Reliance's move follows its strategy from three years ago when it relaunched Campa soft drinks to challenge global incumbents Coca-Cola and PepsiCo. Industry observers, including Britannia CEO Rakshit Hargave and Tiger Consulting founder A. Manikandan, note that biscuit margins leave very little room for steep price cuts. Simultaneously, market leader Britannia is defending its margins by raising product prices by 3.5% and reducing pack sizes due to rising costs for palm oil, wheat flour, and sugar.
Key points
Industry leaders believe low existing price points will prevent Reliance from disrupting…: Industry leaders believe low existing price points will prevent Reliance from disrupting biscuits as it did beverages.
Steep discounting in the biscuit sector risks harming profitability far more than in the…: Steep discounting in the biscuit sector risks harming profitability far more than in the soft drink market.
Britannia plans further price increases and pack size reductions to counter ongoing raw m…: Britannia plans further price increases and pack size reductions to counter ongoing raw material price pressures.
Sources checked by our analysis pipeline: 1
Reliance on Monday expanded the biscuit range under its Independence brand in Tamil Nadu, with packs starting at 5 rupees, days after it established the segment as the "focus category" of its consumer business.
Also Read: Reliance Consumer expands Independence biscuit portfolio with nine variants
The push comes after the company relaunched the Campa soft drinks brand three years ago, triggering a price war with global rivals Coca-Cola and PepsiCo through cut-throat pricing, similar to its strategy in the telecom sector.
Britannia CEO and Managing Director Rakshit Hargave cautioned that this approach would be challenging to repeat in biscuits.
"A large part of the market operates at 5 rupees and 10 rupees, so the ability to disrupt those two price points ... is much more difficult than you can do in a cola market by discounting by 5 rupees or 10 rupees," Hargave said on a post-earnings call.
Also Read: Reliance starts new rivalry with ITC, Amul & others with a Rs 20 drink
However, he said that the Good Day maker was "watchful" of competition from Reliance, whose biscuits…
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