AMBANI REVIVES CAMPA SOFT DRINKS BRAND IN CHALLENGE TO COCA-COLA AND PEPSI
▶ In our fortnightly round-up of the super wealthy, MacKenzie Scott makes $250m open call to non-profits and net worth of Stripe founders plunges
Indian industrial company Reliance is reviving a local cola brand with plans to use its vast retail network to cut prices and challenge US beverage businesses PepsiCo and Coca-Cola in a key market.
Mukesh Ambani
Reliance, controlled by billionaire Mukesh Ambani, this month launched revamped Campa drinks, the sugary sodas popular in India in the 1970s and 1980s before disappearing from shelves as the US companies expanded rapidly in a liberalising economy.
At first glance, it may seem that Mr Ambani will find it tough to loosen Pepsi’s and Coca-Cola’s stranglehold on a market Euromonitor estimates is worth $4.6 billion and is expected to grow by 5 per cent a year until 2027.
Other tycoons have tried to go toe-to-toe with the drinks companies and failed, most notably Britain’s Richard Branson with Virgin Cola.
But Asia’s richest person disrupted India’s telecoms market seven years ago with cut-throat pricing to make Reliance the leading player in that industry. He is applying some of that strategy in his soft drinks venture.
“Coca-Cola and Pepsi are unused to a nationwide challenge, and Reliance has the financial muscle and reach to challenge them with a local brand with high nostalgic value,” says Amulya Pandit, a consultant at Euromonitor International. Reliance plans to open factories of its own or as joint ventures to produce Campa, and take the drink to India’s hotels, restaurants and in-flight sales, a company source says.
Production of Campa is outsourced after the $2.7 million acquisition of the brand in August last year.
The company is heavily discounting in-store prices. A two-litre Campa Cola bottle is priced at 49 Indian rupees (60 US cents) in shops, a near 50 per cent discount on its label price and about a third lower than 2.25-litre Coke and Pepsi variants, a Reuters price check showed.
The smallest bottles of Campa Cola and Coke both cost 10 rupees, while Pepsi starts from 12 rupees.
“The price will be disruptive,” says the source, who added that Reliance is planning an advertising spree during the IPL cricket season and is in talks with at least three teams to make Campa their refreshment partner.
Coca-Cola says it has broadly kept prices of its small bottles unchanged since last year and was focused on expanding distribution.
“Having new players in the market presents a great opportunity for investments to develop the market further,” it says.
Reliance, India’s leading retailer, will supply Campa to its 2,500 grocery outlets and thousands of smaller non-network shops as part of its new consumer goods push, from which it has set an internal target of $6.5 billion in annual revenue within five years.
The company also has a grocery shopping app and a wholesale division through which it supplies consumer goods to 500,000 small shops.
Reliance’s cola and consumer goods venture is led by T Krishnakumar, an executive who worked for nearly 17 years at Coca-Cola.
MacKenzie Scott
The philanthropist is launching a $250 million “open call” to community-focused non-profits.
Through her organisation, Yield Giving, Ms Scott plans to make unrestricted $1 million donations to 250 non-profits selected in the process, which she calls a “new pathway to support organisations making positive change in their communities”.
Applicants must have annual operating budgets larger than $1 million, but less than $5 million for at least two of the past five years.
“Teams on the front lines of challenges have insights no one else can offer,” Ms Scott says.
“So, there are three big headlines here in my heart: Community change-makers can nominate themselves. Community change-makers get feedback from their peers. Community change-makers have a powerful role in funding decisions.”
The open call is the first time non-profits can reach out to Ms Scott.
Until now, she and her team secretly contacted organisations they were interested in funding, then offered them unrestricted donations after receiving information about the group’s work and financials.
Since 2019, when she pledged to donate the majority of her wealth, Ms Scott has given more than $14 billion in unrestricted funds to 1,600 non-profit organisations.
She is worth more than $26 billion, according to Forbes.
She says that she is excited to enter into a partnership with non-profit Lever for Change, which will manage the open call process to find community-focused organisations that are advancing people of modest means and groups who have suffered discrimination and encountered other systemic obstacles.
“This open call is designed to empower and strengthen communities across the United States that are often overlooked,” said Cecilia Conrad, chief executive of Lever for Change, an affiliate of the John D and Catherine T MacArthur Foundation.
Organisations need to register to apply before May 5 and complete their applications by June 12.
The applications will be reviewed by peers, who will select up to 1,000 finalists. Those finalists will then be evaluated by a publicly named panel selected for their related experience. The 250 winners will be announced in early 2024.
Ms Scott does not discuss the reasons behind her philanthropy, beyond essays on her website. However, some analysts have said the open call process is a continuation of her desire to change philanthropy.
Phil Buchanan, president of The Centre for Effective Philanthropy, said when Ms Scott originally announced her open call plans in December that her approach says: “We as donors can yield to those talented people in non-profits working closest to communities who know best what is needed and how to do it.”
John and Patrick Collison
The Irish brothers became two of the world’s richest millennials over the past decade as Stripe’s valuation surged more than 5,000 per cent – an ascent that was emblematic of the easy-money era.
It has not been so easy of late. The wealth of Patrick, 34, and John, 32, has nearly halved since a 2021 funding round valued the payments company they founded at $95 billion, making it the biggest US startup at the time.
The company last week revealed a $50 billion external valuation after raising money from investors, including Peter Thiel’s Founders Fund.
The brothers are now worth about $5.9 billion each, down from a combined $23 billion two years ago, according to the Bloomberg Billionaires Index.
The rapid decline in the siblings’ wealth underscores how rising interest rates and surging inflation are hitting the fortunes of technology billionaires.
Stripe, which has its headquarters in San Francisco and Dublin, has repeatedly cut its internal valuation in recent months and slashed more than 1,000 jobs to prepare for what the brothers called “leaner times” in an email to employees in late 2022.
The company is using the $6.5 billion it raised in its latest funding round to pay the taxes of long-standing staff.
Stripe has told potential investors it will turn a profit this year.
The Collison brothers sold their first company for $5 million when they were teenagers and founded Stripe in 2010 after dropping out of college in the US.
Before last week, they were worth $7.5 billion each, based on Stripe’s internal valuations for its stock, according to the Bloomberg Billionaires Index.
The company, which sells software allowing businesses to accept online payments, held a seed round in 2011 from investors such as Elon Musk and revealed a valuation of $1.8 billion with its series C funding round three years later.
The value then surged to $20 billion during a 2018 series E round led by Chase Coleman’s Tiger Global Management.
Even with their recent wealth slump, the Collisons are still the only self-made billionaires under 35 among the world’s 500 biggest fortunes.
UK aristocrat Hugh Grosvenor, 32, and Red Bull heir Mark Mateschitz, 30, inherited their riches.