Soft Drinks to Soap – Reliance Unveils Big Price War plan

You are currently viewing Soft Drinks to Soap – Reliance Unveils Big Price War plan

Following the relaunch of Campa, which sparked a price war in the soft drink segment, billionaire Mukesh Ambani’s Reliance has entered the FMCG personal and home care segment, offering products at 30 to 35% lower prices.

According to experts, the jury is out, and a competitive offering from Reliance would entice customers to try its products and compare performance, quality, and perception to that of established brands.

Products of RCPL, the FMCG arm and wholly owned subsidiary of Reliance Retail Ventures Limited (RRVL), are only available in a few markets, but the company is expanding its dealer network across India, and product availability will be expanded across modern and general trade channels.

“They are developing a distinct and dedicated distribution network comprised of traditional dealer/stockists as well as modern trade b2b channels,” an industry source explained.

It articulates ambitions to be a relevant player in the USD 110 billion FMCG (Fast Moving Consumer Goods) segment, which is largely dominated by players such as HUL P&G, Reckitt, and Nestle. 

RCPL has priced its Glimmer beauty soaps, Get Real natural soaps, and Puric hygiene soaps at Rs 25, which is much lower than the products of leading brands such as Lux (Rs 35 for 100 gm), Dettol (Rs 40 for 75 gm) and Santoor (Rs 34 for 100 gm) etc, while prices of its Enzo 2 litre front load and top load liquid detergent is Rs 250 (on Jio Mart) in comparison to a 2-litre pack of Surf Excel Matic priced at Rs 325.

Reliance Retail has entered the Indian fast-moving consumer goods sector by expanding the distribution of its private label brands, Reliance Fresh and Reliance Smart, which are sold in its supermarkets

Click Here to Read More

The price of Enzo front-load and top-load detergent powder was Rs 149 for a 1-kilogramme pack (on Jio Mart).

The two types of washing machines are front-load and top-load.
While in the dishwashing segment, it began with appealing price points of Rs 5, 10, and 15 for bars and has also launched liquid gel packs at price points of Rs 10, Rs 30, and Rs 45.

In the dish wash category, RCPL competes with HUL’s Vim, Jyothy Lab’s Exo and Pril, and has also introduced a Rs 1 sachet of liquid gel.

The price of Enzo detergent bars has yet to be announced.

RCPL relaunched the iconic soft drinks brand Campa earlier this month, entering the territory of US cola behemoths PepsiCo and Coca-Cola. It was reasonably priced at Rs 10 for a 200-ml bottle and Rs 20 for a 500-ml bottle.

Statista, an online market and consumer data platform, estimates the Indian soft drinks segment to be worth USD 8.85 billion.

Technopak Advisors Chairman Arvind Singhal said Reliance has earlier successfully disrupted the market in the telecom sector with its prices.
“They want to compete with HULs Surf and Lux, market leaders in their respective categories. They have a product, which is of Rs 25 against Rs 34 of Lux, it is a substantial incentive for the customer to try it once. Once the customer has tried it and the product is actually as good as Lux is, then Reliance can build a market. But if the consumer finds that it is slightly inferior to Lux, then Reliance will not succeed,” said Singhal.

He went on to say that Reliance does its homework well and is quite successful. It has placed a strong emphasis on areas of private consumption.

According to expert market research, the Indian beauty and personal care industry will be worth USD 21.65 billion in 2022.
According to Pallab Roy, Partner at KPMG in India, the Indian FMCG space has become interesting, with many companies announcing their forays and investments. It maintains attractive margins with room to grow as it transitions from loose to packaged products and as consumption per capita rises.

“However, creating iconic FMCG brands with pull and a formidable distribution network takes a significant amount of time and investment. While the jury is still out on this one, the FMCG industry will undoubtedly continue to evolve, which will benefit consumers “Roy stated his case.
According to Rajat Wahi, Deloitte India Consulting Partner, with better technology, ingredients, and other support available, including many third-party manufacturers who have scaled up in the last 5 years, it has become easier for new and existing players to develop and launch brands today, as evidenced by the many new D2C/consumer brands launched every day across packaged food, beauty, health, wellness, and so on.

But the real challenge for most brands is around scaling up and reaching consumers across the physical retail, especially the general trade in India as e- commerce today accounts for only 4-5 per cent of retail

Another 8-10% of total retail for FMCG and consumer products is accounted for by modern trade. 85-87 percent of retail is still represented by general merchandise, small local chains, or neighbourhood mom and pop shops, which account for 11-13 million outlets.

These outlets are serviced by thousands of distributors and dealers, and such networks have been built over many decades by leading FMCG brands. They are still being fine-tuned with best practises and technology, and every percentage of margin has been rationalised to make the entire value chain competitive.

“In my view, these “fortresses” or “moats” are almost unscalable today by the newbies as they look to expand their reach across the country, and it will take them years, if not decades, to replicate this model. This may be equally challenging for any retailer wanting to launch their private brands in India, as the conundrum of supplying the brands to the existing 11-13 million outlets still remains for them,” said Wahi

Dhairyashil Patil, President of the All India Consumer Products Distributors Federation (AICPDF), stated that RCPL stock has yet to enter the market.

“Some soap brands, such as Lux, Santoor, and others, are well-established and dominate the market. Furthermore, there are over 1,000 other brands available on the market. However, it will not be noticed unless and until it becomes a brand and begins advertising with a media campaign and makes products available in the market “He stated.

Click Here to invest in Reliance Retail.

You can also reach out to us at +91 82406 24850

Also Read: Refund 300 crores To NSE; Supreme Court to SEBI

Share and Enjoy !


Leave a Reply