VARUN BEVERAGES, LTD

ABOUT THE INDUSTRY:

The history of food and drink goes back as far as humankind. However, there were no significant
advancements until the 19th century, when Louis Pasteur and Nicholas Appert created pasteurization and
canning, respectively. Food became a product that could be stored and packed for later use thanks to these
procedures.
Innovations in the food industry found fertile ground thanks to world war, Better preservatives and
flavoring agents were created as a result of food rationing and price regulation. Instant foods were made
possible as a result.
The success of the food sector is largely attributed to improvements in distribution. Prior to the industrial
revolution, local marketplaces provided the majority of the food and beverage consumption. Food may
now be transported to stores thanks to transportation and cold storage facilities.
According to a study created by the Confederation of Indian Industry (CII) and Grant Thornton, India is
predicted to overtake China as the fifth-largest consumer market in the world by 2025.
The largest category of consumption is food and drink. The extensive agricultural sector provides support
for the food and beverage industry. India is the world's top producer of pulses and ranks second in the
production of rice, wheat, sugarcane, fruits, and vegetables.
The additional beneficial elements are the vast areas of fertile land, the favorable climate, the lengthy
coastline, and the low wages.
Early economic liberalization in the 1990s reduced trade restrictions to a minimum. With the growth of
contemporary retail systems like supermarkets, the industry has found more routes to the market.
Logistics for storage and transportation have also advanced. The industry also benefits from the large
population and the growing middle class. A little over half of the population is under the age of 30, and
many of them begin working young and aspire to live better lives.
Consumers with greater income levels also have higher disposable incomes. More families are eating out
and experimenting with diverse cuisines as a result of changing lifestyles. Convenience food purchases by
working couples are rising.
Consumers are becoming pickier, and those who live in metropolitan areas put more faith in branded
items since they guarantee quality.
A certain segment of consumers has grown very health conscious. From those high in carbohydrates or fat
to those high in protein and fruits and vegetables, this segment is shifting. Customers who care about
quality have increased the bottled water industry to $50 million.
The beverage sector is estimated to be worth $16 billion when alcoholic beverages are excluded. The
most popular drinks are tea and coffee, which are then followed by juices and carbonated drinks, health
drinks, milk-based drinks, flavored drinks, and energy drinks.

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In this nation, unpackaged tea and coffee make up half of the total consumption. According to estimates,
the market for alcoholic beverages is worth roughly $35 billion, with whiskey, beer, and wine being the
most popular options.

Industry Size/Value

The global beverage industry was valued at USD 24.42 billion in 2021 and is expected to grow to USD 71.83
billion by 2030.
In 2022, the global beverage market was valued at USD 239,105.7 million. It is projected to grow at a
Compound Annual Growth Rate (CAGR) of 13.77%.
In 2022, the global beverage industry was valued at USD 1813 billion and is expected to grow to USD
1961.24 billion in 2024.
In 2020, India's beverage industry revenue was Rs 1.9 trillion (US$ 25.8 billion). It is expected to reach Rs 2.6
trillion (US$ 35.3 billion) by 2024.
The food and beverage (F&B) industry includes companies that process, package, and distribute raw food
materials. This includes fresh, prepared foods, packaged foods, and both alcoholic and non-alcoholic
beverages
In Q4 2022, the India beverages market was valued at 49.66 billion liters (BL). Despite rising oil and food
prices, the country's GDP is predicted to grow in Q4 2022. As low-income people lowered their purchasing of
non-essential items, high annual inflation generated headwinds for several categories. Despite their high sugar
content, low-cost beverages such as nectars, fruit powders, and still drinks did well. Tourism and family
gatherings increased during festivals like Diwali and Christmas, benefiting both on-premise and at-home
consumption.
The India beverages market research report, which covers soft drinks, dairy drinks, hot drinks, and alcoholic
drinks, is a crucial tool for staying up to date on quarterly industry performance and advancements.
Hot drinks are divided into three categories: hot coffee, hot tea, and other hot liquids. In Q4 2022, hot tea had
the greatest volume within the segment.
Dairy and soy drinks, as well as milk alternatives, are subdivided into condensed milk, drinking yogurt,
evaporated milk, fermented milk, flavored milk, and grain, nut, rice, and seed (GNRS) milk.
Soymilk and white milk are two alternatives. White milk had the greatest volume in the sector in Q4 2022.
Packaged water, improved water, flavored water, carbonates, juice, nectars, still drinks, squash/syrups,
fruit powders, iced/RTD tea drinks, iced/RTD coffee drinks, sports drinks, energy drinks, and bulk/HOD
water are all subcategories of soft drinks. The packaged water segment had the biggest volume in the
category.
Beer, cider, flavored alcoholic beverages, fortified wine, brandy, gin and gen ever, liqueurs, rum,
sparkling wine, speciality spirits, still wine, tequila and mezcal, vodka, and whisky are all types of
alcoholic beverages. Whisky had the greatest volume in the segment in Q4 2022.

