Varun Beverages’ Q3 profit surges 24% on strong international demand amid monsoon challenges in India 

INDIA – Varun Beverages, PepsiCo’s exclusive bottler in India, has reported a robust third-quarter performance, posting a 24 percent increase in net profit despite facing domestic market challenges due to an unusually rainy monsoon season.  

The company’s profit reached Rs 6.20 billion (US$73.8 million), surpassing analysts’ expectations of Rs 5.76 billion (US$80.4M), according to LSEG data. 

Throughout the quarter ending September 30, India experienced higher-than-normal rainfall, which dampened out-of-home beverage consumption and hindered Varun Beverages’ domestic growth. India’s volume growth came in at 5.7 percent, contrasting the “double-digit” increase seen during the same period last year.  

However, the company’s overall sales volume still rose by nearly 22 percent to 267.5 million cases, driven by strong demand from its international markets, particularly in Africa. 

“Our global operations, particularly in Africa, are positioned to drive further growth as we capitalize on emerging demand trends and enhance our operational capabilities,” said Chairman Ravi Jaipuria. 

The company’s revenue from operations increased by 25 percent, reaching nearly Rs 50 billion (US$594.7M), partly due to contributions from South Africa-based BevCo, an acquisition completed earlier this year.  

Increased raw material costs, such as sugar, flavorings, glass bottles, and packaging, led to a 26.4 percent rise in total expenses for the quarter. 

Despite these rising expenses, Varun Beverages achieved a 30 percent year-on-year increase in EBITDA, reaching Rs 1,151 crore (US$136.9M).  

This growth was bolstered by operational efficiencies, resulting in an over 100-basis point increase in EBITDA margin to 24 percent, up from 22.8 percent in the prior year. The company’s gross margin for the quarter also rose slightly by 22 basis points, reaching 55.5%. 

In addition to strong quarterly results, Varun Beverages has been expanding its production capabilities to support future growth. New facilities across India are expected to be operational by the key summer season next year.  

The company also recently launched a greenfield facility in the Democratic Republic of Congo (DRC), with plans to add a second facility in the coming calendar year. 

On October 9, the company approved a Qualified Institutional Placement (QIP) to raise 7,500 crore rupees, pending shareholder approval.  

This capital is expected to drive the company’s growth ambitions, including potential acquisitions, further expansion into new territories, and strengthening its financial position. 

With its popular brands such as Mirinda, Mountain Dew, and Tropicana, Varun Beverages continues to expand its footprint both domestically and internationally. 

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