🤯 Why RIL Spent Rs. 22 Cr On A Dead Brand
Reliance is ready to kickstart its FMCG business and the first step to do so was to buy Campa Cola. Here's why the company bought a dead brand.
We have seen enough revenge reincarnation stories in movies and TV shows.
But it's now time for the FMCG space to have its own ‘Karz’ (a revenge reincarnation bollywood movie) moment, thanks to Reliance.
RIL is bringing back Campa Cola from the dead.
Now, Gen Z may not have heard of it. But mention it to your parents and you will see a gleam of nostalgia in their eyes.
And that nostalgia could be fatal for other soda brands out there.
📖 The History of Campa Cola
Before we get into RIL’s current deal, let's get into the history of Campa Cola.
The drink brand was created by Pure Drinks Limited in 1977.
What’s Pure Drinks?
It is the reason you can now enjoy a chilled Coke.
Yes, Pure Drinks was responsible for introducing Coca-Cola to India back in 1949.
At the time it was the only distributor and manufacturer of the drink in India.
But when Coca-Cola had to take a 17-year vanvaas from India (due to Indian government regulations that mandated foreign companies to dilute 40% stake in their Indian subsidiaries: you can read about this law here), Pure drinks rushed to fill its shoes.
It launched Campa Cola, a drink that tasted and looked just like Coca-Cola.
Not just that, it introduced several other soda flavours like orange, lemon, and jeera masala.
And with Coca-Cola gone, it didn’t have to fight for a space on store shelves.
It became people’s go-to Coke alternative.
Now, other drinks like Thums Up and Gold Spot also came up at the time, but still Campa Cola enjoyed a decent market share.
Until Coca-Cola re-entered India in 1993, when the government opened up the economy to foreign investments.
While Thums Up survived because of its unique taste, demand for Campa Cola, which was just a copy cat product died down. Especially because of the aggressive marketing strategies of the global cola giants.
So, it died a slow death, finally shutting down in 1999.
But why is Ambani buying this dead brand?
🧠 RIL’s Game Plan
As you may have already heard, Reliance is planning on entering the FMCG space.
And instead of sitting and creating a host of products from scratch, it is taking a shortcut: acquiring several small brands that already exist.
Campa Cola is one such brand which RIL acquired for Rs. 22 crores. The brand may be dead but it still has the formula for the cola concentrate that tastes similar to Coca-Cola, which will be a huge asset for Reliance.
And the company is ready to relaunch the product in October right in time for festival season.
But why relaunch a brand that has failed?
You see, fighting a brand like Coca-Cola or Pepsi is going to be difficult.
If RIL launches a new brand, it will not only have to get a fair share on store shelves and TVs, but also have to gain customers’ mindshare.
And in a country where thanda matlab Coca-Cola is the norm, this is going to be an almost impossible task.
RIL knows this, because believe it or not, it already has its own personal soda brand called “Yeah!”
If you have not heard of it, you just kinda proved our point.
So, to win in the soda race (or for that matter the entire FMCG race), RIL will have to bank on brands that exist and do have some sort of a recall and scale them.
That’s why Campa Cola. Lots of customers know it and even though back in the days they chose Coca-Cola over it (because it was the new thing back then), the power of nostalgia and desire for good old days will probably convince many to try Campa Cola.
But will this nostalgia be enough for Campa Cola to become a regular in refrigerators?
Well, probably not. But the Campa Cola brand has yet another secret weapon. Unlike Coke and Pepsi or even Thums Up (which is owned by Coca-Cola), it is an Indian company.
And with the current wave of self-reliance and aatmanirbharta, a lot more Indians may choose Campa Cola instead of Coca-Cola.
Plus, since the two look similar lots of people may even pick up Campa Cola accidentally.
Don’t believe this can happen?
RIL has already managed to sell people several of its items just because they were disguised as a popular brand. However, this hasn't been enough to make its personal brands successful.
What’s more, Reliance Retail already has a network of 15 lakh stores and JioMart. So, distributing its products won’t be a problem.
Plus, we have already seen how good Ambani is at burying competition.
Jio managed to completely disrupt the telecom sector with its dirt cheap prices. Reliance Retail could replicate the same strategy with Campa Cola. The company does have enough cash to burn.
But even if Reliance somehow manages to garner a huge market space, will it ever be truly able to erase Coca-Cola and Pepsi?
Or for that matter players like HUL and ITC?
Research suggests it may not have to try to do that.
You see, India’s grocery market has grown from $300 billion in 2013 to $600 billion in 2019. And it is set to further grow to over $800 billion by 2024.
So, there might be enough space for RIL to enter the grocery business without disrupting the status quo.
Will Ambani be satisfied with this? Only time will tell.
⚡ In a line: Reliance Retail is buying Campa Cola to enter the soda and the FMCG business and the brand’s nostalgia value could give Reliance a major boost.
💡 Quick question: Do you think Reliance poses a major threat to existing FMCG players?
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