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INDUSTRY STRUCTURE

Non-alcoholic beverages such as soft drinks, bottled water, and juices are included in the beverage sector,
as are alcoholic beverages such as beer, wine, and spirits. Emerging industries such as health care and
premium drinks are gaining traction. The structure of the sector varies, with multinational businesses,
regional firms, and craft manufacturers. Consumer preferences, health trends, and distribution channels
such as retail and e-commerce are essential factors to consider. The volatility of the market necessitates
adaptation to changes in consumer preferences and regulatory landscapes, making it critical for
organizations to match their strategy with these complex factors for long- term success.

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1.Non-Alcoholic Beverages Segment:

Soft Drinks: This includes carbonated beverages, energy drinks, and flavored water. Major players in this
segment include companies like The Coca-Cola Company and PepsiCo.
Bottled Water: This segment includes various brands of bottled and packaged water, both still and
sparkling.
Juices and Juice Drinks: Companies produce a wide range of fruit juices, fruit blends, and juice-based
beverages.
Coffee and Tea: This includes both ready-to-drink coffee and teaproducts as well as coffee and tea
concentrates.

2.Alcoholic Beverages Segment:

Beer: This is a significant segment of the alcoholic beverage industry and includes a wide variety of beer
types produced by multinational corporations and craft breweries.
Wine: Wine production ranges from large wineries to boutique vineyards, producing various types of
wines including red, white, and rosé.
Spirits: Distilled spirits like whiskey, vodka, rum, and gin are producedby distilleries around the world.

3.Functional and Health Drinks Segment:

Sports and Energy Drinks: These beverages are marketed to provide energy and hydration for athletes
and active individuals.
Health and Wellness Drinks: This includes beverages with added nutrients, vitamins, and herbal
extracts that promote health benefits.
Dairy and Dairy Alternatives Segment:
Milk and Milk-Based Drinks: This includes traditional milk productsas well as flavored and fortified
milk drinks.
Dairy Alternatives: Plant-based milk alternatives like almond milk, soy milk, and oat milk are becoming
increasingly popular.
Emerging Segments:

Functional Beverages: These include beverages with added functional ingredients like probiotics,
antioxidants, and other health-promoting substances.
Premium and Craft Beverages: This trend is prominent in both alcoholic and non-alcoholic segments,
where consumers seek unique and high-quality products.

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ABOUT THE ORGANIZATION

Nature of the business:

Varun Beverages Limited, a prominent participant in the beverage industry, stands as among
the largest PepsiCo franchisees globally, excluding the United States. Since the 1990s, VBL
has established a business partnership with PepsiCo. Over the course of the past 25 years,
VBL has strengthened this relationship through various means. These include expanding the
number of licensed territories and sub-territories covered by the company, diversifying the
range of PepsiCo beverages produced and distributed, incorporating additional stock-keeping
units (SKUs) into its portfolio, and expanding its distribution network. PepsiCo is responsible
for the production, distribution, and sale of a wide range of carbonated soft drinks (CSS) and
non-carbonated beverages (NCBs), which includes bottled drinking water bearing PepsiCo
trademarks. PepsiCo CSD brands, including Pepsi, Pepsi Black, Mountain Dew, Sting, Seven Up,
Mirinda Orange, Seven- Up Nimbooz Masala Soda, and Evervess, are produced and distributed by VBL.
PepsiCo NCB brands, such as Tropicana Slice, Tropicana Juices, SevenUp Nimbooz, Gatorade, and
Aquafina packaged water, are produced and promoted by the company. VBL, the entity responsible for
more than 90% of PepsiCo India's beverage sales, has been authorized as a franchisee to distribute
various PepsiCo products in 27 States and 7 Union Territories within India. Furthermore, the VBL has
been granted the authorization to participate in the territories of Zimbabwe, Zambia, Morocco, Nepal, and
Sri Lanka. In fiscal year 2022, the primary market of India accounted for a substantial 80% of the
operating revenues (net). VBL is a constituent of the RJ Corp conglomerate, a worldwide corporation
with diversified investments in the healthcare, ice cream, quick-service restaurant, and beverage sectors.

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GLOBAL FOOTPRINT
• It has 3 million+ Outlets

• 6 Manufacturing Facilities in International Geographies

• 31 Manufacturing Facilities in India

• 1.4 billion Plus consumers Served

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VISION
To become the most Successful & Profitable Beverage Company in the world having Market Leadership
in the territories we operate.

