PepsiCo bottler Varun Beverages to acquire South Africa’s Bevco

Varun Beverages Ltd, Pepsico’s largest franchise bottler, has announced the acquisition of South African beverage firm The Beverage Company (Bevco) and its subsidiaries, in a deal that will allow it to grow its footprint in Africa.

The company said it plans to complete the acquisition at an enterprise value of ZAR 3 billion (about ₹1,320 crore, or $150 million) by July next year.

Bevco, which holds franchise rights from PepsiCo Inc. in several African nations, manufactures and distributes both licensed and own-branded non-alcoholic beverages, Varun Beverages said.

Bevco has franchise rights from PepsiCo in South Africa, Lesotho and Eswatini, and distribution rights for Namibia and Botswana.

The agreement, subject to regulatory approvals including from PepsiCo and the Competition Commission of South Africa, also allows for potential minority co-investment by a large equity fund, the company said.

Bevco reported a net revenue of ZAR 3.6 billion (or $191 million) in fiscal 2023, the company said.

Shares of Varun Beverages shot up by 8.45% on Wednesday to ₹1,271 apiece at 2.30pm.

“The rising affluence of South African households has resulted in urbanization, coupled with longer workdays and emerging interest from female consumers, which has contributed to the growth in the Industry,” Varun Beverages said in an investor presentation announcing the deal.

BevCo manufactures and sells 7UP FREE, Mirinda, Mountain Dew, Pepsi, Pepsi Light and Pepsi Max, in addition to Refreshhh, Reboost, Coo-ee, and JiVE.

It also has five manufacturing facilities – two in Johannesburg and one each in Durban, East London and Cape town, the company said in the investor presentation.