Varun Beverages Q1 misses estimates, says Campa isn’t hurting growth
Varun Beverages Ltd sought to reassure investors on Tuesday that its India business continues to grow more than 20% despite intensifying competition from Reliance Consumer Products Ltd’s Campa Cola, after a weaker-than-expected June quarter and margin pressure rattled investor confidence.
PepsiCo Inc. bottler reported consolidated revenue from operations ₹8,650.6 crore in the April-June quarter (FY27), up 20.8% YoY but below Q1 FY20 Bloomberg consensus estimate ₹8,675.9 crore as per 15 analyst estimates. Consolidated net profit increased by 15.1% ₹1,525.4 crore, also missing Bloomberg consensus estimate ₹1,533.6 crore from 14 analysts.
The earnings miss, along with margin pressure from the integration of South African beverage maker Twizza and higher input costs, caused the stock to close 7.53% lower. ₹429.50 on the National Stock Exchange on Tuesday.
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Varun Beverages reported consolidated revenues of ₹8,650.6 billion and net profit of ₹1,525.4 billion in the first quarter of FY2027.
The stock price fell 7.53% due to earnings losses, margin pressures from the Twizza acquisition and higher input costs.
Varun Beverages is focusing on sustaining profitable growth by offering larger pack sizes and emphasizing uncompetitive price segments rather than chasing lower quality products.
While concerns arise due to earnings losses and margin compression, Varun emphasizes continued growth by maintaining growth rates of over 20% in its core markets.
Varun Beverages is expanding into hydration drinks, juices and value-added dairy products, which are growing significantly faster than its traditional beverage offerings.
“We are growing at a healthy rate of 20%. Even post-June, we expect 20% growth at least at a minimum,” chairman Ravi Jaipuria said on the company’s post-earnings conference call.
Jaipuria said that July maintained this pace after unseasonal rains in April adversely affected beverage consumption.
hold the line
The comments come at a time when India’s carbonated soft drinks market is embroiled in its fiercest competitive battle in years.
Reliance Consumer revived Campa Cola and expanded it rapidly. ₹The 10 price point is a segment historically dominated by regional beverage producers, offering larger pack sizes for the same price, encouraging incumbents to respond with higher grammage and promotional offers. The aggressive pricing strategy has raised concerns that established players may eventually have to sacrifice margins to maintain market share.
Varun said that he does not intend to pursue this segment.
“Rs 10 is a non-profit category for us,” Jaipuria said. “As long as we’re growing over 20% in most of our markets, we’re pretty happy with that growth.”
Asked about Campa’s growth, Jaipuria said the rival’s expansion was not at the expense of Varun Beverages’ business but was driven by geographical expansion, consumers entering the sparkling beverage category for the first time and market share gains from regional brands.
“We’ve seen growth in our markets at least in tandem with our price points,” he said, adding that the company has instead relied on larger pack sizes to drive profitable growth. Price of recently released 400ml bottle ₹Management said 20 helps attract new consumers while maintaining profitability.
Management also noted faster growth in new beverage categories as a driver for future expansion beyond carbonated soft drinks. Management said hydration drinks, juices and value-added dairy products are growing three to four times faster than the company’s overall operations. Value-added dairy products grew by more than 40%, while liquid food brand Nimbos grew by more than 30%.
Beyond soft drinks
These remarks also come as Varun Beverages expands its portfolio beyond the traditional PepsiCo business.
Earlier this year, the company partnered with Japan’s Asahi Group for the production and distribution of CALPIS, marking the Japanese beverage maker’s entry into India’s non-alcoholic ready-to-drink market. The company also signed a deal with Carlsberg last year to exclusively distribute the brewer’s beer portfolio across parts of Africa and expand its presence in international markets beyond soft drinks.
Management also rejected recent market speculation that a purchase of brewer Bira was being considered. “We are not looking at beer,” Jaipuria said while answering questions regarding media reports.
The announcement follows reports that RJ Group has hired senior industry executives to assess opportunities in alcoholic beverages after PepsiCo expanded its production and distribution deal from Varun Beverages to include a wider range of beverage categories beyond carbonated soft drinks.
The company confirmed it had hired executives to evaluate new initiatives, but stressed that discussions remained at an early stage.
“Right now we’re still looking at what categories we’re going to expand into. We’re hiring some people to look at new ventures, new possibilities. But it’s still very early,” said Jaipuria, adding that the newly hired executives will work across a broader group, not just alcoholic beverages.
Varun Beverages is PepsiCo’s second-largest franchise bottler globally outside the US and operates in more than 30 countries spanning Asia and Africa. The company manufactures and distributes brands such as Pepsi, Mountain Dew, Sting, Mirinda, 7UP, Slice, Tropicana, Gatorade, Aquafina and newer products such as Nimbos, while also expanding into adjacent beverage categories through partnerships and acquisitions.
