Bottling Excellence: VBL’s Iconic Beverage Brands

“While we witnessed slower than anticipated demand due to unseasonal rains, we remain optimistic about our full-year performance, especially considering the low seasonality in our business following the integration of west and south territories. As we move forward, we will continue to capitalize on our position as a key player in the beverage industry and focus on strengthening our capabilities in line with customer performance. We are confident this approach will translate into sustainable value for all stakeholders.”
-Ravi Jaipuria, Chairman

Stock Data

Ticker	VBL
Industry	FMCG
Exchange	NSE

Share Price

Last 5 Days	-2.5%
Last 1 Month	8.3%
Last 6 Months	35.7%

Business Basics

Varun Beverages Limited, a prominent player in the beverage industry, operates with a focus on growth, efficiency, and consumer satisfaction. As one of the largest franchisees of PepsiCo, the company’s business fundamentals are grounded in a commitment to excellence, innovation, and responsible business practices. At the core of Varun Beverages’ business strategy is its role as a bottler and distributor for a diverse range of PepsiCo products. The company holds the responsibility of manufacturing, packaging, and distributing these beverages across various markets. This strategic partnership allows Varun Beverages to tap into the strong brand recognition of PepsiCo and leverage its global expertise, while also tailoring offerings to meet local preferences.

The company places a strong emphasis on operational efficiency and supply chain management. With an extensive distribution network spanning multiple geographies, Varun Beverages ensures that its products are accessible and available to consumers in urban and rural areas alike. This operational prowess not only ensures timely product availability but also contributes to the company’s competitive advantage. Innovation is key to Varun Beverages’ sustained success. The company consistently introduces new flavors, packaging formats, and marketing campaigns that resonate with its target audience. By staying attuned to changing consumer preferences and market trends, Varun Beverages keeps its product offerings relevant and appealing.

Varun Beverages Limited stands as a dynamic and responsible player in the beverage industry. Its strategic partnership with PepsiCo, focus on operational excellence, innovation, and commitment to sustainability have propelled the company’s growth and market presence. By consistently delivering quality products and adapting to changing market dynamics, Varun Beverages continues to thrive in the competitive beverage landscape.

Q1 FY24 Financial Performance

Varun Beverages Ltd reported Revenues for Q1FY24 of ₹5,611.00 Crores up from ₹4,955.00 Crore year on year, a rise of 13.24%. Consolidated Net Profit of ₹1,005.00 Crores up 25.31% from ₹802.00 Crores in the same quarter of the previous year. The Earnings per Share is ₹7.65, up 26.24% from ₹6.06 in the same quarter of the previous year.

Brands Licensed To Varun Beverage

Varun Beverages Limited boasts an impressive portfolio of beverage brands that cater to diverse consumer preferences and market segments. As a key franchisee of PepsiCo, Varun Beverages plays a pivotal role in bottling and distributing the iconic Pepsi cola brand. With its distinct taste and global recognition, Pepsi continues to be a favorite among consumers of all ages. Mirinda, another flagship brand of PepsiCo, offers a vibrant range of flavored carbonated beverages. As a low-calorie and sugar-free variant of Pepsi, Pepsi Max caters to health-conscious consumers who want to enjoy the classic cola taste without added sugars. With its fruity and refreshing variants, Mirinda caters to consumers seeking unique taste experiences. Known for its energetic and citrusy flavor, Mountain Dew is a brand that resonates with the youth and adventure enthusiasts. Its bold taste and association with adrenaline-pumping activities make it a distinct offering in the portfolio. 7UP, a clear and crisp lemon-lime flavored beverage, is favored for its light and refreshing taste. It appeals to consumers looking for a beverage option that complements a wide range of occasions.

Varun Beverages also offers Aquafina, a purified and bottled water brand under the PepsiCo umbrella. With a focus on quality and hydration, Aquafina caters to health-conscious consumers seeking pure and clean drinking water. Varun Beverages also distributes Gatorade, a sports and energy drink that helps in rehydrating and replenishing electrolytes during physical activities.

Tropicana is synonymous with premium quality fruit juices. Varun Beverages distributes a variety of Tropicana products, providing consumers with convenient access to nutritious and delicious fruit-based beverages. Known for its indulgent and fruit-forward flavors, Slice offers a range of fruit juices and fruit drinks. It appeals to consumers seeking a balance between taste and nutrition. Nimbooz is a brand that specializes in offering a range of ready-to-drink lemonade beverages. With its tangy and zesty flavors, Nimbooz provides a refreshing and quintessentially Indian beverage experience.

Recent Updates

Varun Beverages has newly established greenfield plants and brownfield manufacturing lines that have become operational in order to meet the increasing demand. The company is currently establishing greenfield facilities in the states of Uttar Pradesh, Maharashtra, and Odisha, primarily for its juice and value-added dairy products. According to management, these new facilities, along with the upcoming facility in DRC, are expected to be fully operational before the next season. Moreover, have established a new subsidiary in South Africa to investigate the beverage manufacturing and distribution business.

Varun Beverages’ Capex Planning

The company has a net debt of about 900 crore, which includes money set aside for investments in new projects in Maharashtra, Uttar Pradesh, and Odisha for the year 2024. These investments are expected to help Varun Beverages in expanding in these critical areas.

The company spent around 1900 crore in the first half of 2023 on building new production facilities in Bundi and Kota (Rajasthan) and Jabalpur (MP). In addition, approximately 850 crore was spent to expand existing factories in India and around 300 crore to expand the business in other countries. The company spent 10 crore on land purchase for future projects. Furthermore, due to unexpected rains, the working capital period increased from around 17 days on June 30th, 2022, to 21 days on June 30th, 2023.