Varun Beverages Launches Kenyan Subsidiary to Boost African Growth

Varun Beverages Ltd, PepsiCo’s largest bottler, has announced the establishment of a wholly-owned subsidiary in Kenya, named VBL Industries (Kenya) Limited. This new entity will concentrate on the manufacturing, distribution, and sales of various beverages.

This move comes after the company’s recent announcement regarding its entry into the beer market in Africa through an exclusive distribution partnership with Carlsberg Breweries, a well-known Danish beverage producer.

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Moreover, Varun Beverages has reported that its snacks facility in Morocco has achieved full operational capacity, which will support a processing plant being established in Zimbabwe.

Third Quarter Performance

For the third quarter, consolidated sales volume increased by 2.4%, reaching 273.8 million cases, compared to 267.5 million cases during the corresponding period last year, despite persistent heavy rainfall in India. While volumes in India remained relatively flat, international sales surged by 9.0%, particularly driven by robust performance in South Africa.

Gross margins improved by 119 basis points to 56.7% in Q3, attributed to a higher proportion of water sales in international markets. Additionally, there has been a shift in expenses from raw material costs to employee expenses, energy, and other overheads due to increased in-house production initiatives.

Also Read: Varun Beverages Q1 Results: 15.5% Organic Volume Growth, Flat Realisations

In terms of revenue, the quarter showed a 2% increase from the previous year, totaling ₹4,896.7 crore. Net profit saw a significant rise of 20% to ₹742 crore from ₹619 crore last year. This was influenced by reduced finance costs and an increase in other income, which includes interest generated from deposits in India and favorable currency shifts in international markets.

Varun Beverages Ltd shares closed at ₹454.00, a decline of ₹3.40 or 0.74%, on the BSE.