Varun Beverages (VBL), one of PepsiCo’s leading bottling and manufacturing firms globally, is aiming to acquire a 100% stake in The Beverage Company (Proprietary) Ltd in South Africa for Rs 1,320 crore. According to a regulatory filing, the transaction is expected to be completed by July 31, 2024.
The South African-based company and its wholly-owned subsidiaries, known collectively as Bevco, manufacture and distribute licensed (PepsiCo Inc.) and own-branded non-alcoholic beverages. PepsiCo Inc. has granted Bevco franchise rights in South Africa, Lesotho, and Eswatini. It also has distribution rights in markets such as Namibia and Botswana. According to VBL, Bevco’s revenue in FY23 was ZAR 361.5 million, or Rs 1,638 crore.
“The Board of Directors of the company at their meeting held today inter-alia considered and approved to acquire 100% stake in the business conducted by The Beverage Company (Proprietary) Ltd, South Africa along with its wholly-owned subsidiaries (hereinafter referred to as “Bevco”) with an option to accept minority co-investment from large equity fund subject,” VBL said in the regulatory filing.
Since PepsiCo’s re-franchising exercise in India in 2021, VBL has emerged as the country’s largest non-alcoholic beverage bottling company. However, its presence in international markets is rapidly expanding. Apart from India’s 27 states and seven union territories, which account for well over 90% of the country’s consumer market, VBL has a significant presence in foreign markets.
Varun Beverages
According to Jaipuria, VBL already has plants in five of those six markets, and to increase capacity even further, VBL is constructing a greenfield bottling plant in the Democratic Republic of the Congo (DRC). According to Nuvama Institutional Securities, VBL will serve 60% of the DRC market with that plant. The company recently acquired distribution rights in Mozambique, another African country. According to experts, Jaipuria’s long-standing and trusted relationship with PepsiCo is another factor driving VBL’s rise.
Such factors have aided VBL’s financial performance in recent quarters. Its performance in the key season (April-June FY2024 quarter) was hampered by a milder summer, but in the July-September period, VBL reported a 22% YoY increase in top line revenue.
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