PepsiCo has had a long relationship Varun Beverages, its bottling partner owned by RJ Corporates. Recently, the brand announced that the latter had bought out its bottling franchises in the south and western part of the country. This deal took place over an undisclosed amount and has made Varun Beverages the National Bottling partner for PepsiCo. This news has been confirmed by PepsiCo’s India president, Mr. Ahmed El Sheikh.
Speaking about this new development, he said: “To unlock the full potential of PepsiCo’s operating model in India, the company has decided to franchise its company-owned bottling operations in South and West regions to Varun Beverages Limited (VBL), subject to receipt of necessary statutory approvals.”
Mr. Sheikh has also said that with this new deal, Varun Beverages will be acquiring a noticeable footprint within the bottling, sales, and distribution avenues. He also confirmed that PepsiCo will still hold all the rights to product creation and brand communications. “The move will profitably drive synergies of scale, operational productivity, and efficiency across all facets of PepsiCo’s beverage business.” Said Mr. Sheikh.
Varun Beverages and PepsiCo have had a synergetic business relationship for more than three decades.
PepsiCo’s performance in India
Although it has been close to 30 years since PepsiCo entered India, the brand has not enjoyed a fantastic footing in the country. In 2017, PepsiCo reported revenue of 6,540 Crore INR. This showed that the brand’s sales have been steadily declining, considering that its revenue was 6,994.8 Crore INR in 2012-13.
One of the biggest reasons for the dramatic fall in their sales in that Indian consumers is now veering towards healthier options. While this change has led to a drop in their soft drinks sales, it did not inspire much of a rise in the sales of their juices (Tropicana) and Quaker Oats. The brand has also seen a decline in the sales of its chips – Kurkure and Lays.