MISSION
• Being a Global, Growth Oriented and Profitable Organization by:

• Offering best quality & refreshing product to every customer & consumer.

• Being a preferred employer providing consistent growth path, respect & empowerment.

• Creating value for our stakeholders by driving excellence in our operations.

• Being responsible towards environment & society.

OBJECTIVES OF VARUN BEVERAGES.

• Proper work allocation.

• Use the skills of the work force appropriately so that they are lured and motivated in to working to the
fullest of their capacity.

• Make employees reveal their core competencies coming under the purview of the organization structure.

SWOT ANALYSIS

Strengths:
• Strong Partnership with PepsiCo: One of the biggest beverage and snack companies in the
world, PepsiCo, has a strong cooperation with Varun Beverages. Varun Beverages now have access to a
variety of well-known beverage brand names, enabling them to produce, sell, and promote these goodsin
multiple places.

• Diversified Product Portfolio: A wide variety of beverages, such as carbonated soft drinks,
juices, energy drinks, and packaged water, are includedin the company's portfolio. Due to its diversity, the
business is better able to serve various market niches and client preferences.

• Supply Chain and Distribution Network: The company's solid distribution and supply systems
are key advantages. The distribution expertise of Varun Beverages contribute to making sure that their
products are easily accessible to customers in various geographical areas.

• Experienced and dedicated Sales team.

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• Market leader Position: Through strategic acquisitions and collaborations, the organization has
proved its dedication to growth and expansion. This strategy enables them to enter new markets and
strengthen their market position.

• Good brand image: Varun Beverages has developed a reputation for providingcustomers with
high-quality products throughout the years. Customer loyalty and repeat business may increase as a result
of this favorable brand reputation.
• Strong Geographical Presence: With operations in numerous nations around Asia, Africa, and
the Middle East, Varun Beverages has a wide geographic reach. The corporation can reach a sizable
consumer base and enter a variety of markets because of its extensive distribution network.
Weaknesses:
• Product Dependence: While the agreement with PepsiCo gives Varun Beverages access to
popular beverage brands, it also implies that Varun Beverages' success is inextricably linked to PepsiCo's
performance. If the relationship encounters difficulties, this could leave it vulnerable.
• Environmental Concerns: The beverage business is increasingly being scrutinized for its
environmental impact, which includes concerns such as waste from packaging and conservation. To solve
these concerns, Varun Beverages may need to engage in environmentally friendly methods.
Opportunities:
• Increasing demand for healthy food and beverages: Investing in R&D to generate distinctive
flavors, inventive packaging, and new beverage concepts could help the company stand out from the
competition.
• Growth in beverages consumption
• Launching of new fruit flavored drinks: there is an opportunity to bring new fruit flavors and
customization to local tastes and preferences in different regions.
Threats:

• Threat from other drink Competitors: With several established firms and new entrants, the
beverage market is very competitive. Varun Beverages may encounter competition from both domestic
and foreign businesses selling identical products.

• Increase in cost of the products and raw materials: Price fluctuations of rawmaterials which
include sugar, packaging materials, and flavorings can have a significant effect on Varun Beverages'
manufacturing costs and profit margins.

• Changes in consumer tastes and preferences: Increased health and wellnessawareness may lead
to less consumption of sugary and carbonated beverages, which make up a large portion of Varun
Beverages' product selection. People becoming more health conscious

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PRODUCTS :

Food :

Beverages :

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PRICE

PEPSI
Pet 750ml Rs.38

Can 250ml Rs.32

Pet 2.25L Rs.66

7UP
Pet 750ml Rs.34

Can 250ml Rs.27

Pet 2.25L Rs.66

MIRINDA
Pet 750ml Rs.38

Can 250ml Rs.27

Pet 2.25L Rs.66

MOUNTAIN DEW
Pet 750ml Rs.38

Can 250ml Rs.27

Pet 2.25L Rs.63

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SLICE
Pet 600ml Rs.30

Pet 250ml Rs.20

Pet 1.25L Rs.60

LEHAR SODA
Pet 600ml Rs.15

Pet 750ml Rs.20

Pet 1.25L Rs.30

AQUAFINA
Pet 500ml Rs.10

Can 1L Rs.20

Pet 2L Rs.35

TROPICANA
Tetra 180ml Rs.20
(litchi)
Tetra 1L Rs.91
(apple Delight)
Tetra 1L Rs.125
(mixed fruit)

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GATORADE
Pet 250ml Rs.20

Pet 500ml Rs.50

STING
Pet 250ml Rs.20

Can 250ml Rs.33

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Marketing Strategy of Varun Beverages Ltd :

Understanding Customers Better:

Varun Beverages pays attention to what customers in the non-alcoholic beverage industry need and want.
They group similar customers together based on things like buying habits, background, and where they
live, making it easier to connect with them.

