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Varun Beverages Ltd (VBL), one of the largest franchise bottlers of PepsiCo in the world, on Tuesday said it is set to acquire South Africa’s The Beverage Company Ltd (BevCo) with plans to expand its geographical footprint in Africa.
The proposed transaction at an enterprise level is valued at ZAR 3 billion, or ₹1,320 crore, the company said in a filing to the exchanges.
“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 as ‘Bevco’) with an option to accept minority co-investment from large equity fund subject to regulatory and other approvals (if any) including but not limited to PepsiCo Inc. and Competition Commission South Africa,” VBL said in a filing.
BevCo is engaged in the business of manufacturing and distribution of licensed PepsiCo and own-branded non-alcoholic beverages in South Africa. BevCo has franchise rights from PepsiCo Inc., in South Africa, Lesotho and Eswatini. Further, it also has distribution rights for Namibia and Botswana. Bevco achieved sales volumes of 117 million 8oz cases in FY23, according to disclosure made in the filing. BevCo achieved net revenue of ZAR 3,615 million, or ₹1,590 crore, in FY23.
South Africa is the largest soft drinks market in Africa, with the country reporting one of the highest per capita consumption of soft drinks in the continent.
“The rising affluence of South African households has resulted in urbanization, coupled with longer workdays and emerging interest from female consumers, which has contributed to the growth in the industry,” VBL said in an investor presentation following the acquisition announcement.
BevCo manufactures and sells PepsiCo franchise brands including 7UP, Mirinda, Mountain Dew, Pepsi, Pepsi Light and Pepsi Max. It also sells brands such as Refreshhh, Reboost, Coo-ee, among others.
VBL holds rights to manufacture, distribute and sell carbonated soft drinks, fruit juice-based drinks, packaged drinking water, sports drinks and energy drinks for PepsiCo. It sells various PepsiCo products across 27 states and 7 union territories in India, making it the largest PepsiCo bottler in the country.
VBL has also been granted the franchise for various PepsiCo products for the territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe. However, India is the largest market and contributed 80% of revenues from operations (net) in fiscal 2022.
In 2022, the company reported net sales of ₹13,731 crore.
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