Varun Beverages: A Journey of Growth, Innovation and Market Leadership

Company Profile is an initiative by StartupTalky to publish verified information on different startups and organizations.

Varun Beverages Limited (VBL) stands as a significant player in the beverage industry. Furthermore, VBL’s continued focus on expanding its global footprint, coupled with its aggressive market penetration strategies, has allowed it to build lasting relationships with suppliers, distributors and consumers alike. As it eyes future growth through strategic acquisitions and market diversification, Varun Beverages is poised to maintain its momentum in both the Indian and international markets.

In this StartupTalky, we will explore the strategies, challenges, and achievements that have shaped Varun Beverages’ journey toward becoming a leader in the beverage industry.

Varun Beverages Limited - Company Highlights

Varun Beverages Limited - About
Varun Beverages Limited - Industry
Varun Beverages Limited - Founders and Team
Varun Beverages Limited - Mission and Vision
Varun Beverages Limited - Name, Tagline and Logo
Varun Beverages Limited - Business Model
Varun Beverages Limited - Revenue Model
Varun Beverages Limited - Challenges Faced
Varun Beverages Limited - Mergers and Acquisitions
Varun Beverages Limited - Financials
Varun Beverages Limited - Advertisements and Social Media Campaigns
Varun Beverages Limited - Awards and Achievements
Varun Beverages Limited - Competitors
Varun Beverages Limited - Future Plans

Varun Beverages Limited - About

Varun Beverages Limited (VBL) is among the largest PepsiCo franchisees globally, outside of the United States.

Since partnering with PepsiCo in the 1990s, VBL has built a strong and lasting relationship, steadily expanding its reach and operations. Over the past 25+ years, the company has grown its footprint by acquiring more licensed territories and sub-territories, diversifying its product lineup with new beverage options and packaging formats and strengthening its distribution network.

VBL produces, distributes and sells a wide array of beverages. These include carbonated soft drinks (CSDs) and a broad range of non-carbonated beverages (NCBs), such as packaged drinking water, all under well-known PepsiCo trademarks. The company’s commitment to quality and innovation ensures that it caters to the evolving tastes of consumers while staying true to its partnership with PepsiCo.

A Deep Analysis into the Iconic Brand’s Success | Company Profile | Owner | Founder | Origin Country

PepsiCo started with Caleb Bradham, a North Carolina industrialist, who developed the first Pepsi recipe. Know more about its business model, success story, founder, origin country, revenue, owners, and more.

StartupTalkyShevaughn Pimenta

Varun Beverages Limited - Industry

India's beverages industry has seen a surge of over INR 50,000 crores in investments in recent years, highlighting its growing importance in the country’s economy. The non-alcoholic, ready-to-drink segment alone is on track to surpass INR 1.5 lakh crore in market size by 2030. This sector contributes significantly to the economy, adding an estimated INR 80,000 crores through its downstream and upstream activities.

A substantial portion of this investment has been directed toward building and expanding manufacturing and bottling facilities, particularly in Tier 2 and Tier 3 cities across various states. This has created tens of thousands of jobs and offers immense potential for further employment growth. The industry also plays a vital role in supporting India’s ‘sunrise’ food processing sector and acts as a backbone for the vast network of kirana shops and retailers nationwide.

However, challenges persist. A high GST rate of 40% is putting pressure on the industry, potentially stifling opportunities for employment, investment and entrepreneurship.

According to recent research by the CMI Team, India’s carbonated beverages market is poised for steady growth, with an expected CAGR of 6.5% between 2024 and 2033. The market size, valued at $80.1 billion in 2024, is projected to reach a significant $141.1 billion by 2033, underscoring the sector’s potential and resilience in the face of challenges.

Varun Beverages Limited - Founders and Team

Ravi Kant Jaipuria Chairman - RJ Corp

Manager - Varun Beverages

Ravi Jaipuria, often hailed as "India’s Cola King," is a billionaire entrepreneur and the chairman of RJ Corp. Through RJ Corp, he oversees Varun Beverages, PepsiCo’s largest bottling partner outside the United States and Devyani International, India’s largest franchisee of Yum! Brands. Under his leadership, Devyani International operates popular chains like KFC, Pizza Hut, Costa Coffee and TWG Tea outlets across the country.

