The carbonated drinks market in India is seeing intensified competition, and Coca-Cola, the country’s largest cola company, has flagged the same, warning that it may have to cut prices or spend more on marketing to defend its market share against new entrant Campa, the cola brand owned by Reliance Industries.
Hindustan Coca-Cola Holdings Ltd (HCCH), Coca-Cola's largest bottler in India, has highlighted these risks in the draft red herring prospectus (DRHP) for its proposed initial public offering (IPO). The company recently filed the DRHP with the Securities and Exchange Board of India (SEBI). The IPO will comprise an offer for sale of up to 99.75 crore shares by Coca-Cola's holding arm, Hindustan Coca-Cola Overseas Holdings. HCCH is owned 60% by Coca Cola through its subsidiary Hindustan Coca-Cola Overseas Holdings, and 40% by Jubilant Group. Coca Cola is selling 15% stake in the company and trim its holding to 45% post-IPO.
In the DRHP, HCCH says players such as Reliance Consumer Products (RCPL), through Campa, and regional beverage companies are expanding their presence by offering products at competitive price points.
The company says it competes with global and national brands, regional players, diversified FMCG companies and brands pursuing affordability-led strategies. Intensifying competition, it warns, could force it to reduce prices or increase marketing expenditure, putting pressure on profitability.
Citing a report by India-based management consulting firm The Knowledge Company (TKC), HCCH sees RCPL as an emerging player that is scaling up rapidly across beverage categories through acquisitions, partnerships and the wider Reliance ecosystem. The Coke bottler says diversified FMCG companies benefit from multi-category distribution networks, while emerging players are adding competitive pressure through faster expansion and strategic partnerships.
According to the DRHP, RCPL reaches more than 3 million retail outlets through over 5,000 distributors, with beverages manufactured at around 18 facilities through co-investment partnerships across 12 states. Another major competitor in the non-alcoholic ready-to-drink (NARTD) category is Varun Beverages Ltd (VBL), PepsiCo's sole bottler in India.
HCCH, according to the IPO document, reaches around 1.7 million outlets through 2,273 distributors, while VBL has a distribution network covering more than 4 million outlets.
The cost squeeze
The DRHP also flags increasing cost pressures in the mass-market category of the beverage industry. Sharp increases in PET resin, aluminium and sugar prices are creating margins pressures on products sold at fixed price points such as Rs 10, Rs 20 and Rs 30. Carbonated beverages also attract an effective GST rate of 40%, among the highest for packaged food and beverages.
Despite the growing competition, Coca-Cola remains dominant in HCCH's territories. Coca-Cola India brands commanded a 60.1% value share of the carbonated soft drinks market in HCCH's southern and western territories in the 12 months ended June 2026, with Thums Up emerging as the largest single brand.
The carbonated drinks category is also facing competition light and diet variants drinks, which accounts for 7% of the cola market in FY26, reveals the DRHP, adding that share of such drinks is expected to nearly double by FY31.
With competition intensifying in the lower price segment of the market, Coca-Cola has been forced to push further down the price ladder. It has expanded its portfolio of Rs 10 packs across 150 ml, 250 ml and 500 ml sizes and plans to introduce more products in its lightweight ASSP (Affordable small sparkling package) bottle format.
The competitive and pricing pressures are also reflected in some of the company's financial numbers. HCCH's realisation per unit case declined 3.44% to Rs 166.2 in FY26.
A query sent to Coca-Cola India on growing competition in the cola market remained unanswered at the time of filing of the report.
The impact of rising input costs, however, may not be uniform across players. Campa has access to one of the country's largest PET supplies through its own group companies, giving it an edge over others.
On Reliance's earnings call, Amit Chaturvedi, who presented the petrochemicals business, said demand for PET during the quarter was driven primarily by the beverage sector. VBL says around 25% of its PET requirement was now met through recycled resin, much of which is manufactured in-house and is cheaper than virgin PET.
Campa's march
RCPL recorded beverage sales of Rs 5,250 crore in the first half of FY27 (April-Sept 2026), led by Campa. This was equivalent to 90% of its full-year FY26 beverage sales, Ashutosh Goyal, who presented Reliance's FMCG business, told analysts during Reliance Industries' second-quarter earnings call.
Goyal said RCPL continues to be the third-largest player in the NARTD beverages segment, with a sustained double-digit market share in several states.
The company commissioned several high-speed beverage production lines across states in the first half of FY27 and is setting up integrated food and beverage parks. Campa has also secured a prominent platform for brand visibility as an official partner of the Board of Control for Cricket in India (BCCI).
Varun Beverages stays out of price war
VBL, meanwhile, is staying out of aggressive pricing war. During its October 30 analyst call, executive vice-chairman Varun Jaipuria, when asked whether the company would push Rs 10 packs ahead of next summer, said the price point accounts for only 0.2-0.3% of VBL's volumes and that the unit economics do not make sense even for 150 ml packs.
The Pepsi bottler believes it can sustain growth without targeting the bottom end of the market. Its India volumes rose 22.5% in the July-September quarter, while consolidated revenue increased 33.2% to Rs 6,607.6 crore.
Responding to concerns about competition, Jaipuria said India's per-capita beverage consumption remained sufficiently low to allow VBL and its rivals to expand their businesses.
For VBL, however, the more immediate challenge has been rising input costs. 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.
The company has also reduced the size of its Sting energy drink pack from 300 ml to 250 ml. Jaipuria said the industry was discussing possible responses to sustained cost inflation, including reducing pack sizes, raising prices or cutting trade margins.