Varun Beverages Limited (VBL), a key player in the beverage industry and one of the largest franchisees of PepsiCo worldwide, anticipates robust growth in the coming quarters, buoyed by improved weather conditions and strong international performance.

Projected Growth and Capacity

The company projects early-to-mid teens growth for its international operations in the next quarter. This optimistic outlook is supported by VBL's statement that it can handle a 50% growth in capacity, indicating strong operational readiness to meet increased demand.

Q3 CY2025 Financial Highlights

Despite challenging weather conditions in India, VBL has reported steady performance for the third quarter of 2025:

Key Performance Indicators

• International Growth: International volumes grew by 9.0%, led by a strong performance in South Africa.
• Product Mix: CSD constituted 74%, NCB 4%, and Packaged Drinking Water 22% in Q3 CY2025.
• Gross Margins: Improved by 119 basis points to 56.7% in Q3 CY2025.
• EBITDA Margins: Slightly declined by 53 basis points to 23.4% in Q3 CY2025.

Strategic Developments

1. Kenyan Expansion: VBL is incorporating a wholly-owned subsidiary in Kenya to manufacture, distribute, and sell beverages, furthering its international presence.

2. Product Diversification: Certain African subsidiaries of VBL will test market beer through an exclusive Distribution Agreement with Carlsberg Breweries A/S for their Carlsberg brand.

3. Expansion into Alcoholic Beverages: VBL is adding alcoholic beverage business to its main objects, eyeing opportunities in Ready To Drink (RTD) and various alcoholic beverages.

4. Manufacturing Joint Venture: Formation of White Peak Refrigeration Private Limited in India, a joint venture to manufacture visi-coolers and other refrigeration equipment.

Outlook

Ravi Jaipuria, Chairman of Varun Beverages Limited, expressed confidence in the company's growth trajectory: "While the extended monsoon season impacted consumption trends in India, we remain confident in the significant long-term potential of the domestic beverage industry. With low per capita consumption and rising penetration in semi-urban and rural markets, the opportunity for growth continues to be immense."

VBL's ongoing investments in capacity expansion, distribution reach, and cold-chain infrastructure are expected to strengthen on-ground execution, positioning the company to capture demand recovery in the upcoming season and deliver sustainable growth for stakeholders.

As Varun Beverages continues to expand its international footprint and diversify its product portfolio, the company appears well-positioned to capitalize on improving market conditions and drive growth across its operations.

Varun Beverages Limited (VBL), a key player in the global beverage industry and one of the largest franchisees of PepsiCo outside the United States, is set to diversify its product portfolio by venturing into the alcoholic beverages sector. The company has announced a strategic partnership with Carlsberg for beer operations in Africa, marking a significant expansion beyond its core soft drinks business.

Partnership Details

VBL plans to test market beer in select African territories through an exclusive Distribution Agreement with Carlsberg Breweries A/S for their Carlsberg brand. This move aligns with the company's growth strategy to broaden its product base and strengthen its presence in key growth markets.

Expansion into Alcoholic Beverages

The company is not limiting its alcoholic beverage expansion to just beer. VBL has revealed plans to enter the broader alcoholic beverages sector, including the manufacturing, selling, and distribution of beer, wine, and spirits in India and other international markets.

Strategic Diversification

This expansion into alcoholic beverages represents a strategic diversification for Varun Beverages. The company, known primarily for its soft drinks portfolio, is now positioning itself to capture opportunities in the growing alcoholic beverage market.

Corporate Actions to Support Expansion

To facilitate this expansion, VBL's Board of Directors has approved the alteration of the Object Clause of the company's Memorandum of Association, subject to shareholder approval. The new clause will allow VBL to engage in the business of manufacturing, producing, processing, brewing, distilling, refining, blending, bottling, storing, packaging, selling, distributing, trading, and marketing of Ready To Drink (RTD) and other alcoholic beverages.

African Market Focus

The partnership with Carlsberg specifically targets the African market, where VBL already has a significant presence. This move may leverage VBL's existing distribution network and market knowledge in the region to introduce Carlsberg's beer products effectively.

Implications for VBL's Business Model

This expansion marks a significant shift in VBL's business model. While the company has been primarily associated with non-alcoholic beverages, particularly as a PepsiCo franchisee, this move into alcoholic beverages opens up new revenue streams and market opportunities.

Financial Considerations

While specific financial details of the partnership were not disclosed, this expansion may impact VBL's future financial performance. The company's recent financial results show a steady performance, with consolidated sales volumes rising by 2.40% in the latest quarter, supported by healthy traction in international markets.

Conclusion

Varun Beverages' partnership with Carlsberg and its broader plans to enter the alcoholic beverages sector represent a bold step towards diversification. This strategic move may potentially reshape the company's market position, offering new growth avenues beyond its traditional soft drinks business. As VBL navigates this new territory, stakeholders will be keenly watching how this expansion unfolds and impacts the company's overall growth trajectory.