New Delhi: Reliance Consumer Products (RCPL) is in advanced talks with leading Chennai-based Bovonto soft drinks maker Kali Aerated Water Works for a manufacturing and distribution partnership to make and sell Reliance’s Campa soft drinks range, executives directly aware of the development said.

Reliance had held discussions to acquire a majority stake in Kali Aerated Water Works before it bought Campa in August last year. Bovonto is one of the largest cola brands in the southern markets, and competes aggressively with multinational brands Coke and Pepsi. Kali Aerated, which also makes lemon, orange and ginger ale fizzy drinks, has more than eight plants in the South. It also sells juices and tender coconut water.

“The deal, which is in advanced stages of closing, will give Reliance immediate advantage of Bovonto’s manufacturing lines as well as strong distribution outreach, and a distinct edge over the competitors,” one of the executives said.

An email sent to RCPL, the FMCG arm and a wholly owned subsidiary of Reliance Retail Ventures (RRVL), did not elicit a response till press time Sunday. Queries addressed to Kali Aerated Beverages executives remained unanswered.

“Despite very limited marketing and advertising spends, regional brands continue to hold significant share in their home turfs. This is despite national brands like Coke, Pepsi, Thums Up and 7Up investing heavily in regional marketing and local language ads,” said another executive who represents a large bottling company.

Kali Aerated Water Works, also known as Kalimark, sells its beverages mainly in Tamil Nadu and Andhra Pradesh, at prices lower than that of national brands. The company started its beverage business with Bovonto, then a grape-flavoured aerated drink, over a century back. According to information on its LinkedIn platform, Kalimark was established in 1916 as a manufacturer and supplier of carbonated and non-carbonated drinks by entrepreneur PVSK Palani Appa Nadar.

RCPL’s Strategy
The business is run by the fourth generation of the family and has 501-1,000 employees.

For its Campa franchise, RCPL has signed up as pouring partner with three Indian Premier League (IPL) teams – Lucknow Super Giants, Punjab Kings, and Sunrisers Hyderabad. The partnerships are aimed at pushing up on-field visibility for Campa, a strategy that has so far been mostly adopted by Coca-Cola and PepsiCo on sports platforms.

The Mukesh Ambani-led Reliance, which started selling Campa across retail channels in Andhra Pradesh and Telangana early last month in cola, lemon and orange variants, has priced the drinks lower than those of Coca-Cola and PepsiCo. The move led to the multinational soft drinks brands stepping up trade discounts, consumer promotions and local marketing spends, according to trade sources. The development led to concern among distributors that an imminent price war by companies in the sector could hurt their margins. Before that, RCPL had been selling Campa through its own grocery stores and JioMart. Reliance Retail has a channel network of 17,225 stores.

Reliance bought Campa last year from Pure Drinks group for an estimated Rs 22 crore. It acquired a 50% stake in Gujarat-headquartered Sosyo Hajoori Beverages and its mainstay beverage brand Sosyo in January this year. Besides Sosyo, Hajoori’s other brands include Kashmira, Lemee, Ginlim, Runner and Opener. Sosyo is a dominant player in Gujarat.

Analysts said Reliance’s foray into mass categories such as soft drinks, soaps and biscuits is bound to stir up price wars but that dislodging long-established brands would be a challenge.

Nuvama Equities said in a recent report: “Most of the FMCG companies have gained market share in their core categories over the last 10 years as they continue to get benefits due to consolidation and changes in distribution, sales automation, innovations and scale benefits. RIL has huge financial muscle but FMCG players know how to deal with new entrants.”

RCPL’s extensive portfolio of summer-centric products will also include ice-cream under its own grocery brand Independence starting with the Gujarat market, a traditional stronghold of Amul, which is India’s largest dairy brand, according to the executives cited above.