Varun Beverages snaps up South Africa’s The Beverage Company in groundbreaking €150 million deal

January 26, 2024

Varun Beverages, the PepsiCo India franchisee, is buying The Beverage Company, a firm based in South Africa, according to reports quoting the news agency Reuters.

The deal represents another key foray into the African market for Varun Beverages and highlights the Indian company’s international ambitions.

According to media, the purchase of The Beverage Company, which is expected to be completed by the end of July, is valued at 13.2 billion Indian rupees (€150 million).

Varun Beverages will hold all of the equity share capital of The Beverage Company, also referred to as Bevco, once the deal goes through.

Reuters reported that Ravi Batra, the chief risk officer and group company secretary for Varun Beverages, saying that the company was keen to “expand its geographical footprint in Africa”.

Bevco should fit well into Varun Beverages’ existing operations because the South African company too is a PepsiCo franchisee, bottling and selling the firm’s products in its home country, which is said to be the largest market in Africa for soft drinks.

Varun Beverages snaps up South Africa's The Beverage Company in groundbreaking €150 million deal

Photo credit: Nikhil / Unsplash

While South Africa has, even in recent years, been described as the most unequal country in the world, it is also said to be ideal territory for soft drink producers because of growing urbanisation and rising affluence.

Bevco reportedly has five facilities in South Africa in total, one each in Cape Town, East London and Durban, plus two in Johannesburg.

The Beverage Company is also the PepsiCo franchisee in Botswana, Namibia, Lesotho and Eswatini, which was formerly known as Swaziland.

The market appears to have already given the purchase of Bevco its seal of approval, as Varun Beverages saw its share price jump significantly after the deal was given the thumbs up by its board.

While the purchase of Bevco will strengthen Varun Beverages’ operations in Africa, even before the deal the Indian company had a significant presence on the continent, as it is a PepsiCo franchisee in Morocco, Zambia and Zimbabwe.

Varun Beverages, also referred to as VBL for Varun Beverages Limited, describes itself as one of the largest PepsiCo franchisees in the world outside the United states.

According to the company, it provides PepsiCo beverages to one sixth of the world’s population, and the drinks it produces are sold at three million outlets.

Varun Beverages snaps up South Africa's The Beverage Company in groundbreaking €150 million deal

Photo credit: Ja San Miguel / Unsplash

“VBL has been associated with PepsiCo since the 1990s and has, over two and half decades, consolidated its business association with PepsiCo, increased the number of licensed territories and sub-territories covered by the company, produced and distributed a wider range of PepsiCo beverages, and introduced various SKUs [stock-keeping units] in the portfolio, and expanded the distribution network,” the company said in an online briefing document.

While Pepsi is the best known beverage brand that VBL is involved with, the firm also produces a wide variety of other carbonated and non-carbonated soft drinks, some of them household names such as Seven-Up and Mirinda.

Other beverages produced and sold by PepsiCo include Pepsi Black, Mountain Dew, Evervess, Tropicana Slice, Tropicana Juices and Gatorade. Varun Beverages also produces packaged drinking water under the brand Aquafina.

The company has 37 manufacturing facilities in six countries, namely its home market of India, Sri Lanka and Nepal, plus its three existing African countries of Morocco, Zambia and Zimbabwe.

In all of these nations Varun Beverages is a franchisee for various PepsiCo products, with India – where 30 of the firm’s manufacturing facilities are located – contributing about four-fifths of total revenues. Varun Beverages recently announced plans to open a 31st factory in India, this one in the state of Jharkhand.

The company, which is chaired by Ravi Jaipuria, is owned by RJ Corp, which is described as a “diversified business conglomerate” that has interests in sectors as varieda as quick-service restaurants and healthcare.

Main photo credit: Aboodi Vesakaran / Unsplash

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