In a journey that traces back to PepsiCo’s entry into India in 1991, Varun Beverages, under the astute leadership of bottling baron Ravi Jaipuria, has achieved unprecedented success. Collaborating with PepsiCo, Varun Beverages has evolved into the powerhouse responsible for bottling the entirety of India’s Pepsi consumption, strategically growing by acquiring other bottlers and expanding its territorial footprint.
At the core of PepsiCo’s asset-light strategy in India lies Varun Beverages Ltd, serving as the manufacturer, bottler, and distributor of PepsiCo products. This strategic partnership allows PepsiCo to maintain agility by avoiding the complexities associated with manufacturing and selling fast-moving consumer goods (FMCG). Despite challenges posed by the COVID-19 disruptions, Varun Beverages has experienced consistent growth, earning accolades from market enthusiasts.
Varun Beverages now holds franchise rights for various PepsiCo products across 27 states and seven Union Territories in India, contributing to nearly 90% of PepsiCo India’s beverage sales volume. Notably, India stands as Varun Beverages’ largest market, contributing approximately 80% to its revenues.
The company’s portfolio includes Pepsi, Pepsi Black, Mountain Dew, Sting, Seven-Up, Mirinda Orange, Seven-Up Nimbooz Masala Soda, Evervess, Tropicana Slice, Tropicana Juices, Gatorade, and Aquafina. With over 30 manufacturing units in India, Varun Beverages’ total revenues have seen substantial growth from Rs 5,127 crore in FY16 to Rs 13,211 crore in FY22. The net profit margin has concurrently increased from 5.73% to 11.36%.
Ravi Jaipuria, the Chairman of Varun Beverages, began his journey with one bottling plant inherited from his father, Chunilal Jaipuri, who had previously co-founded the Bank of Rajasthan and secured the bottling franchise for Coca Cola. Aligning with PepsiCo in 1991, Ravi Jaipuria has been instrumental in the company’s remarkable ascent.
Looking ahead, Varun Beverages aims to sustain its growth momentum by capitalizing on the promising future of India’s soft drinks industry. The company anticipates robust growth driven by improving demographics, expanding retail penetration, favorable macroeconomics, and a rising trend of in-home consumption. With franchise rights acquired for South and West regions in 2018, Varun Beverages is poised for national dominance, aiming for greater operational efficiency and higher revenues.
Despite facing challenges due to COVID-19 disruptions and market integration issues, Varun Beverages is geared to increase its market share by expanding reach per route by 40%. Additionally, the company plans to focus on value-added dairy, sports drinks, and juice segments, expanding pan-India with new facilities in Maharashtra and Uttar Pradesh in 2024.
Venturing into international territories, Varun Beverages eyes the African market for further expansion. With a presence in Morocco, Zambia, and Zimbabwe, the company recently announced the acquisition of South Africa-based The Beverage Company, a strategic move valued at Rs 1,320 crore. This acquisition enables Varun Beverages to establish a significant foothold in Africa’s largest market, tapping into the region’s growing soft drinks industry. South Africa’s rising affluence and evolving consumer preferences make it an attractive market for Varun Beverages’ expansion endeavors. The company’s relentless pursuit of growth and strategic acquisitions position it as a key player in the dynamic global beverage landscape.