I think, this is quite interesting observation that, Competition in Cold Drink sector has affected the Sales of Juice sector!!
Personally I believe that, this could be transitional. Eventually the Cold Drink sector will be impacted more by launch of cheaper alternative cold drinks.
Over a period, people will realize the benefits of Healthy options over Cold Drinks and this trend may reverse. Generally over a longer period, Healthy options might be better for most of the population unless their price is too exorbitant.
Dominos ads show they use pepsi as bev co. Now by taking 40% stake in coke bottling they will replace pepsi with coke in all Jubilant QSRs. Not very good for pepsi and Varun bev.
Even in India Domino’s was partnering with Coke right from the beginning, but in 2018 Pratik Pota replaced Coke with Pepsi. Now they may go back to Coke, of course. I think beverages constitute something like 2.5 % of JFL’s revenues, which comes to about Rs.125 crores for their India operations. This is less than 1 % of VBL’s consolidated revenue, so it is not much of a problem for VBL.
Reliance going super aggressive in energy drink by launching “Spinner”.
“Spinner is backed by its partnership with top IPL teams, including Lucknow Super Giants, SunRisers Hyderabad, Punjab Kings, Gujarat Titans and Mumbai Indians who will collaborate with RCPL to drive awareness and increase brand visibility nationwide.”
A direct competitor to Sting at half its price (I guess sting is sold for 20 bucks)
The company is a 20% growth engine, but the PE re-rating is not on the cards anymore.
For a stock to deliver extraordinary returns you need PE Expansion + earning growth.
Hence the question: can you find other companies with better earnings growth and lower/similar pe? if the answer is yes, then you take a call on your allocation else stick with this counter.
I acknowledge the near-term challenges, but the market has enough space for multiple players this coming summer. It’s already 35 degrees in Mumbai as of today so prepare for a hotter summer this year as well. Even companies like Lahori Jeera, Bombay Banta, etc are achieving impressive sales with their Jeera drinks which makes it evident that there is space for all kinds of soft drinks in the market.
Although the price war may help Campa gain some market share, I believe they may have to find newer geographies as the beverage industry operates under different dynamics.
Unlike water, where brand loyalty is weak—since if you’re thirsty, you’ll choose any available brand like Bisleri, Kinley, or Aquafina just to quench your thirst.
Carbonated drinks and juices foster strong brand loyalty. If I have been drinking Pepsi, Coca-Cola, or Thums Up for years, I am unlikely to switch to Campa, even if it’s priced lower. The same applies to Fanta or Miranda; personal taste usually dictates your choice, and you will consistently reach for your preferred drink.
Additionally, VBL possesses a strong distribution network, characterized by its competitiveness, the number of chillers, and its ability to promptly replenish demand—all of which contribute to its continued strength in the market.
Thus I continue to believe that it will remain a 20-25% growth engine regardless of competition.
Disclosure: I am invested, so my views may be biased.
IMHO , Unit economics may be calculated and different assumptions of sales and marketing may be presumed , the only thing which may matter the most is the taste of cola. if in any way campa can crack the taste thing, we can witness a history in making where the broader world has duopoly in CSD (carbonated soft drink) market , we may have a heavy weight third player doing the damage to the duopoly. and acquiring* a substantial mkt share.
Campa may do well in the rural markets where the Torinos, Kali mark and Bovonto carved out their own share of market until the very recent past. The rural market just want a carbonated sweet drink at an affordable price and these can fly of the shelves easily if there’s a significant price difference.
A year ago, it was quite difficult to find any soft drink brand other than Pepsi and Coca-Cola at Reliance Mart in my hometown, Begusarai, Bihar. However, the scenario has now changed significantly. Currently, around 90% of the soft drink shelves are occupied by Campa soft drinks, with the remaining 10% comprising other brands. Since Reliance operates the mart, it is expected to prioritize selling Campa products. Nevertheless, this shift indicates a noticeable disturbance in the soft drink market at the ground level.
Despite this change in Reliance Mart, small Kirana shops in the area continue to stock only Coca-Cola and Pepsi products. This contrast suggests that while major retail chains may influence market trends, traditional retailers still rely on established brands. However, the growing presence of Campa in a major retail space signals an evolving competitive landscape in the soft drink industry.
