Varun Beverages gains after signing exclusive agreement with PepsiCo for Zimbabwe, Zambia

Varun Beverages rose 1.88% to Rs 1613.40 after the company said that it has enetered into an exclusive snacks franchising appointment with PepsiCo Inc. to manufacture, distribute, and sell 'Simba Munchiez' in the territory of Zimbabwe & Zambia.

The New Delhi-based company stated that PepsiCo reports 59% of its revenue (up from 55% in 2021) from snack foods. Given the size of snack foods opportunity, VBL India, through its Morocco subsidiary entered into an exclusive snacks appointment for Morocco territory on 20 February 2024 to manufacture Cheetos.

To further strengthen the relationship with PepsiCo and expand the footprint in PepsiCo snacks portfolio, VBL, through its subsidiaries - Varun Foods (Zimbabwe) (VFZ) and Varun Beverages (Zambia) (VBZ) has discussed with PepsiCo to enter into an exclusive snacks franchising appointment with Premier Nutrition Trading LLC, Dubai (a PepsiCo Inc. subsidiary) to manufacture, distribute, and sell Simba Munchiez in the territory of Zimbabwe & Zambia.

As per the understanding, an estimated investment in manufacturing facility would be around $7 million (approximately Rs 60 crore) for an annual capacity of approximately 5,000 MT for manufacturing of Simba Munchiez in multiple SKUs at each location of Zimbabwe and Zambia.

The appointment will be effective on or before 1 October 2025 for Zimbabwe and 1 April 2026 for Zambia, once the respective manufacturing facilities come into operation.

VBL subsidiaries shall leverage its distribution prowess to introduce the new affordable range of snacks products from the house of PepsiCo. PepsiCo shall give a strong push in certain fast-moving SKUs through price initiatives.

Varun Beverages (VBL) is a key player in beverage industry and one of the largest franchisees of PepsiCo in the world (outside USA). The company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo. As on date, VBL has been granted franchises for various PepsiCo products across 27 States and 7 Union Territories in India. VBL has also been granted the franchise for various PepsiCo products for the territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.

The company's consolidated net profit jumped 24.9% to Rs 547.98 crore in Q1 CY24 as compared with Rs 438.57 crore in Q1 CY23.Revenue from operations (excluding excise duty) increased 10.9% YoY to Rs 4,317.31 crore in Q1 CY24.

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