VBL to challenge Coca-Cola with major expansion in African beverage market

TANZANIA/GHANA – Varun Beverages Ltd. (VBL), one of PepsiCo’s largest global franchisees, has announced significant acquisitions and investments as part of its aggressive expansion into African markets. 

The company has acquired 100% ownership of SBC Beverages Tanzania and SBC Beverages Ghana for US$155 million and US$15 million, respectively. These acquisitions, subject to regulatory approval, strengthen VBL’s position as PepsiCo’s leading bottler in Africa.

The acquisitions mark a pivotal step in PepsiCo’s strategy to challenge Coca-Cola’s dominance in the region. 

Both SBC Tanzania and SBC Ghana are key players in bottling and distributing PepsiCo products, including popular brands like Pepsi, 7UP, and Mirinda. 

SBC Tanzania operates five manufacturing facilities, generating revenue of ₹1,505.3 crore (US$180 million) in FY24, while SBC Ghana runs one facility and reported revenue of ₹32 crore (US$3.8 million) in the same period.

Expanding snack production in Africa

In addition to beverages, VBL is venturing deeper into snack manufacturing across Africa. In July 2024, the company began producing Simba Munchiez snacks in Zimbabwe, adding to its biscuit production at its Harare plant. 

The new factory is expected to produce 5,000 tonnes of snacks annually. VBL is also constructing a snack manufacturing facility in Zambia to meet growing regional demand.

In March 2024, VBL partnered with Premier Nutrition Trading, a PepsiCo subsidiary, to invest US$12 million in a Cheetos snack factory in Bouskoura, Morocco. The facility, slated to commence operations in May 2025, will further enhance PepsiCo’s snacks portfolio in Africa.

Major investments in bottling infrastructure

VBL’s presence in Africa has been bolstered by its recent investments in the Democratic Republic of Congo (DRC). 

In September 2024, the company inaugurated a US$50 million bottling plant in Kinshasa, the capital city. A second plant, currently under construction in Lubumbashi, will cater to the southern regions of the DRC.

The company is also finalizing the acquisition of Southern African PepsiCo bottler The Beverage Company (Bevco), which serves South Africa, Lesotho, and Eswatini and holds distribution rights for Botswana and Namibia.

Vertical integration and supply chain consolidation

In a parallel development, VBL has announced plans to acquire the remaining 39.93% stake in Lunarmech Technologies Pvt. Ltd. for ₹200 crore (US$24 million), making it a wholly owned subsidiary. 

Lunarmech specializes in producing plastic closures for PET bottles and recorded ₹183.4 crore (US$22 million) in revenue in FY24. This move aims to streamline VBL’s supply chain operations, ensuring efficiency in its expanding manufacturing network.

Funding future growth

To support its expansion strategy, VBL plans to raise up to ₹7,500 crore (US$900 million) through a qualified institutional placement (QIP). 

This funding will back its acquisitions and facilitate the local manufacturing and distribution of PepsiCo’s snack products in African markets.

Bullish outlook on Africa

Ravi Jaipuria, Chairman of VBL, expressed optimism about Africa’s growth potential, highlighting the continent’s promising opportunities over the next two decades. 

VBL’s shares reflect this bullish outlook, having surged nearly 19% year-to-date and over 47% in the past year, currently trading at ₹588.85 (US$7).