Reliance Consumer Products and Udaan Partnership in Turmoil over Campa Beverage Range
According to the leading association of FMCG distributors, Reliance Consumer Products Ltd. is likely to have stopped providing its Campa line of beverages directly to the B2B e-commerce platform Udaan. Dhairyashil Patil, head of the All India Consumer Products Distributors’ Federation, told BQ Prime, “We contacted the Top Management of Reliance Consumer, who informed us that it has not signed Udaan as National Distributors for the soft drink brand—Campa.” It was a problem at the local level, and Reliance had already requested that the team immediately halt sending Campa to Udaan, according to Patil. BQ Prime’s inquiries to Reliance Consumer and Udaan have not yet received a response. Traditional distributors will always receive priority from Reliance Consumer, and if any stock remains after that, they may consider providing it to other large players like Udaan, according to a person with knowledge of the matter, who spoke on condition of anonymity.
This comes a day after Udaan issued a statement announcing that it had partnered with Reliance Consumer to distribute Campa’s line of beverages across all of India. Three new Campa flavors—Cola, Orange, and Clear Lime—have been made available through this agreement by Reliance at different consumption levels and pricing points. According to Vinay Shrivastava, Head of the FMCG business at Udaan, “the large retailer base combined with a cost-effective distribution network places Udaan in a unique position to serve the needs of RCPL for deeper market penetration for the “Campa” range across Bharat.” Over 50,000 mom-and-pop stores will initially carry Campa beverages, and over 1 lakh retailers and grocery stores will follow in the following two months, according to the Unicorn Startup based in Bengaluru. Udaan said it would work on various retailer promotions to drive expansion of Campa and increase the buyer base on the platform.
By focusing on the rural market, the Corporation has started ‘Project Vistaar’ to grow the fast-moving consumer goods and food category. According to Udaan, the project, which is now being executed in rural Uttar Pradesh, would reach markets with up to 3,000 residents. In the following 10 to 12 months, the company plans to increase its reach to over 10,000 towns and villages, according to Udaan. The company reported shipping over 1.5 lakh tonnes of FMCG goods in 2022, with a significant portion of orders coming from Uttar Pradesh, Delhi, Karnataka, Maharashtra, and Telangana. Another individual with knowledge of the situation who spoke anonymously said that it would be surprising if Reliance prioritizes any other platform over traditional distributors, which is the backbone of India’s retail trade.
If modern platforms like Udaan start providing goods to stores on less favorable terms, that amounts to undercutting and strains relationships with current distributors. And given that the general trade accounts for the majority of FMCG sales, no companies would want to do that, the source claims. Traditional distributors have experienced a decline in business during the previous few months. Consumer goods firms that have partnered with e-commerce players and added a revenue stream have run afoul of traditional distributors since these players purchase the products directly from the companies rather than through a distributor. Although this gives e-commerce players the ability to set their own prices and offer discounts, distributors have claimed that the e-commerce players are embracing deep discounting. Products from Amul and Parle had also earlier stopped supplying stocks directly to Udaan, alleging that Udaan was monopolising distribution to retailers. Earlier, Udaan had filed complaints with the Competition Commission of India against Parle Products Pvt. and Britannia Industries Ltd. on different occasions as the consumer goods makers refused to supply their products directly to the Startup.
However, the National Competition Regulator rejected both arguments, citing a lack of a valid justification. The $110 billion FMCG industry was interrupted by the coronavirus lockdowns, which had an effect on the distribution channels and store-level inventory. In order to increase their presence in underserved markets, companies like Hindustan Unilever Ltd., Nestle Ltd., Marico Ltd., and Dabur India Ltd. have since added direct distributors. In order to reach a vast number of outlets, “the traditional distributors,” some of whom have been in operation for three generations, have established a huge infrastructure, according to Patil. This gives them an advantage over more recent businesses, like Udaan, who might not have the same level of reach. According to Patil, the General Traders have 80 lakh outlets spread out among the outlets in the entire Nation. This compares with Udaan’s network of 30 lakh Grocery Stores, Retailers, Pharmacies, Hotels, Restaurants & Catering, and others.
