Varun Beverages Ramps Up Juice, Dairy Production for 2024

11 Mar 2024 , 11:03 AM

According to the company’s most recent annual report, Varun Beverages, a prominent bottler of beverage giant PepsiCo, plans to double its production capacity in the juice and value-added dairy product divisions by 2024.

In addition, Varun Beverages Ltd.’s founder and non-executive chairman Ravi Jaipuria informed shareholders that the company is bolstering its chilling infrastructure and distribution network, both of which are critical to enhancing presence in the current and underpenetrated markets.

“The continued growth of production facilities, with an emphasis on reacting to changing consumer tastes and market trends, is central to our expansion strategy for CY 2024. We are focusing especially on boosting our production capabilities in the dairy products with added value and juices segments,” he stated. The business has operations in six nations. In 2023, three African nations—Morocco, Zambia, and Zimbabwe—contributed the remainder 17% of its net revenues, with three markets on the Indian Subcontinent—India, Sri Lanka, and Nepal—making up the remaining 83%.

In India, VBL is responsible for over 90% of PepsiCo’s beverage sales volume. It produces, promotes, and distributes a variety of PepsiCo-owned goods, such as bottled drinking water, energy drinks, sports drinks, carbonated soft drinks, and juice-based beverages.

According to VBL, a number of variables, including younger demographics, faster urbanization and rising wages, higher household spending, rural improvements, and improved electrification, will drive significant development in the soft drink market in India. With skill, the industry responded to changing consumer tastes and kept up a steady growth rate. The energy drink market, which started to grow in 2022 and kept going through 2023, was one area where this tenacity was most clear, according to the annual report.

In 2023, a “challenging yet progressive year” for the beverage industry, the market for soft drinks as a whole, which includes carbonates, juices, and bottled water, continued to rise. “The growing middle-class population and changing demographic profiles drove industry growth. Higher demand was sparked by these demographic changes and an increase in disposable income, the report added.

Another important factor was urbanization, as more people moved into cities, increasing exposure to and demand for a wider variety of soft drink options. VBL, whose fiscal year coincides with the calendar, reported net revenues of ₹16,042.58 Crore in 2023, an increase of 21.8%.

It has been connected to PepsiCo for more than thirty years. In order to grow its business, it is expanding the number of licensed territories and sub-territories. With an enterprise value of ₹1,320 Crore, the firm announced in December that it would acquire Beverage firm (Bevco), situated in South Africa, together with its wholly-owned subsidiaries. This acquisition will enable the company to increase its market share in Africa.

PepsiCo’s franchise rights in South Africa, Lesotho, and Eswatini are owned by Bevco. Over 1.4 billion clients are currently being served by VBL as a whole. Nonetheless, its India business accounts for a sizable portion of its revenue, which is 79% of total revenue.

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