Food and Beverage Business
Manufacturing

Varun Beverages Increases Its Share in PepsiCo’s Soft Drink Volumes

Varun Beverages Increases Its Share in PepsiCo's Soft Drink Volumes auction, backgrounds, beverage industry, bible, business expansion, contract, copy space, courtroom, crime, decisions, desk, gavel, Government, horizontal, industry, judge, judgement, justice, Law, law enforcement and crime, lawyer, legal system, legislation, market growth, PepsiCo, Police, politics, shares, soft drinks, trial, Varun Beverages, wood Food and Beverage Business

Varun Beverages has made a significant investment of ₹4,128.04 million by acquiring ordinary shares in its subsidiary, The Beverage Company Proprietary Limited (BevCo). This strategic move underscores the company’s commitment to expanding its influence in the food manufacturing sector.

BevCo stands as the largest bottler of PepsiCo products outside the United States, boasting a consolidated turnover of ZAR 4,090 million for the financial year ending June 30, 2024. This achievement highlights the robust performance of the food manufacturing industry on an international scale.

Since establishing a partnership with PepsiCo in 2018, BevCo has served as the exclusive manufacturer of popular beverages for South African consumers, including Pepsi, Pepsi Max, Pepsi Light, Mountain Dew, 7UP Free, and Mirinda.

Over the years, PepsiCo’s shares have experienced a consistent increase. Between 2011 and 2024, Varun Beverages reportedly expanded its market share in PepsiCo’s soft drinks volume by 60%, establishing itself as a formidable player in the food manufacturing landscape.

In its Q3 2024 investor and analyst conference call, the business revealed that brands owned by PepsiCo are growing at a faster rate than its own portfolio, with growth rates of 12% compared to 20% in Q2. Nonetheless, the company affirmed its commitment to scaling up its entire product portfolio.

Brokerage firm JM Financial Services projects that Varun Beverages has ample opportunity for growth, driven by its extensive geographical reach and strong supply chain, particularly in Africa, which has been identified as a significant growth driver.

Recent business expansions have seen the company roll out operations in South Africa and Tanzania, while also increasing capacity in Congo. Furthermore, three new plants are being developed in Zimbabwe, Zambia, and Morocco, which are expected to generate approximately $100 million in revenue. The overall market is valued at around $800 million, with JM Financial Services highlighting opportunities for expansive territory rights.

“Looking ahead over the next 20 years, Africa appears very bullish,” stated Ravi Jaipuria, the chairman of Varun Beverages, during the call.

“There are some challenges, but that’s why we don’t put all our eggs in one basket. We are going into different countries. Each country might represent 2%, 3%, or 5% of our turnover. If one country has an issue, it will not affect us.”

The brokerage firm emphasized that the beverage company’s solid track record, combined with its fast growth opportunities and a debt-free balance sheet, will inspire confidence in its earnings growth and return on capital employed.

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