Varun Beverages expects demand surge after GST cuts on water, juice products 

INDIA – Varun Beverages Ltd (VBL), PepsiCo’s bottling partner in India, expects stronger demand for its water and juice categories following recent Goods and Services Tax (GST) cuts.  

Chairman Ravi Kant Jaipuria confirmed the company will pass the benefits directly to consumers while expanding production capacity to meet rising demand. 

Speaking to CNBC TV-18, Jaipuria explained that the reductions cover nearly 30% of the company’s volumes. “We have got huge benefits on water, which has come down from 18% to 5%, and in juice, which has come down from 12% to 5%,” he said. “This is about close to 30% of our volume, which we are going to pass to the consumers.” 

The tax rate on carbonated soft drinks (CSDs) remains unchanged at 40% (28% GST plus 12% cess). “We would have hoped it could be even more positive by getting some reduction on CSD,” Jaipuria added. “But we are very happy with the rate cut overall.” 

The company expects demand to recover by the end of the current quarter, despite recent weather disruptions. “This effect will only come by the end of this quarter,” Jaipuria noted, acknowledging that heavy rains had dampened second- and third-quarter sales.  

“Even with the rained-out quarters, we are still looking at flattish numbers, which are very good for the industry.” 

To drive further growth, VBL is expanding retail distribution aggressively. “We are adding about 8-10% more outlets every year, which is about four to five lakh outlets,” Jaipuria said.

He highlighted India’s low per-capita beverage consumption as an opportunity for the entire industry, including competitors like Campa and Coca-Cola. 

On profitability, Jaipuria said margins remain healthy. “We’ve always said margins in 20 to 25%, but we’ve had very good margins, and if we can continue with these margins and with the growth coming, we’ll be very happy.” 

In the second quarter of 2025, VBL reported a 2.5% year-on-year increase in consolidated revenue to Rs 7,017.4 crore (US$808.3 million). However, sales volumes declined 3% to 389.7 million cases, compared to 401.6 million cases in the same period of 2024. 

Domestic sales volume fell by 7.1%, while international operations grew 15.1% year-on-year. Net profit rose 5% to Rs 1,317 crore (US$151.7 million) from Rs 1,253 crore (US$144.3 million) in the prior-year quarter. 

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