Varun Beverages Limited: history, ownership, mission, how it works & makes money

A Brief History of Varun Beverages Limited

Varun Beverages Limited, established in 1995, is one of the largest franchise bottlers of PepsiCo in India. The company operates in the non-alcoholic beverage sector and has significantly expanded its footprint over the years across India and other regions.

In 2016, Varun Beverages was listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The Initial Public Offering (IPO) raised approximately ₹1,000 crore (around $150 million). The listing price was set at ₹445 per share, and the stock opened at ₹455, reflecting positive investor sentiment.

Varun Beverages has expanded its production capabilities through various acquisitions. Notably, in 2019, the company acquired the bottling rights for PepsiCo's products in several additional territories, strengthening its market position. As of 2023, Varun Beverages operates over 31 bottling plants across India and has a workforce of more than 8,000 employees.

The company reported a revenue of ₹3,976 crores for the fiscal year ending 2022, reflecting a robust growth trajectory of approximately 25% compared to the previous fiscal year. The net profit for the same period was recorded at ₹718 crores, demonstrating a significant increase of about 30%.

As of the latest reports in 2023, the company has diversified its product offerings, which now include a variety of soft drinks, juices, and carbonated beverages under the PepsiCo brand. Varun Beverages holds a market share of approximately 15% in the Indian soft drink market, positioning it as a key player in the industry.

Moreover, Varun Beverages has been proactive in sustainability efforts, investing in reduced water usage and recycling initiatives. The company has aimed for a 30% reduction in water consumption by 2025, aligning with global sustainability goals.

The stock performance of Varun Beverages has also been notable. After its IPO, shares rose to a high of about ₹1,020 in early 2022, reflecting a strong demand in the market. The one-year return on equity (ROE) stood at approximately 20%, showcasing effective management and operational efficiency.

Varun Beverages continues to focus on expanding its market reach and product portfolio, with plans for new bottling plants and an increased presence in international markets, particularly in Africa, where it has begun operations in countries like Morocco and Tunisia.

A Who Owns Varun Beverages Limited

Varun Beverages Limited (VBL) is one of the largest franchisee bottlers of PepsiCo products in India and its ownership structure reflects significant investments from various stakeholders. As of the latest available data, the ownership distribution is predominantly concentrated among institutional and retail investors.

The largest promoter group is the Divyanshu K. Sethi family, which plays a critical role in strategic decision-making and operational management. This family group has maintained a significant influence over the company's direction, further solidifying their position in the market.

In terms of shareholding, as of July 2023, the following are key promoters and their respective stakes:

Additionally, the company has seen a diversified interest from institutional investors which is crucial for its financial stability. Notable institutional shareholders include:

The stock performance of Varun Beverages has been robust, which can be indicative of the confidence that both retail and institutional investors have in the company's future growth prospects. As of October 2023, the share price stands at approximately ₹1,000, showing an increase of about 20% year-to-date.

Additionally, Varun Beverages reported a revenue of approximately ₹8,250 crore for the fiscal year 2022-2023, demonstrating consistent growth in sales driven by expanding its distribution network and product offerings.

Varun Beverages Limited Mission Statement

Varun Beverages Limited, a prominent player in the beverage industry, focuses on manufacturing and selling carbonated soft drinks (CSDs) and non-carbonated beverages. The company operates as a franchisee of PepsiCo in India and several other countries. Its mission statement revolves around achieving excellence in production and distribution while emphasizing sustainable growth and customer satisfaction.

The company aims to provide high-quality products that meet the diverse needs of consumers while adhering to sustainable practices. Varun Beverages Limited strives to enhance its operational efficiency and enrich the lives of consumers through a wide array of beverages that are both refreshing and nutritious.

As of the latest financial year, Varun Beverages Limited reported robust growth in revenue, highlighting its commitment to expanding market share. The company’s key metrics include:

In terms of market presence, Varun Beverages Limited has expanded its operational footprint significantly. As of October 2023, the company operates in more than 16 countries across Africa and South Asia, reflecting its strategic intent to widen its market reach. Its extensive distribution network encompasses over 1.2 million retail outlets, ensuring product availability to a broad customer base.

The company's mission also includes a commitment to environmental sustainability. Varun Beverages Limited has implemented initiatives focusing on:

• Water conservation and management strategies to reduce the overall water footprint.
• Recycling initiatives aiming for at least 100% of its PET bottles to be recycled or reused.
• Energy-efficient practices to minimize carbon emissions across manufacturing processes.

Furthermore, Varun Beverages Limited actively engages with local communities, enhancing its brand reputation and fostering goodwill. The company recognizes the importance of social responsibility, which is a core element of its mission. Over the past year, Varun Beverages has invested approximately INR 15 Crores in community development programs and health initiatives.

