Why Pepsi Bottler Varun Beverages Wants to Sell Soft Alcohol Now

Varun Beverages Ltd, PepsiCo’s largest bottler in India, is in talks with the beverage giant to start selling its ready-to-drink (RTD) low-alcohol products, Chairperson Ravi Jaipuria told analysts last week. His comment came shortly after the company announced a partnership with Carlsberg to distribute the Danish brewer’s brands in certain African markets.

The company’s African subsidiaries will test-market beer in their territories as part of an exclusive distribution agreement. The plan was revealed during Varun Beverages’ third-quarter earnings release.

During the post-earnings analyst call, Jaipuria said that in the African market, the company could adopt a similar go-to-market strategy for alcoholic products.

“Our products can be loaded on the same trucks, sold by the same people, and distributed through the same network. This makes it much easier and more scalable without significant extra expense. There’s a huge opportunity here since, in most countries, beer businesses are run by individual players. It’s a golden chance for us, and we’re going to test the market,” he said.

When asked whether the same model could work in India, Jaipuria clarified, “Carlsberg is already well-established in India, but this initiative has nothing to do with India for now.”

He further explained, “Ready-to-drink low-alcohol products are growing globally, and there’s good potential here too. However, in India, alcohol advertising isn’t permitted, so visibility will naturally remain limited.”

Despite that, the Pepsi bottler said the company remains “open and hopeful.”

“We are starting with Africa, and let’s see what we can do in India,” Jaipuria added.

Talks with PepsiCo

Earlier this year, PepsiCo announced new global partnerships with spirits giants AB InBev and Diageo through its subsidiaries. In collaboration with Labatt Breweries, AB InBev’s Canadian arm, it launched SVNS Hard 7Up, a blend of alcohol and 7Up. Meanwhile, its tie-up with Diageo led to the introduction of a ready-to-drink mix of Captain Morgan rum and sugar-free Pepsi Max in the UK market.

According to a September report by Future Market Insights, demand for RTD alcoholic beverages in India is projected to grow at a CAGR of 6.0% between 2025 and 2035.

“We are looking at it. We have free cash flows. We have to utilise our cash. We have to grow the business,” Jaipuria told analysts.

If Varun Beverages decides to go ahead, it will mark the first time that VBL and PepsiCo expand beyond soft drinks in their three-decade-long partnership.

PepsiCo’s rival Coca-Cola has also made inroads into the alcohol category through partnerships with Pernod Ricard for Absolut Vodka and Sprite, and with Brown-Forman for Jack Daniel’s and Coke. In India, Coca-Cola entered the alcohol segment two years ago with Lemon-Dou, its global ready-to-drink alcoholic beverage.