Masterstroke by Mukesh Ambani, set to dominate FMCG market as Reliance Consumer sets new….

In a major move, billionaire businessman Mukesh Ambani-owned Reliance Consumer Products (RCPL) is offering trade partners and distributors margins of 6-8 percent, which is double the industry average, as an incentive to stock and promote its daily essentials and grocery products, said executives with direct knowledge of the matter. Notably, major consumer goods firms like Britannia, Coca-Cola, Parle, Hindustan Unilever, Reckitt, and Nestle offer margins between 3 percent and 5 percent to traders and distributors.
Reliance Consumer Products, the FMCG division of Reliance Retail, offers products such as oils, Glimmer beauty soaps, pulses, staples, and Puric hygiene soaps. It also offers Alan Bugles snacks and Snactac biscuits.
“Reliance Consumer Products is replicating the strategy it began with (cola brand) Campa to all categories it is present in … it is a disruptive strategy and works to incentivize the supply chain, more so for new entrants,” Economic Times quoted an executive as saying.
“The company is offering these trade margins starting with smaller markets and plans to scale up distribution in metros over the coming quarters,” he added.
Price Lower Than Competitors
The business policy of RCPL to offer their products at rates strikingly 20–40 percent lower than their business rivals is undoubtedly shaking things up in the trade market. The pricing approach of this company is all set to ignite fierce price competition.
“After Reliance’s play in FMCG goes national, margins for the industry in general are bound to increase. Almost all daily essentials categories, from soap and biscuits to staples, are seeing heightened competition from regional players, so terms of trade become even more crucial, which all large category players want to protect,” Economic Times  quoted an executive at a large distributor platform.
Price War In Markets
For instance, PepsiCo and Coca-Cola have begun to give larger trade-level incentives in only some markets where Campa is present in order to counteract the latter’s lower costs, this executive stated. Coca-Cola and PepsiCo sell 250 ml bottles for Rs 20, while RCPL sells 200 ml bottles of Campa for Rs 10.
Notably, big brands such as PepsiCo and Coca-Cola are now giving larger trade-level incentives in selected markets where Reliance’s new soft drink Campa Cola is present. The brands are doing it to counter Mukesh Ambani company’s lower costs.
Coca-Cola and PepsiCo provide the choice of 250 ml bottles for just Rs 20 per bottle, while RCPL serves up their own deal; 200 ml bottles of Campa at a fair price of Rs 10 each.
The Higher Profits Strategy
RCPL, under Mukesh Ambani’s guidance, is accelerating its strategies to significantly boost profits by focusing more on local corner shops and general trading mediums. These channels account for a substantial 85-90 percent of the revenue stream in smaller markets or tier-2 cities. However, the company’s consumer division has a slight presence in the rapid online commerce platforms.
According to the executive, the profits given by the company incudes support for the distributor sales force.
Given that RCPL doesn’t spend much on marketing and advertising, it’s rather typical for retailers to offer promotions to stimulate interest.