Jaipuria pursued business management studies in the United States before returning to India in 1985 to join the family business as a Pepsi bottler. Over the years, he has expanded his ventures across various industries, including a minority stake in Medanta, a leading healthcare organization. His innovative approach and sharp business acumen have cemented his position as a key figure in India’s beverage and foodservice industries.

Varun Beverages Limited - Mission and Vision

Mission
Varun Beverages Limited (VBL) is dedicated to utilizing resources effectively, empowering its workforce and contributing meaningfully to society through its commitment to excellence and ethical practices.

Vision
By focusing on sustainable growth, robust financial performance and maximizing market share, VBL aspires to lead the industry while maintaining a forward-thinking approach to its business and community responsibilities.

Varun Beverages Limited - Name, Tagline and Logo

Guided by its slogan, "Grow Consistently. Sustain Constantly.", VBL is dedicated to delivering refreshing experiences to consumers while fostering sustainable business practices.

Varun Beverages Limited - Business Model

Varun Beverages Limited (VBL) operates a robust business model centered around the manufacturing, distribution and marketing of PepsiCo beverages in India. The company’s well-integrated operations ensure seamless delivery of high-quality beverages to consumers across diverse markets.

Manufacturing
VBL manufactures and bottles a wide range of PepsiCo beverages, including carbonated soft drinks (CSDs), non-carbonated beverages (NCBs) and packaged drinking water (PDW). Key raw materials, such as sugar and PepsiCo concentrates, are sourced from approved suppliers to maintain quality standards. Additionally, VBL produces packaging materials like preforms, crowns and plastic closures in some of its facilities, enhancing operational efficiency.

Distribution
The company’s extensive distribution network caters to traditional and modern retail outlets in urban, semi-urban and rural markets. By leveraging this reach, VBL ensures its products are widely available, meeting the diverse demands of its customer base.

Varun Beverages Limited - Revenue Model

Collaboration with PepsiCo
VBL’s partnership with PepsiCo is a cornerstone of its operations. Under a franchisee agreement, VBL is authorized to manufacture and market PepsiCo beverages within designated regions. PepsiCo supports this partnership by providing established brands, concentrates and marketing guidance. In return, VBL pays royalties for using trademarks such as "LEHAR" with products like Aquafina and Evervess, reflecting the collaborative synergy between the two companies.

Marketing
VBL drives market presence and brand visibility through localized marketing and promotional efforts, such as investing in chilling equipment and Below-The-Line (BTL) marketing campaigns. These initiatives aim to boost market share while connecting with consumers at a community level.

Varun Beverages Limited - Challenges Faced

Demand Risk

• Risk: A slowdown in target markets or cyclical downturns could reduce sales velocity and adversely impact the company’s growth.
• Mitigation Plan:Varun Beverages adopts a strategic approach by offering the right brands, featuring tailored products at competitive prices and leveraging effective distribution channels. Its diverse product portfolio caters to the varying tastes and preferences of different consumer segments, ensuring steady demand. Furthermore, the company operates in underpenetrated markets characterized by favorable demographics, growing populations and supportive climatic conditions, contributing to consistent sales growth.

Business Agreement Risk

• Risk: Dependence on strategic relationships with PepsiCo poses a risk of termination or less favorable terms during agreement renewals, potentially affecting profitability.
• Mitigation Plan: Over three decades, Varun Beverages has fortified its relationship with PepsiCo by expanding its territories, diversifying its product offerings and strengthening its distribution network. This partnership has grown stronger, as evidenced by the extension of the bottling appointment and trademark license agreement with PepsiCo India until April 30, 2039. By collaborating on strategic initiatives, investing in joint projects and fostering trust, VBL ensures a mutually beneficial and enduring relationship with PepsiCo, safeguarding its long-term profitability and operational stability.

Varun Beverages Limited - Mergers and Acquisitions

Varun Beverages has strategically pursued mergers and acquisitions to expand its market footprint and enhance its production and distribution capabilities, strengthening its position as a leading beverage company globally.

