Indian bottler gets major funds injection

By Ankush Chibber

- Last updated on GMT

Indian bottler gets major funds injection

Related tags: Coca-cola, Soft drink

Standard Chartered Private Equity (SCPE) has invested about US$56m in India-based bottler Varun Beverages Ltd, as a new market report hints at untapped potential in India's soft drinks market.

Varun Beverages, a part of the holding company RJ Corp, is PepsiCo’s largest bottler in South Asia. The company manufactures and markets carbonated and non-carbonated soft drinks, and packages drinking water under the Pepsi brand.

The beverage portfolio includes Pepsi, 7 UP, Miranda and Mountain Dew, Aquafina, Tropicana and Slice. The company reported revenues of US$182 m in the year ended March 31, 2011.

Global co-head at SCPE Nainesh Jaisingh said: “We can confirm that this investment of $56m has been made by SCPE, for a significant minority stake. The partnership with RJ Corp is intended to help them expand in India and overseas.”

Though both RJ Corp and SCPE declined to confirm the stake amount, media reports indicated that it was less than 10 per cent.

According to a new report by market intelligence firm Eprobe, the Indian carbonated drinks industry is worth US$1.3 billion as of 2011 and is growing now at 5 per cent annually.

The report said that Coke and Pepsi have a combined market share of around 95 per cent. Varun Beverages is the largest manufacturer of Pepsi in the country.

However, the report also noted that the growth of carbonated soft drinks in 2010 declined due to the entry of non-carbonated alternatives in the Indian market, after being dented by the slowdown in 2009, when customers started shunning modern retail formats in favor of local grocers.

In 2010 though, customers have begun coming back to modern retail formats that are a big sales channel for soft drink makers.

According to the report, the Indian carbonated soft drink market consists of the cola segment, which constitutes 62 per cent; the non-cola segment, accounting for 30 per cent; and energy drinks at 8 per cent.

The report said that the energy drinks segment has been growing at a compound annual growth rate of 29 per cent, and that urban areas report a dramatically higher consumption of carbonated drinks compared to rural areas.

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