Varun Beverages Ltd (VBL), the primary bottler for PepsiCo, is intensifying its efforts to expand manufacturing capacities, particularly in sectors such as juices, and strengthening its distribution channels to penetrate under-served markets more effectively.
In a letter to shareholders in the annual report for CY2023, Ravi Jaipuria, Promoter and Non-Executive Chairman, VBL stated, “Central to our expansion strategy for CY2024 is the further development of manufacturing facilities with a focus on adapting to evolving consumer preferences and market trends. We are particularly concentrating on increasing our production capacities in the juices and value-added dairy product segments.”
In addition to producing and distributing PepsiCo licensed brands, the company is recognized for its own Creambell brand in the dairy-based beverage sector. With a total of 40 production facilities, the majority of which (34 plants) are situated in India, representing its largest market.
Jaipuria stated that the company has “successfully initiated operations” at new production facilities located in Bundli, Rajasthan, and Jabalpur, Madhya Pradesh. Additionally, it has increased capacity at six existing manufacturing plants: Pathankot, Kosi, Bharuch, Tirunelveli, Begusarai, and Guwahati.
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“The commissioning of multiple greenfield and brownfield beverage manufacturing lines in CY2023 was a significant step in enhancing our operational capabilities. These expansions are vital for meeting increasing consumer demand and tapping into new market opportunities,” he said.
In its 2023 annual report, the company emphasized the importance of enhancing both the distribution network and chilling infrastructure to expand its footprint in both existing and under-served markets.
During the calendar year 2023, the company experienced a 21.8 percent increase in net revenues, reaching INR 16,042.58 crore, despite sales being affected by unseasonal rains in certain regions during peak summer.
Regarding geographical expansion, VBL recently finalized a binding agreement to acquire a 100 percent stake in South Africa’s Beverage Company Ltd (BevCo). BevCo possesses franchise rights from PepsiCo Inc in South Africa, Lesotho, and Eswatini, along with distribution rights for Namibia and Botswana.
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“This acquisition, which aligns perfectly with our strategic goals, offers an excellent opportunity to significantly enhance our presence in the African market — a region known for high demand for soft drinks and favourable demographics. The integration of BevCo into VBL’s operations is expected to yield substantial synergistic benefits in the future,” Jaipuria said in the annual report.
