Some of India’s leading distributors are protesting against price wars between FMCG companies, which they said will severely hurt their margins, as soft drinks companies push consumer promotions in states where Reliance Consumer Products has launched Campa Cola at prices lower than all national brands.

“This competition between large companies with lower consumer prices and promotions directly hurts the margins of lakhs of distributors,” Dhairyashil Patil, president of All India Consumer Products Distributors Federation (AICPDF), which represents 4 lakh distributors, told ET.

“We fear the price wars can escalate to other FMCG categories like biscuits and confectionery where Reliance is foraying into…all this will hurt margins of distributors severely,” Patil said.

Reliance Consumer Products, the FMCG arm of Reliance Retail Ventures, last week announced the launch of Campa in cola, lemon and orange variants in Andhra Pradesh and Telangana. Coca-Cola’s Thums Up has a dominant share in Andhra Pradesh, and rival PepsiCo has a much smaller presence in AP.

Distributors Raise the Red Flag as Price War Begins in the Cola Field

“The price war has begun. The AICPDF is closely watching the developments as distributors will be at a loss.. will write to all the companies on this unethical competition,” the distributor federation tweeted on Thursday, tagging handles of the PMO, commerce minister Piyush Goyal and the companies. Patil said the entity is “escalating the matter” to the government and the Competition Commission of India (CCI).

A Coca-Cola spokesperson said: “We have broadly kept the same prices since last year for all our entry packs. Having new players in the market presents a great opportunity for investments to develop the market further and bring innovations to evolve the category and ultimately benefit the consumers.”

Reliance Consumer Products’ FMCG portfolio also includes acquired soft drinks maker Sosyo Hajoori, confectionary maker Lotus Chocolates and Sri Lanka’s Maliban biscuits. Its own brands include Independence and Good Life, among others. “Lower MRPs are good for consumers, but distributors need higher margins in that case,” said another Chennai-based distributor, who requested not to be named.

An email query sent to Reliance did not elicit a response till press time. Reliance has relaunched Campa Cola at price points lower than those of Coca-Cola and PepsiCo across five different pack sizes, a move that has led the multinational soft drinks companies to step up trade discounts, consumer promotions and local marketing spends with immediate effect.


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