What happened
Early this month, Reliance Consumer Products launched biscuits under its Independence brand in Tamil Nadu, with plans to take them across India. According to the reports:
- The range has nine variants and 28 packs (SKUs), priced from ₹5 to ₹125.
- Reliance has done this before. Its Campa soft drinks took on Coca-Cola and PepsiCo with sharp pricing, and Reliance says Campa now has double-digit share in key markets.
- Campa sold ₹2,900 crore in the June quarter, close to a third of Reliance Consumer's sales, according to its earnings presentation.
On an analyst call on Saturday, Britannia's CEO Rakshit Hargave said the new range looks very similar to the classic biscuits already on the market, and that Tamil Nadu is a big state for Britannia too. His main point was about price. Most biscuits already sell at ₹5 and ₹10, so there is far less room to undercut rivals than there was in cola. He called Reliance a respectable competitor, and said Britannia has “very, very strong moats.”
The case
You're the Tamil Nadu sales head of an established biscuit brand. A large new competitor has just launched 28 packs in your state. Your distributors are nervous, and a few big retailers are asking what you'll do for them. Your CEO asks: should we raise retailer margins across the state to protect our shelf space, or hold our nerve?
1Clarify
- Where exactly is the new range selling? Which towns, and through which channels: kiranas, supermarkets, quick commerce. A local threat needs a local answer.
- Which of our packs does it overlap with? If it copies our biggest ₹5 and ₹10 lines, that's where to defend. Our premium packs may not be at risk at all.
- What is our weekly sell-out doing in launch areas? Retailer orders can dip simply because shelf space is shared. Sales to shoppers tell the real story.
- What do retailers and distributors earn from us today? That's the base any scheme is built on.
2Structure
Split the response by who you need to keep on side:
- Retailers: shelf space, display and margin.
- Distributors: stock levels, credit and how often they visit stores.
- Shoppers: the right pack at the right price in every outlet.
- The competitor: what we watch to tell a launch spike from a real shift.
3Analyse
Why price cuts don't work well here
This is Hargave's point, turned into maths. On a ₹5 pack, taking off just ₹1 is a 20% price cut. On bigger packs, the same rupee barely matters:
Simple arithmetic on round pack prices. It shows why the cheapest packs leave so little room to undercut.
So the fight at ₹5 and ₹10 is less about the printed price and more about getting onto the shelf and staying there. That puts the retailer's margin at the centre of the case.
What would defending cost?
Assumptions, all made up for the case:
- Our Tamil Nadu biscuit sales are ₹600 crore a year, so ₹300 crore over six months.
- Our contribution margin is 30%.
- The scheme is 2 extra percentage points of retailer margin for six months.
- The top 20% of outlets sell 60% of our volume.
Two options:
- Statewide: 2% of ₹300 crore = ₹6 crore.
- Targeted at the top outlets: 2% of (₹300 crore × 0.6) = ₹3.6 crore.
How much share would we need to lose for it to pay?
Each 1% of volume we lose over six months costs ₹300 crore × 1% × 30% = ₹0.9 crore of contribution. So:
This assumes the scheme fully stops the loss, which is generous. Example numbers, not any company's real figures.
A statewide scheme only makes sense if you expect to lose nearly 7% of volume without it. That's a big call to make in week two of a competitor's launch. The targeted scheme pays back at 4%, and puts the money where most of the volume is.
4Recommend
I'd hold off on a statewide margin increase. Instead, I'd run a targeted defence for six months: extra margin and display support in the top outlets, for our ₹5 and ₹10 packs only. That costs about ₹3.6 crore against ₹6 crore.
First, the price maths says the fight is for the shelf, not the price tag. Second, the targeted scheme protects most of our volume and pays back if it saves us 4% of it. Third, it keeps money in reserve in case the new range spreads beyond the launch towns.
The risk is that the competitor wins smaller outlets we aren't defending. So I'd track weekly sell-out in launch areas, and widen the scheme if our share in the smaller outlets falls by more than an agreed level.