Cola Giants’ Bottled-up Fears of Smaller Rivals Bubble Up
Cola majors set up specialised groups to track smaller regional brands that are stealing market share
New Delhi: Coca-Cola and PepsiCo, the world’s largest sellers of soft drinks, are viewing the growing popularity of a slew of smaller regional brands in India as a threat. For the first time, the cola multinationals are setting up specialised groups to track these B-brands, which are stealing market share from them.
“The teams looking at these brands are separate from the ones tracking rural markets or counterfeits,” said a top official from one of the cola companies.
There are at least 50 such fizzy drink brands that are sold in the country with little spending on marketing. The regional drinks are about 20% cheaper than the global cola brands. From Bovonto in Tamil Nadu and Jayanti cola made by Jayanti Beverages in Alwar to Xalta Cola made by a New Delhi-based company and Gujarat’s Hajoori & Sons, which sells drinks branded Sosyo, Ginlim and Lemee, to City Cola sold by Delhi- based Rahul Beverages — the threat is ominous. According to industry data, the consolidated market share of these regional brands is 15-17%.
That’s a sizable chunk of the organised soft drink market, which is estimated at over .₹ 14,000 crore. These brands are riding on almost no marketing spends and high trade margins, with some of them supplying their products directly to retailers.
A Coca-Cola spokesperson said the company was competition-aware but not competition-focussed. “We stay informed of new products, new brands and emerging consumer preferences.”
“When there is a change in control with or without transfer of shares and in the event of a change from a dual or multiple control to sole control, open offer gets triggered under the takeover code,” said RS Loona, partner at Dhaval Vussonji Alliance and former executive director at Sebi.
When contacted, a Diageo spokesperson said: “It is clear that Diageo has been in control of USL since we started fully consolidating USL results in July 2014. We are, therefore, very clear that there was no change of control in February 2016.”
In a related development, Sebi said Diageo Holding Netherlands had issued a $135-million bank guarantee to Standard Chartered Bank on July 4, 2013, on the liabilities of Watson, a company affiliated to Mallya. Watson defaulted in May 2015. On January 29, 2016, DHN paid $140.97 million to Standard Chartered Bank. On June16, 2016, Sebi asked Diageo to make additional payments to minority shareholders of USL as its earlier open offer price had not factored in the bank guarantee provided to the company affiliated to Mallya.