Varun Beverages Limited - Financials

Varun Beverages Limited - Advertisements and Social Media Campaigns

'Swag se Solo' Campaign

The ‘Swag se Solo’ campaign launched during the COVID-19 pandemic cleverly combined cultural heritage and public health messaging. Key takeaways:

• Cultural Relevance: By highlighting the namaste and salaam gestures, the campaign embraced traditional Indian greetings, making them a symbol of both respect and safety.
• Public Health Advocacy: The campaign effectively communicated the importance of social distancing in a relatable and responsible manner.
• Youth Engagement: By positioning these traditional greetings as “cool,” the campaign resonated with younger audiences, promoting safe behavior while staying trendy.

2020 Campaign: Encouraging Self-Belief and Confidence

Pepsi’s 2020 campaign emphasized individuality and self-expression through its tagline and message. Key observations:

• Celebration of Individuality: The campaign empowered young people to be authentic, challenging societal norms and judgments with self-confidence and “swag.”
• Youth-Centric Messaging: It addressed the core struggles of Indian youth, like societal expectations, in a relatable manner.
• Effortless Cool: The film’s tone and Salman Khan’s persona reinforced the brand’s appeal as youthful, bold and unapologetically self-assured.

Varun Beverages Limited - Awards and Achievements

Corporate Governance Awards:

• Business Brand Award for Best Corporate Governance
• CFI.CO (UK) for Best FMCG Corporate Governance: A prestigious recognition received for four consecutive years (2018-2022), highlighting consistent excellence in corporate governance within the FMCG sector.
• India Achievers' Award for Best Corporate Governance: Bestowed in 2022.
• Responsible Business Award for Best Corporate Governance: Received in 2022.
• Golden Peacock Award for Excellence in Corporate Governance: Awarded in 2021.

Quality Awards

• Golden Peacock National Quality Award: Recognized in 2022.
• CII National Award for Food Safety: Received for the production facility in Nuh, emphasizing the company’s commitment to food safety and hygiene standards.

Sustainability Recognition

• PepsiCo’s “Better” Category Award: Acknowledged for the company’s contributions towards sustainability, showcasing its initiatives to reduce environmental impact and promote sustainable practices across its operations.

Varun Beverages Limited - Competitors

These companies are key players in both the beverage and food industries, with many of them directly competing with Varun Beverages through their product offerings and market presence.
Beverage Companies:

1. Nestle India Ltd
2. Britannia Industries Ltd

Food Companies:

1. Adani Wilmar Ltd
2. ADF Foods Ltd
3. Bambino Agro Industries Ltd
4. Bikaji Foods International Ltd
5. Chordia Food Products Ltd
6. Euro India Fresh Foods Ltd
7. LT Foods Ltd
8. Manpasand Beverages Ltd
9. Mrs. Bectors Food Specialities Ltd

Varun Beverages Limited - Future Plans

Fundraising

• Varun Beverages (VBL) is planning to raise INR 7,500 crore through a Qualified Institutional Placement (QIP). This capital will be used to fund its expansion efforts, including investments in subsidiaries and strategic acquisitions. Additionally, the funds will be directed towards debt repayment and other corporate purposes.

Revenue Growth

• VBL's revenue in 2023 saw a remarkable 21.8% increase, reaching a total of INR 16,042.58 crore, reflecting strong business performance and robust growth strategies.

Global Expansion

• VBL is making significant investments internationally, with a USD 50 million investment in a Pepsi production facility in Kiswishi City, which is part of the first private Special Economic Zone (SEZ) in the Democratic Republic of the Congo (DRC). This move is aligned with VBL's strategy to further its global footprint.

Stock Target & Performance

• The average target for VBL's stock is set at 690.60, representing an upside potential of 23.21% from its last traded price of 560.50. This indicates strong investor confidence in the company's future prospects.

FAQs

What is Varun Beverages primarily known for?

Varun Beverages is primarily known as a major bottler and distributor of PepsiCo beverages.

What brands are made by Varun Beverages?

Varun Beverages produces popular beverages like Pepsi, Mountain Dew, Mirinda, 7UP, Tropicana juices, Gatorade, Aquafina and Sting.

Who is a founder of Varun Beverages?

Ravi Kant Jaipuria is a founder of Varun Beverages.