Varun Beverages Ltd is planning to acquire PepsiCo’s bottling, sales and distribution in the south and west for its carbonated drinks business. Varun already has PepsiCo’s bottling operations in the north and east. It contributes more than 51% to its India’s sales volume.
Varun Beverages is in advanced with PepsiCo botting regarding this deal. PepsiCo has formed a team in December last year in order to manage the transition of employees from company-owned to franchisee-owned operations.
As stated by one person,“The divestment of the bottling operations nationally is in line with the company’s global direction to run asset-light businesses across world markets and operate the majority of its bottling operations through franchisee partners. The likely transaction, however, will not be (completed) in the short term since it will involve multiple and complicated transfers of assets and employees.”
Once this deal will be done, PepsiCo will only focus to sell concentrate under the brand name, whereas the sales and distribution will be operated by the franchaisees.
PepsiCo refused to comment on rumour and speculation. RJ Corp chairman Ravi Jaipuria said, “We don’t comment on market speculation.”
From last two years, the maker of Pepsi Cola, Mountain Dew lemon drink, Tropicana juices and Lay’s chips and RJ Corp were in discussion for the same kind of deal.
The executive said, “RJ Corp is the most likely contender for the national bottling business, given it’s over two-decade association with PepsiCo. While there were talks about PepsiCo likely to split its bottling assets among multiple franchisee partners, it is now likely to consolidate further with Jaipuria.”