Varun Beverages acquires more franchisee rights

Varun Beverages Limited, one of the largest franchisee of PepsiCo in the world (outside USA) has informed bourses on Thursday that it intent to enter into a binding agreement to acquire franchise rights from SMV Group in the State of Karnataka (13 districts), Maharashtra (14 districts) and Madhya Pradesh (3 districts), subject to approval.

Earlier PepsiCo had given these franchised rights to SMV Group. Post acquiring franchisee rights from SMV Group, Varun Beverage will have its presence in the 22 states and 2 UT of India. According to the company, the territories which aims to acquire are under-penetrated regions which gives enormous headroom to boost volume and gain market share. The company further added that this acquisition aligns with Varun Beverage’s strategy to expand its footprint in nearby market which would lead to improved operating leverage and maximum asset utilisation through economies of scale.

Further, the company’s management believes that strategically located manufacturing facilities would lead to reduction in time to market and enable optimization of freight and logistics costs, which in result in better margin going forward.

In today’s trading session, the stock of Varun Beverage opened at Rs. 836.45 and touched intra-day high of Rs. 840.8 in early morning session. At 10.28 hours the stock was trading at Rs. 825 apiece, down by 0.2 per cent.

Varun Beverages produces and distributes carbonated soft drinks, along with a large selection of non-carbonated beverages. Packaged drinking water sold under trademarks owned by PepsiCo is also produce by the company.