Hindustan Coca-Cola Beverages (HCCB), a bottling company owned by Coca-Cola India, is planning an initial public offering (IPO), banking on the promising growth opportunities in India, as shared by executives familiar with the matter.
“The listing plans are currently being discussed internally, and HCCB has begun exploring potential bankers to lay the groundwork for the listing,” shared one of the executives.
Beverages are outperforming other fast-moving consumer goods (FMCG) categories due to their “under-penetration” and affordable price points, according to another source.
Moreover, the source mentioned that India’s per-capita consumption of soft drinks ranks among the lowest globally, suggesting significant growth opportunities. They also highlighted India’s emergence as a sought-after market for investors.
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A specific date for the listing has not been determined yet, but the company is optimistic about India’s prospects, considering it a key market for growth. He further noted that the country is experiencing an IPO surge due to market confidence in its status as the fastest-growing economy.
HCCB manages Coca-Cola’s bottling operations in India, alongside several franchisees responsible for producing and delivering popular fizzy drinks like Coke, Thums Up, and Sprite, as well as juices such as Minute Maid and Maaza, and Kinley water. Bottling responsibilities are shared equally between HCCB and the franchisees.
Queries directed to Coca-Cola India and HCCB went unanswered.
The bottling partner of rival PepsiCo, Varun Beverages Ltd (VBL), which went public in 2016, currently boasts a market capitalization of INR 1.96 lakh crore. Its stock has witnessed a remarkable surge of over 200% in the past two years.
According to Registrar of Companies (RoC) filings accessed by business intelligence platform Tofler, HCCB saw a 40% rise in revenue from operations for FY23, reaching INR 12,840 crore compared to INR 9,147.74 crore in FY22. This increase can be attributed to growing demand following a year of Covid-19-related disruptions. Additionally, net profit surged by over twofold to INR 809.32 crore.
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HCCB operates 16 factories nationwide, with a portion of its operations divested to independent entities in the northern and eastern regions. In January, Coca-Cola unveiled plans for “strategic business transfers in India,” involving the sale of company-owned bottling operations in certain territories—Rajasthan, Bihar, the Northeast, and specific areas of West Bengal—to local partners. Coca-Cola’s bottling operations in southern and western India remain under HCCB’s purview.
In its quarterly earnings statement released in the US on Wednesday, the company disclosed that it had generated $293 million (INR 2,420 crore) from refranchising activities earlier in the year in India.
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In December, HCCB revealed plans for a INR 3,000 crore investment in Gujarat, and in November, it announced a INR 1,387 crore investment for a plant in Maharashtra.
“The company has delivered an impressive performance for FY23 after two straight years of Covid-related disruptions and business impact,” HCCB had stated in its RoC filing. The company has maintained a “laser-sharp” focus on execution, expanding its market reach, and safeguarding its business model.
In its RoC filing, HCCB expressed a “very positive” long-term outlook for the beverage business in India.
“The fundamental forces propelling long-term growth, including rising spending power, heightened consumer awareness, limited penetration of consumer goods, favorable demographics, burgeoning urbanization, and a growing preference for established brands, remain steadfast,” the statement read. “Our company remains committed to pursuing new avenues such as e-commerce, grocery, pharmacy, and more, both organically and through strategic acquisitions, aligning with our vision and mission.”
According to the RoC filing, HCCB, established in 1997, caters to 2.5 million retailers and operates with 3,500 distributors.
Coca-Cola’s bottling partners globally consist of both publicly traded and privately owned firms. As per its website, the top five principal bottling partners of Coca-Cola worldwide accounted for 42% of the company’s total unit case volumes in 2022.
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