Soda Wars: Can Campa Cola Compete with Coca-Cola and Pepsi?

Hello there,

It's your favorite Newsletter (I hope its true) back again to take you on a wild ride through the world of business, finance, and the economy.

Remember how I promised to bring you a juicy case study today? well its not juicy but we'll be diving headfirst into a battle of the bubbles - a competition of carbonation - a showdown of sweetness.

Yes, you guessed it right! Today's case study is all about the world of soft drinks, and more specifically, the challenge that Campa Cola faces as it tries to take on the Coca-Cola and Pepsi. So, grab your favorite fizzy drink (Campa Cola, Coke, or Pepsi - I don't discriminate), and let's get ready to rumble!

There’s a famous saying that Coke and Pepsi are Capitalism filled in the bottles. As they are popular beverages that are often found in areas where clean drinking water is scarce. They dominate the non-alcoholic beverages industry with a market share of 80%, according to a report by Crisil. Despite this, Mukesh Ambani recently acquired Campa Cola, indicating his entry into this highly competitive market. Ambani has a good track record in business, which may help him challenge Coke and Pepsi. However, it's unclear if he'll succeed. This development is interesting because it could lead to more competition and new products for consumers.

Ambani has a reputation for disrupting the businesses he enters, as seen with his entry into the telecom sector with Jio. This move caused big players like Idea and Vodafone to change their strategies and merge, now known as VI. Will Ambani be able to disrupt the cola market in a similar way? Only time will tell.

Before we can answer whether Ambani can disrupt the cola market, we need to understand why Campa Cola shut down its operations back then. To do that, we need to take a brief look at its history. ( I will try to make it short and not boring)

After India gained independence, Coke entered the Indian market with the help of a Punjab-based company called Pure Drinks. Pepsi also tried to enter the market, but due to Indian foreign policies at the time, it was not approved. Coke enjoyed a monopoly for a long time and made a lot of money. However, in 1970, the Indian government became strict about profit sharing and policies for foreign companies. They made a law that international companies could not own more than 40% of a company if they wanted to do business in India..(in simple terms if you are an international company and earn Rs. 100 in India then you can only take maximum of Rs.40 back to your home).Coke disagreed with this and stopped their operations in India.

After Coke stopped their operations in India, PURE DRINKS, who had been managing their business, decided to start their own Indian cola brand to keep their 3000 employees employed and to capture a share of the market. This is how Campa Cola was born. For 15 years, Campa Cola enjoyed high market share and profits, and even featured Salman Khan in their advertisements. In fact, Salman Khan's first advertisement was with Campa Cola only.

During the early 1990s, India was going through a significant transformation in terms of its foreign policy. With the introduction of Globalization(the process of creating a worldwide network of connections, trade, and interdependence.) and Liberalization(it's the process of freeing up the market from government control, allowing for more flexibility and growth), India opened its doors to the global market and allowed foreign companies to invest in the country.

Taking advantage of this opportunity, Coke and Pepsi re-entered the Indian market with heavy investments. They were well-prepared to take over the market share, with strong branding strategies and aggressive marketing campaigns. With their extensive experience in the beverage industry, they quickly captured the attention of Indian consumers, especially the younger generation.

To better understand the functioning of a soft drink business, we need to take a look at the five key factors that play a crucial role in its operations. These factors are:

1. Taste Architects - These are the masterminds who craft the unique flavor profiles that make us crave our favorite soft drinks.

2. Manufacturers - The "Fizz Wizards" who bring those recipes to life by manufacturing the drinks in bulk.

3. Distributors - The "Road Warriors" who ensure the drinks are transported safely from the manufacturing units to retailers.

4. Retailers - The "Soda Sellers" who stock and sell the drinks in their stores, ensuring that consumers have access to them.

5. Consumers - The "Thirsty Masses" who ultimately drive the demand for soft drinks and shape the entire value chain through their purchasing decisions.

Now Company like Coke and Pepsi in our chain are the Taste Architects who works on their recipe and then pass it on to manufacturers in India. Pepsi uses Varun Beverages as its bottling company, while Coca-Cola uses Hindustan Coca-Cola Beverages. If Campa Cola wants to take a market share in this industry, it needs to ensure that it has efficient bottling capacity to compete. In fact, the very reason why Campa Cola failed in the 90s was due to their ineffective capacity.

After bottling, it's crucial for soft drink companies to have an efficient distribution system to ensure their products reach a wide audience. According to a survey, Coke has about 6 million distribution channels and even provides Visi Freezers to retailers to increase their visibility.

For Campa Cola, it will be important to rely on Reliance retail stores which have over 3000 locations in India, giving them a good position on the shelves and even in the online retail store Jio Mart, where they can establish their presence. Marketing will also be crucial in this segment as Campa's initial plan is to sell their drink based on national drink and nostalgia, but it's uncertain how the younger generation will feel a connection as they may not have even heard of this brand before.

In contrast, Coke and Pepsi invest heavily in marketing each year, signing different film stars and celebrities to create a good image of their brand. As a result, when a consumer is at the shop, they tend to ignore local and regional brands because they have seen so many good ads of their favorite celebrities.

In my opinion, Reliance is a company with deep pockets and they are willing to spend a lot of money to make their brand stand out. We have seen this recently with their OTT platform Jio Cinema, which disrupted Hotstar and Netflix by offering free screenings of major events like the FIFA World Cup and IPL and they are looking forward to buy the rights of HBO content which is going to play a very vital role. like this only we can see Campa Cola will be sponsoring the IPL teams in near future to make their presence in the market and this move could help them get noticed by more people and increase their market share.

Well that's a wrap for today's edition of the Newsletter! I hope you enjoyed my little trip through the world of soft drinks and the battle of the bubbles. If you found it as refreshing as a cold Campa Cola on a hot day, be sure to hit that like button and show me some love!

Oh, and before I sign off, I have a confession to make. I promised myself I wouldn't sneak in a movie recommendation in case study based newsletter (I wanted to keep it professional) , but I just couldn't resist. So, without further fuss, I present to you the latest movie "Ghosted." No spoilers, no reviews, just take my word for it and give it a watch - you won't be disappointed!

Remember to always stay curious, stay informed, and stay entertained. Until next time, stay awesome.