Varun Beverages Ltd, PepsiCo’s largest franchise bottler, has successfully concluded its acquisition of South Africa-based Beverage Company (BevCo) and its wholly-owned subsidiaries as of March 27, 2024. This acquisition was finalized following the necessary approvals from PepsiCo Inc and the Competition Commission South Africa. BevCo has now become a subsidiary of Varun Beverages Ltd starting from March 26, as disclosed in a regulatory filing.
As part of the acquisition process, Varun Beverages Ltd issued a corporate guarantee worth ZAR 1,500 million (approximately Rs 660 crore) to secure credit facilities extended to BevCo by FirstRand Bank in South Africa. However, Varun Beverages Ltd clarified that this corporate guarantee does not impact the company’s financial standing.
In December 2023, Varun Beverages Ltd had announced its intention to acquire a 100 per cent stake in BevCo and its subsidiaries at an enterprise value of approximately Rs 1,320 crore (around ZAR 3 billion). BevCo holds franchise rights from PepsiCo in South Africa, Lesotho, and Eswatini, along with distribution rights for Namibia and Botswana. It also owns popular beverage brands such as Refresh, Boost, Coo-ee, and JIVE.
BevCo operates five manufacturing facilities across South Africa, with an installed capacity of 3,600 bottles per minute (BPM), spread across Johannesburg, Durban, East London, and Capetown. Varun Beverages Ltd’s acquisition of BevCo is aimed at expanding its presence and market share in Africa, particularly in South Africa, which is the largest soft drinks market on the continent.
According to Varun Beverages Ltd, South Africa’s soft drinks market is expected to grow at a Compound Annual Growth Rate (CAGR) of 5.3 per cent until 2027. Varun Beverages Ltd, reporting its financials on a calendar year basis, recorded a net revenue of Rs 16,042.58 crore in 2023, marking a 21.8 per cent increase from the previous year.
The association between Varun Beverages Ltd and PepsiCo spans over three decades, with Varun Beverages Ltd continuously expanding its licensed territories and sub-territories to drive further business growth and market penetration.