Daybreak - How Reliance's price war made Pepsi and Coke love 'zero sugar'

Episode Date: January 14, 2026

India’s soda shelves have changed almost overnight. Coke and Pepsi now sell zero-sugar versions of their drinks at prices as low as 10 rupees. The move came after Reliance launched Campa Cola with its own budget zero-sugar option. Now, they are taking over in big cities and small towns alike.But what looks like a health trend is really a business strategy.   What is really inside those bottles? And what does it mean for consumers?Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. In India, in 2025, over half of PepsiCo's sales volume came from drinks which are labeled as low or no sugar. Now, it sounds like India is undergoing some kind of a health awareness revolution, but really that isn't. in the case. It actually boils down to this really intense price war that is playing out.

For years, and I'm sure you know about this, Coke and Pepsi treated their sugar-free sodas like premium products. They were always priced high and sold mostly in big cities aimed at fitness-conscious buyers. Regular cola stayed cheap, they were everywhere and they dominated sales. And then, in March this year, Reliance relaunched its nostalgic Kampa-Cola brand at a lot of, and they dominated sales. rock bottom prices, just $10 a bottle. And then Reliance being Reliance pulled off the ultimate disruptor move. It launched a zero-sugar version of Kampacola at the same price, $10. Suddenly, Coke and Pepsi were left-cornered. If they wanted to compete, they couldn't just fight Kampa Kama Kola on taste or nostalgia. They had to fight it on price. And the only way to do that

and still protect their margins was to flood the market with cheap. zero-sugar sodas of their own. So, they did. Overnight, India saw 10-ruppie bottles of Coke Zero, Pepsi no-sugar, Sprite Zero and thumbs-up X-Force everywhere, from metro supermarkets to Tier 2 town Kirana stores. And now, it looks like their bets have paid off. Because, you see, zero-sugar drinks actually cost less to make. Artificial sweeteners are cheaper than sugar.

Even production is simpler and less messy compared to sugar. And since regular and diet soda sell at the same price, the companies quietly make more money on the healthier option. But here's the catch. Beneath the labels, the promises and the marketing spin, what are we really drinking? And is this really about health? Welcome to Daybreak, a business podcast from the Ken.

I'm your host, Nick Das Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that is worth understanding and worth your time. The zero sugar explosion didn't just come out of nowhere. The ground was already shifting. Back in 2024, demand for low and no sugar drinks doubled to almost $85 million. And this is based on data from the Indian Beverage Association. So what used to be a tiny segment of the market has now suddenly become more than one-tenth of it. Big cities like Bombay, Delhi and Bangalore were leading the charge at the beginning,

but soon Tier 2 towns started drinking zero-sugar sodas too. What was once a premium product became the everyday choice. Investor Nitin Shadhir, who backs Pepsi's Indian bottling partner, Varan beverages, told my colleague the Ken reporter Pranati DVLS that just like how people upgraded in categories like shampoos and detergents, now they see sugar-free sodas the same way. It's not a luxury, it's a norm. Reliance pushed it even further. In August this year, it took control of nature edge beverages and launched Shunia,

a zero-calorie cola infused with Indian herbs and marketed as quote-unquote functional wellness. The price was $60. Healthier image, bigger margins. But how healthy is it actually? That is a whole different story and I will tell you about it later in the episode. But analysts say that the economics of all of this was irresistible. Sugar is expensive. A 10-rupee soda with sugar costs about 5 to 5.5 rupees to make.

And the same soda without sugar is just 4 rupees. That is a 5 to 10% boost to the company's bottom line. Artificial sweeteners also simplify production. There's no messy sugar syrup, no sticky residues, less cleaning, and the best part, faster output. And since Coke and Pepsi price regular and diet sodas identically now, 40 rupees for a 300-m-l can, there is no barrier for customers to switch. Distribution also helps.

Both companies run plants across India, each serving a 200-kilometer radius. Smaller brands, on the other hand, which often ship nationwide from a single factory, end up spending a lot more on logistics. By early 2025, Varun Beverages reported selling nearly 400 million cases of low and no-sugar drinks in one quarter, more than the previous quarter, and over half of PepsiCo sales now comes from these variants. Consumers barely notice the change, but companies definitely did. But how healthy are these low or no-sugar drinks? Stay tuned to find out. The story is not as clean as the labels make it out to look.

Industry insiders warn of deceptive labelling. A soda might claim no artificial sweeteners on its pack, but will still contain stevia. Others say no aspartame while containing erythritol. Eritrethritol is basically a sugar alcohol used as a low-calorie sweetener. A 2025 University of Colorado study found that it could harm blood vessels in the brain and raise chances of strokes. And as for aspartame, which is used widely in Diet Co, The WHO in 20203 said that it is possibly carcinogenic. Even Pepsi Sting, which is marketed as low sugar, mixes natural and artificial sugars.

The ingredients have kept changing over the decades. Sugar built the first cola empires. Then came artificial sweeteners for diabetics in the late 1980s, and then came the energy drinks with caffeine. By 2023, India was drinking more than 570 million litres of energy drinks, which was a 30 times increase since 2018. Now, zero-sugar sodas are overtaking even energy drinks and sales, becoming the mainstream alternative to regular colas.

Now, the Indian government in its recent GST overhaul grouped all carbonated drinks, sugar or no sugar, with tobacco and pan masala as sin goods, and slap them all with a flat 40% GST. In response, the Indian beverage association, petitioned the finance ministry to switch to sugar-based taxation. They argued that, quote-unquote, healthier alternatives should not face the same penalty as full sugar sodas. Analysts also seem to agree. A sugar-based tax could push more brands to sell zero-sugar drinks at affordable prices like

$10 to $20. Meanwhile, consumer behavior seems to split into two camps. Price-conscious buyers in small towns simply say, seem to grab the cheapest sodas available, sugar or no sugar. Health-conscious urban consumers order the 40-R-0-sugar cans on delivery apps thinking they are making the better choice. But both of these groups together are ultimately fueling the growth of these cola giants. As one investor put it, whenever a company enters a new category, costs rise first,

then volumes rise, because the consumer is headed that way. And right now, the consumer is headed straight, for the zero sugar aisle. But zero sugar does not mean zero risk. Long-term health effects of these sugar replacements are still unclear. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full

subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the web. website. Today's episode was hosted and produced by my colleague's Niktha Sharma and edited by Rajiv CN.