Picking the Right Audience:

After studying different customer groups, Varun Beverages chooses a specific audience to focus on. They
consider factors like how attractive that audience is, the resources needed, potential financial gains, and
the competition in that market.

Cool Campaigns with Salman Khan:

In their 2020 campaign, especially with Pepsi, Varun Beverages and Salman Khan make traditional
gestures like namaste and salaam trendy. They encourage young people to be themselves and challenge
societal judgments with confidence, promoting a message of acceptance.

Online Presence and Engagement:

Varun Beverages is active on social media, having more followers on LinkedIn (103k) than Facebook
(4k). Their posts are a mix of commercials and informative content, occasionally sharing new product
launches to keep things interesting for their audience.

Celebrity Partnerships for Impact:

Varun Beverages, particularly with Pepsi, collaborates with Bollywood celebrities like Salman Khan,
Jacqueline Fernandez, and others. This not only gains them loyal customers but also boosts awareness of
their brands. Collaborations extend to various social channels, involving celebrities like Katrina Kaif and
Hrithik Roshan for other brands like 7up, Tropicana, and Mountain Dew

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Financial information

Performance Contribution to Net Revenue

Indai International

21%

79%

Total sales volume (in Million Cases)

2019-2023 sales volume CAGR – 17%

176
149

115 International
89 India
88 737
653

404 454
337

2019 2020 2021 2022 2023

2019 2020 2021 2022 2023

Total
493 425 569 802 913

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Segment-wise Sales Volume

7%

23%

70%

Carbonated Soft Drinks Packaged Drinking Water

Non-Carbonated Beverages

5-Year Financial Highlights

Net Revenue
Compound Annual Growth Rate (2019-23) : 22.5%

Rs. in Million
1,60,426

1,31,731

88,232
71,296
64,501

2019 2020 2021 2022 2023

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PAT and PAT Margin

Compound Annual Growth Rate (2019-23) : 45.2%

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Suppliers :

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Risk and Opportunities Management :

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MAJOR COMPETITORS
 Coca cola:

Coca-Cola, a worldwide beverage conglomerate, is well-known for its diverse line of soft drinks, which
includes the iconic Coca-Cola brand. It was founded in 1886 and operates globally, providing a variety of
carbonated and non-carbonated beverages. Coca-Cola has become synonymous with refreshment and
happiness because to its extensive distribution network and durable branding. It is always introducing
new tastes, running effective marketing efforts, and adapting to changing consumer preferences. Aside
from its namesake cola, the company also makes water, juices, energy drinks, and other beverages. Coca-
Cola's ongoing worldwide presence and dedication to innovation have cemented its position as a
Beverage Industry Leader.
Coca-Cola and Varun Beverages are two important participants in India's beverage sector, primarily in
the carbonated soft drink category. While Coca-Cola is a global beverage behemoth, Varun Beverages is
one of the region's largest bottlers of PepsiCo beverages.

 Nestle India :

Nestlé India and Varun Beverages compete in separate categories of the food and beverage business,
although their presence in the broader market may result in some indirect competition. Nestlé is a
multinational corporation best recognized for its dairy, confectionery, bottled water, and other food and
beverage products. Varun products, on the other hand, is a well-known bottler and distributor of PepsiCo
products. While they don't count as direct competitors in terms of the items they manufacture, they may
compete indirectly in the following ways:

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Nestlé and Varun Beverages both offer beverages, albeit their focus and product kinds differ. Nestlé
manufactures a wide range of beverages, including coffee, tea, and health-conscious beverages such as
Milo and Nesquik. In this way, there might be some similarities with certain beverage categories where
they both have a product presence.

 Redbull :

Red Bull is one of the fastest-growing energy beverages and sports drinks in terms of brand value. It is
also one of the main direct competitors of Coca-Cola. The widespread use of Red Bull in pub culture,
where it may be included into a variety of drinks, has contributed to its appeal. Red Bull drinkers find its
flavor to be bolder and wonderful. RedBull is another business with a big distribution network. It was
among the first rivals to contribute to the widespread recognition of energy drinks. Red Bull is marketed
to the general public, whereas Gatorade is marketed to athletes. Interestingly, Red Bull is the only one of
the top 6 Coca- Cola direct competitors that is not produced by either Coca-Cola or Pepsi. A business
from Australia owns it.

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