ICICI Securities analysts led by Aniruddha Joshi noted that Campa Cola doesn’t have much brand recognition with people under 25 years. It is however well known to consumers who are 40 years and above but that amounts to only 30-35% of the country’s population, the brokerage firm added.

In their latest research note on Varun Beverages Limited – PepsiCo‘s India Bottler- analysts did a deep dive into the recent entry of Campa Cola in the cold beverages market. The brokerage highlights that the beverages business is ‘low-value high volume' and Campa Cola will need to set up multiple manufacturing units across India to manage freight and transportation charges. The note also added that the company will need to reach at least 5 lakh outlets in order to gain some market share. Analysts think that these investments may take up several years.

However, on the positive side, the company noted that the aggressive pricing proposed by the brand will help it gain initial traction. Campa Cola is priced at Rs10/200ml compared to Rs20/250ml for Thums Up, Coca Cola, and Pepsi. However, the brokerage firm added that the company will need to expand and diversify its product mix to include low-calorie drinks, high-energy drinks, etc.

Considering all these factors the brokerages firm said that it doesn’t see near-term risk for VBL but will be monitoring Campa Cola’s progress closely. However, the firm maintained its ‘hold’ rating on VBL as it noted that upside in the stock is capped at current valuations.

Price Action: VBL shares were up 0.83% to close at ₹1,316.60 on Friday.

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