PepsiCo Bottler Varun Beverages Enters Alcohol Business, Names Ex-Diageo Exec As CEO

Varun Beverages, PepsiCo's second-largest bottler globally, is entering the alcoholic beverages market in India. The company's board has approved setting up a wholly owned subsidiary, KIVA Spirits and Company, to run the ready-to-drink (RTD) alcoholic beverages business, subject to regulatory approvals.

The proposed subsidiary will have an authorised share capital of ₹10 crore and paid-up equity capital of ₹9 crore, to be funded entirely by Varun Beverages.

"The Board of Directors of the Company at their meeting held today approved to incorporate a wholly-owned subsidiary company in India, inter-alia to carry on the business of Ready to Drink (RTD), Alcoholic Beverages, subject to receipt of applicable requisite approvals," the company said in a regulatory filing.

New CEO For The Venture

Varun Beverages has named Prathmesh Mishra as chief executive officer and managing director of the new subsidiary. Mishra has over three decades of experience in the consumer sector. He most recently served as managing director for Korea and Japan at Diageo, and earlier held the roles of chief commercial officer at Diageo India for seven years and chief operating officer-West for three years. He also spent 14 years at Pernod Ricard India and served as chairman of Royal Challengers Bengaluru, where he worked on the franchise's commercial expansion.

The move gives the Ravi Jaipuria-led company a new growth segment beyond its core soft-drink and non-alcoholic beverage business.

Separately, the board approved a joint venture in Tunisia to manufacture and distribute carbonated soft drinks, juices, water and dairy products. The venture, to be named Varun Beverages Tunisia SA or an alternative name approved by regulators, will be owned 75% by Varun Beverages and 25% by Bevanda Tunisia. Its proposed share capital is Tunisian dinar 9 million, about ₹29 crore.

Varun Beverages has been PepsiCo's exclusive bottling partner in several markets for nearly three decades. The company recently signed a fresh agreement with PepsiCo that removes earlier restrictions on diversifying into other beverage categories. Late last year, it had also partnered with Carlsberg Breweries to distribute products in Africa.

Shares of Varun Beverages were trading nearly 2% lower at ₹429.30 apiece on the NSE in morning trade on Wednesday, following the announcements.