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Informist, Tuesday, Jul. 28, 2026

 

--Varun Beverages: Looking at new categories, ventures to expand 

--CONTEXT: Varun Beverages mgmt comments in post earnings call 

--Varun Beverages: See margins improving once West Asia war stops 

 

By Avishek Rakshit & Astha Oriel

 

KOLKATA/NEW DELHI – Varun Beverages Ltd., which is PepsiCo, Inc.,'s second largest franchisee in the world outside the US, is looking at new categories and ventures to chart its future expansion, a senior company official said Tuesday. The expansion strategy follows the company extending its exclusive bottling and trademark licence agreement with PepsiCo in India until April 2049 but, importantly, removing the restriction to operate solely as PepsiCo's special purpose vehicle.

 

"At the moment, we are still looking at what are the categories we would expand. We are hiring some people to look at new ventures, new possibilities, but it's too early. We have just got the clearance with Pepsi..." the senior company official told sector analysts in a post-earnings call Tuesday. 

 

Soon after extending its agreement with PepsiCo under the revised agreement, Varun Beverages signed a business alliance agreement with the Japanese Asahi Group Holdings earlier this month to introduce and commercialise the Calpis brand in India through a franchise arrangement, expanding its portfolio of non-alcoholic beverages.

 

Calpis is Japan's iconic fermented milk-based beverage brand with a legacy of over 100 years. This brand offers both concentrates and ready-to-drink products. Varun Beverages is eyeing launching Calpis in India with the original flavour and mango flavour variants.

 

"Dairy as a category, we're very bullish on," the official said. "We've been doing dairy as a category for many years now in the country, and we're seeing huge growth coming... Calpis is a great addition to our entire portfolio and to strengthen further our portfolio... Our idea is to build a solid portfolio, but our starting point is Calpis right now. We want to stabilise Calpis, we want to structure Calpis right in the market."

 

The company makes over a dozen products licensed by PepsiCo for India and Africa and also manufactures products under the CreamBell trademark, which has been licensed by RJ Corp. to be used by Varun Beverages for ambient temperature value-added dairy-based beverages. It also makes Lipton branded ice tea which is jointly owned by PepsiCo and Unilever, Plc. 

 

At the same time, the company is interested in further strengthening its existing portfolio, which comprises mostly PepsiCo-licensed products and continues to compete at higher price points. 

 

Responding to a question, another senior company official said Varun Beverages is already clocking 20% year-on-year growth in the peak summer months, save April, and as a result it does not see the need to step up its play at INR 10 price points where Reliance Consumer Products, with its Campa Cola brand, is strengthening its market position.

 

"At India level, if month-on-month, my growth is exceeding 20%, without a INR 10 category, then I'm not interested to get into it, because that's not a category we would like to fight," the second official said.

 

Campa Cola is pushing products at the INR 10 price point and recently reduced its pack size to 150 ml from the earlier 200 ml. On the other hand, PepsiCo's pushes 250 ml pack sizes under various aerated beverages brands, manufactured by Varun Beverages and its other bottlers, at the INR 20 price..

 

"The 400 ml pack, what we have launched, we are obviously seeing larger consumers coming in. And that strategy for us, and majority of our market is working for us driving growth," the second official said. 

 

Sales of Varun Beverages in the summer months in India, which coincide with the June quarter, grew in the 20s for most of the period except April due to the impact of the El Nino weather phenomenon, the official said.

 

The company expects its margins to improve once the West Asia war ends. In the June quarter, owing to the US and Israel's war on Iran, commodity and packaging costs, which are linked to crude oil prices, rose for the company. Its raw material costs surged over 28% on year to nearly INR 37 billion in the June quarter. 

 

In India, transportation expenses, which rose because of higher fuel costs, and a surge in distribution costs resulted in the company's earnings before interest, tax, depreciation, and amortisation margin improving by only 38 basis points on year despite higher sales volume.

 

Tuesday, shares of Varun Beverages closed at INR 430 on the National Stock Exchange, down nearly 7.5% from Monday. The company had declared its June quarter results during trading hours and its shares fell after the results were declared.  End

 

Edited by Rajeev Pai

 

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