Overall, the mission statement of Varun Beverages Limited is not only a guideline for their operational strategies but also embodies their commitment to quality, sustainability, and community engagement. This mission underpins the company’s growth trajectory and enhances its competitive edge in the beverage market.

How Varun Beverages Limited Works

Varun Beverages Limited operates as one of the largest franchisee bottlers for PepsiCo products in India and other countries. The company focuses on manufacturing and distributing a wide range of carbonated and non-carbonated beverages.

As of the most recent financial year-end, Varun Beverages reported a total revenue of ₹4,314 crore (approximately USD 570 million). This represents a growth of 42% compared to the previous year, showcasing the company’s expanding market presence.

The company's operational efficiency is reflected in its EBITDA margin, which stands at 15%. This is driven by significant investments in modernizing production facilities and optimizing logistics, contributing to an effective cost management strategy.

Varun Beverages' product portfolio includes popular brands such as Pepsi, Mountain Dew, 7UP, Mirinda, and Tropicana. The company recorded a volume growth of 8% in its soft drink segment in the last fiscal year. Additionally, the non-carbonated drink segment saw a robust growth rate of 25%.

Production and Distribution Network

The company's production capabilities are substantial, operating 31 bottling plants spread across India. Each facility is equipped with advanced technology that enhances production efficiency. In 2022, the total installed capacity across these plants reached 600 million cases annually.

Varun Beverages employs a wide distribution network that includes over 2,000 distributors and more than 1 million retail outlets. This extensive reach allows them to cater to regional markets efficiently.

Recent Financial Data

In terms of market capitalisation, as of October 2023, Varun Beverages has a market cap of approximately ₹33,000 crore (around USD 4.4 billion), reflecting a significant investor confidence and growth potential in the beverage sector.

International Operations

Besides India, Varun Beverages has expanded its operations into international territories, including Nepal, Sri Lanka, and Morocco. The international segments have increased their contribution to total revenue, with exports accounting for nearly 10% of its overall sales in FY2023.

In its international operations, the company reported a revenue of ₹400 crore, driven by strategic partnerships and the introduction of locally favored products.

Key Performance Indicators

• Market Share in India: 10%
• Production Capacity Utilization: 85%
• Return on Equity (ROE): 18%
• Debt to Equity Ratio: 0.5

Varun Beverages continues to explore opportunities for growth through product diversification and geographical expansion, focusing on both soft drinks and healthy beverage options to capitalize on evolving consumer preferences.

How Varun Beverages Limited Makes Money

Varun Beverages Limited is one of the largest bottlers of carbonated soft drinks and non-carbonated beverages in India. As a franchisee of PepsiCo, it plays a significant role in the beverage market, generating revenue through various channels.

The company primarily earns through the sale of soft drinks, water, and other beverages. For the financial year ending December 2022, Varun Beverages reported a total revenue of ₹3,323.64 crore, an increase from ₹2,762.29 crore in the previous year, marking a growth of approximately 20.3%.

Varun Beverages operates in several segments, which contribute to its revenue. The two main categories are:

• Carbonated Soft Drinks (CSD)
• Non-Carbonated Beverages (NCB)

The share of revenue from these categories for FY 2022 was as follows:

Varun Beverages manufactures a wide range of products under the PepsiCo brand, including Pepsi, Mountain Dew, 7UP, and Mirinda. According to the company's annual report, the production capacity across its plants increased to approximately 1.5 billion liters per year as of December 2022.

Another significant revenue stream for Varun Beverages comes from the sale of packaged drinking water. The company operates a brand named ‘Aquafina,’ which has gained substantial market share in the bottled water segment. In FY 2022, the revenue from Aquafina contributed around ₹550 crore, indicating a robust demand for packaged drinking water.

Furthermore, Varun Beverages has focused on expanding its distribution network, which now includes over 200,000 retail outlets across India. This extensive reach translates into higher sales volumes. The company reported a sales volume increase of 15% year-on-year in FY 2022.

In addition to its domestic operations, Varun Beverages has also expanded internationally, operating in several African countries where it has seen consistent growth. In FY 2022, the international segment contributed approximately ₹600 crore to the total revenue, showing a year-on-year growth of 25%.

In terms of profitability, Varun Beverages achieved an EBITDA of ₹675 crore in FY 2022, which translates to an EBITDA margin of 20.3%. The company's net profit for the same period was ₹416 crore, up from ₹318 crore the previous year, demonstrating a net profit margin of 12.5%.

Through strategic partnerships, effective supply chain management, and continuous product innovation, Varun Beverages Limited has successfully positioned itself as a market leader, driving substantial revenue growth and profitability in the competitive beverage industry.