Beverage Wars: David VS Goliath

Coca-Cola and PepsiCo are two of the most well-known names in the beverage market now across the globe. However, it may come as a bit of a shock to find out that some small-scale beverage makers are currently performing better.
Akhil Gupta is a small-scale businessman in New Delhi, and he is already turning away new suppliers. His company, Fresca Juices, is running to its peak performance in order to complete orders that have already been placed. This is due to the fact that he’s already sold out his entire year’s stock. As opposed to Coca-Cola and PepsiCo — the global beverage giants who are still figuring out how to push their sales in India.

Even before peak summer, many small home-grown beverage makers are running at maximum capacity. Some have even turned into franchises in order to expand at a faster rate. Some industry estimates have pegged the market share of regional players in the Rs 14,000-crore soft drinks business at around 15%. Their strategy is simple but effective: Flood the market with Rs. 10 PET bottles.

Gupta says that when something becomes a commodity, it’s easier to sell. The Rs. 10 price point has worked like magic for their industry. At present, one-third of Fresca’s volumes come from Rs. 10 packs. A top executive at a global beverage firm, who did not wish to be quoted said that this is a real threat that PepsiCo and Coca-Cola are facing. “Compared with us, they may be small, with annual turnovers of Rs 5-30 crore. But when you add up hundreds of such players, you have a formidable force to reckon with.”

This small band of David’s consist of Jayanti Beverages of Alwar, Delhi’s City Cola and Xalta, Haryana’s Campa Cola and Gujarat’s Hajoori & Sons, among many others. Jayanti’s Jaljeera, is hawked as an indigenous digestion drink in smaller towns, that Coca-Cola had to re-launch its counterpart Rimzim Cola through its splash bar, a cost-effective dispenser that uses a two-litre bottle to pour chilled beverages in small cups priced at Rs 5. Jayanti has a presence in the north, but according to the group’s sales & marketing director, Rahul Jain, it is currently expanding to southern markets, including Bengaluru.

Xalta, a company started by cricketer Virender Sehwag’s brother, is growing by 30%, according to a senior executive at the local beverage maker. National players, on the other hand, have not had it so easy. Sales have either remained stagnant or dipped over the last few quarters due to bad monsoons and health concerns over carbonated beverages.

Rakesh Khanna, the 55-year-old proprietor of Satguru Enterprises which sells City Cola, says that the customer is greedy so their price is their bait. Khanna started off in 1985 by handling distribution for Ramesh Chauhan, Bisleri’s current chairman & MD, who created popular soft drinks brands such as, Thums Up and Limca and later sold them to Coca-Cola.

Khanna says that they can keep their prices low because of low operating costs. “The salary of an MNC’s CEO will be more than our annual turnover. But here, I am the CEO, the worker and the chemist too.” More power to them!