance Consumer Products (RCPL) and major Chennai-based Bovonto soft drink manufacturer Kali Aerated Water Works are in advanced negotiations for a production and distribution cooperation to produce and market Reliance’s Campa line of soft beverages, according to executives with direct knowledge of the development.
Before purchasing Campa in August last year, Reliance had conversations about acquiring a controlling interest in Kali Aerated Water Works. Bovonto is one of the biggest cola brands in the southern regions and fiercely competes with Coke and Pepsi. There are more than eight plants operated by Kali Aerated in the South, which also produces lemon, orange, and ginger ale fizzy drinks. Juices and sweet coconut water are also offered for sale.
One of the executives added, “The agreement, which is in the final stages of completion, will give Reliance an immediate advantage of Bovonto’s manufacturing lines as well as strong distribution outreach and a distinct edge over the competitors.
RCPL, the FMCG division and a wholly owned subsidiary of Reliance Retail Ventures (RRVL), did not reply to an email addressed to them until Sunday evening when this article was published. Questions sent to Kali Aerated Beverages management went unanswered.
“Regional companies continue to keep a sizable share in their native markets despite very little marketing and advertising expenditures. This is in spite of major regional marketing and local language ad investments by national brands like Coke, Pepsi, Thums Up, and 7-Up, according to another executive who works for a significant bottling company.
In Tamil Nadu and Andhra Pradesh, Kali Aerated Water Works, popularly known as Kalimark, primarily offers its beverages for less than major brands. Bovonto, an aerated drink with a grape flavour that the company introduced more than a century ago, served as the foundation for its beverage division. In 1916, businessman PVSK Palani Appa Nadar founded Kalimark as a producer and seller of carbonated and non-carbonated beverages, according to the material on its LinkedIn page.
Reliance Consumer Products Strategy
With 501–1,000 people, the company is managed by the fourth generation of the family.
Three Indian Premier League (IPL) teams—Lucknow Super Giants, Punjab Kings, and Sunrisers Hyderabad—have agreed to work with RCPL as franchise partners for its Chennai franchise. The collaborations are intended to increase Campa’s on-field awareness. Coca-Cola and PepsiCo have largely used this tactic on sports platforms up to this point.
Early last month, the Mukesh Ambani-led Reliance began selling Campa in Andhra Pradesh and Telangana through retail channels. The company has priced the beverages less expensively than Coca-Cola and PepsiCo. According to trade insiders, the action prompted the international soft drink firms to increase local marketing expenditures, consumer promotions, and trade discounts. The development caused distributors to worry that a looming pricing war by industry players might reduce their margins. Prior to that, RCPL sold Campa through its own supermarkets and JioMart. 17.225 stores make up Reliance Retail’s channel network.
For an estimated Rs 22 crore, Reliance purchased Campa last year from the Pure Drinks business. In January of this year, it purchased a 50% ownership stake in Sosyo Hajoori Beverages, which has its main office in Gujarat, and its flagship beverage brand Sosyo. Along with Sosyo, Hajoori also sells products under the names Kashmira, Lemee, Ginlim, Runner, and Opener. Gujarat is dominated by Sosyo as a player.
In a recent analysis, Nuvama Equities stated: “Most FMCG businesses have gained market share in their core categories over the last 10 years as they continue to profit from distribution changes, consolidation, sales automation, innovations, and scale advantages.” Although FMCG companies are savvy at dealing with newcomers, RIL has enormous financial muscle.
According to the executives quoted above, RCPL will begin offering ice cream under its own grocery brand, Independence, in Gujarat, which has historically been a bastion for Amul, India’s largest dairy brand.