Varun Beverages sets up Kenyan subsidiary, expands African operations

PepsiCo's largest franchise bottler, Varun Beverages Ltd, on Wednesday (November 19) said it has incorporated a wholly-owned subsidiary in Kenya, named VBL Industries (Kenya) Limited. The subsidiary will

focus on the business of manufacturing, distributing, and selling beverages.

This follows Varun Beverages’ October announcement that its African subsidiaries will enter the beer market through an exclusive distribution agreement with Carlsberg Breweries, the Danish beverage company.

Also Read: Varun Beverages shares have a 25% upside potential, Goldman Sachs says

In addition, the company also added that its snacks facility in Morocco has ramped up to full-scale operations. This will result in a processing plant in Zimbabwe.

Third Quarter Results

Consolidated sales volume grew by 2.4% to 273.8 million cases in the third quarter from 267.5 million cases in the same quarter last year, despite heavy rainfall continuing across India throughout the quarter. India volumes were almost flat, and international volumes grew by 9.0%, led by a strong performance in South Africa.

Gross margins improved by 119 basis points at 56.7% in Q3 due to an increased mix of water in international markets. Also, in the international markets, there is a shifting of expenses from the purchase of raw materials to employee costs, power and fuel and other manufacturing overheads because of an increase in-house backward integration initiatives.

Also Read: Varun Beverages Q1 Results: Organic volume growth at 15.5%, realisations remain flat

Revenue for the quarter rose by 2% from the year-ago quarter to ₹4,896.7 crore. Net profit increased by 20% to ₹742 crore from ₹619 crore during the same period last year. The figure was driven by lower finance cost and higher other income, which includes interest on deposits in India and favourable currency movement in the international territories.

Shares of Varun Beverages Ltd ended at ₹454.00, down by ₹3.40, or 0.74%, on the BSE.