Varun Beverages surges 9% on Carlsberg deal despite poor Q2 India show
Shares in PepsiCo bottler Varun Beverages Ltd rose over 9% after the company announced an exclusive distribution partnership with Carlsberg Breweries for select southern African markets.
The company’s international business volumes rose 9% year-on-year in the September quarter but remained flat due to prolonged monsoon rains in India, which affected demand for cola, juices and other beverages. Summer is the busiest season for beverage companies.
The company’s consolidated revenues increased by a modest 1.9% year-on-year. ₹4,896.7 crore, while earnings before interest, tax, depreciation and amortization (EBITDA) fell by 30 basis points. A basis point is one hundredth of a percentage point.
“We delivered consistent performance throughout the quarter, supported by healthy traction in international markets,” Ravi Jaipuria, the company’s chairman, said in Wednesday’s earnings call. “The extended monsoon has affected consumption, but we are confident of long-term growth, especially in semi-urban and rural markets.”
Jaipuria said that the company is exploring the beer business in 1-2 African countries where it already has a strong presence, explaining that these countries have relaxed alcohol sales regulations, allowing the company to supply Carlsberg beers to grocery stores and other retail stores by combining existing distribution networks and on-site personnel.
The company will also transfer its beverage operations in Kenya to a wholly owned subsidiary, it said in a filing to the stock exchange.
campa challenge
Meanwhile, in addition to the monsoon rains in India, cola brands were also affected by the aggressive price war initiated by Reliance Consumer’s Campa Cola, which sells plastic PET bottles at a much cheaper price. ₹10 price points. However, Jaipuria said he was not worried about the competition.
“Competition expands the market for all of us,” he said. “It will be a temporary, small impact. We have all woken up and become more careful than before about going to market. But there is still a huge gap for growth in India. I see only a positive side in this.”
PepsiCo and Coca-Cola introduce their exclusive products at the fair ₹While Campa took 10 price points to combat its competition in small towns, the new entrant began expanding its product portfolio into larger cities and metropolises. In September, it also launched its second packaged drinking water under the Campa Sure sub-brand.
Varun Beverages shares closed 9.1% higher on the National Stock Exchange, while the benchmark Nifty 50 closed 0.45% higher.
