Daijiworld Media Network - New Delhi

New Delhi, Nov 15: Coca-Cola has warned that intensifying competition in India's carbonated drinks market, particularly from Reliance Industries-owned Campa, could force it to cut prices or increase marketing expenditure to protect its market share.

The concerns have been highlighted by Hindustan Coca-Cola Holdings Ltd (HCCH), Coca-Cola's largest bottler in India, in its draft red herring prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI) ahead of its proposed initial public offering (IPO).

The IPO will comprise an offer for sale of up to 99.75 crore shares by Hindustan Coca-Cola Overseas Holdings, Coca-Cola's holding arm. Coca-Cola currently owns 60% of HCCH through the subsidiary, while the Jubilant Group holds the remaining 40%. Coca-Cola plans to sell a 15% stake through the IPO, reducing its holding to 45%.

In the DRHP, HCCH said Reliance Consumer Products Ltd (RCPL), through its Campa brand, and regional beverage companies were expanding their presence by offering products at competitive prices. The company warned that growing competition from global and national brands, regional players and diversified FMCG companies could put pressure on profitability.

Citing a report by management consulting firm The Knowledge Company (TKC), HCCH identified RCPL as an emerging competitor rapidly expanding across beverage categories through acquisitions, partnerships and Reliance's wider business network.

According to the DRHP, RCPL reaches more than three million retail outlets through over 5,000 distributors, with beverages manufactured at around 18 facilities through co-investment partnerships across 12 states.

HCCH reaches approximately 1.7 million outlets through 2,273 distributors, while Varun Beverages Ltd (VBL), PepsiCo's bottling partner in India, has a distribution network covering more than four million outlets.

The company has also flagged rising input costs, particularly PET resin, aluminium and sugar, which are putting pressure on margins for products sold at fixed price points of Rs 10, Rs 20 and Rs 30. Carbonated beverages also attract an effective GST rate of 40%, among the highest rates for packaged food and beverages.

Despite the growing competition, Coca-Cola remains a major player in HCCH's territories. Its brands held a 60.1% value share of the carbonated soft drinks market in the company's southern and western territories during the 12 months ended June 2026. Thums Up was the largest individual brand.

The DRHP also noted growing demand for light and diet beverages, which accounted for 7% of the cola market in FY26. Their share is expected to nearly double by FY31.

Coca-Cola has expanded its Rs 10 product range across 150 ml, 250 ml and 500 ml packs and plans to introduce more products in its Affordable Small Sparkling Package (ASSP) lightweight bottle format. However, HCCH's realisation per unit case declined 3.44% to Rs 166.2 in FY26.

Rising input costs could affect competitors differently. Campa benefits from access to PET supplies through Reliance group companies, while VBL said around 25% of its PET requirement was being met through recycled resin, much of it manufactured in-house.

RCPL recorded beverage sales of Rs 5,250 crore in the first half of FY27, from April to September 2026, led by Campa. This was equivalent to 90% of its full-year FY26 beverage sales, according to Ashutosh Goyal, who presented Reliance's FMCG business during the company's second-quarter earnings call.

Goyal said RCPL continued to be the third-largest player in the non-alcoholic ready-to-drink beverages segment, with a sustained double-digit market share in several states. The company has commissioned several high-speed beverage production lines and is setting up integrated food and beverage parks. Campa has also secured visibility as an official partner of the Board of Control for Cricket in India (BCCI).

Meanwhile, VBL has indicated that it does not intend to enter an aggressive price war. During an analyst call on October 30, executive vice-chairman Varun Jaipuria said Rs 10 packs accounted for only 0.2% to 0.3% of the company's volumes and that the unit economics were not viable even for 150 ml packs.

VBL reported a 22.5% increase in its India volumes during the July-September quarter, while its consolidated revenue rose 33.2% to Rs 6,607.6 crore.

Jaipuria said India's per-capita beverage consumption remained low, providing scope for growth across the industry. However, rising input costs remain a challenge for the company. Its gross margin contracted 334 basis points to 53.1% in the September quarter, mainly due to higher packaging costs following the West Asia conflict.

VBL has also reduced the size of its Sting energy drink pack from 300 ml to 250 ml. Jaipuria said the industry was considering various responses to sustained cost inflation, including reducing pack sizes, increasing prices or cutting trade margins.

A query sent to Coca-Cola India regarding the growing competition in the cola market remained unanswered at the time of filing the report.