Varun Beverages to increase capacity, strengthen distribution this summer

Varun Beverages, one of the largest bottlers of PepsiCo products outside the US, plans to focus on growing its production capacity in juices and value-added dairy products in calendar year 2024.

In its 2023 annual report released on Thursday, the company said commissioning multiple greenfield and brownfield beverage manufacturing lines in 2023 were a significant step and would be vital to meet increasing consumer demand and tapping into new market opportunities.

The company said that its growth strategy involves strengthening its distribution network and chilling infrastructure. “This is essential for enhancing our presence in existing and under-penetrated markets.”

The company has commissioned new production facilities at Bundi in Rajasthan and Jabalpur in Madhya Pradesh, and expanded capacity at six existing locations — Pathankot, Kosi, Bharuch, Tirunelveli, Begusarai and Guwahati — in recent months.

While 2023 was marred by unseasonal rains during the summer, the Indian Meteorological Department (IMD) has forecast above-normal temperatures between March and May this year. It has also forecast more heatwave days during the summer.

Despite the disrupted sales in 2023, “the sector adjusted to evolving consumer preferences and maintained a steady growth trajectory”, Varun Beverages said.

The company has a presence in 27 states and seven Union Territories in India, and five other countries. This includes Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe. As of December 31, 2023, the company operated 40 manufacturing facilities – 34 in India and six in overseas markets, it said.

The company reported a 21.8% jump in revenue in calendar year 2023 to Rs 16,042.6 crore. The profit after tax grew by 35.6% on a year-on-year basis to touch Rs 2,101.8 crore in 2023. Three markets, India, Sri Lanka and Nepal, contribute to 83% to the company’s revenue.

This growth, the company said, was driven by robust consumption across segments, which helped the firm in gaining 13.9% and 7% increase in consolidated sales volume and net realisation per case, each.