(Reuters) -India’s Varun Beverages reported first-quarter profit above analysts’ estimates on Wednesday, as the company benefitted from strong demand for beverages in the country.
The PepsiCo bottler reported net profit of 7.26 billion rupees ($85.44 million) in the January-March period compared to analysts’ average expectation of 7.08 billion rupees, as per data compiled by LSEG.
Varun Beverages, one of PepsiCo’s biggest bottling partners outside the United States, packages and distributes beverages under Pepsi and Tropicana labels, among others. It also sells beverages under its own brands such as “Jive” and “Cream Bell.”
India’s beverage market has room to grow in tandem with rising per capita incomes, urbanisation, electrification and improvement of cold-chain infrastructure that can enable better distribution, said Chairman Ravi Jaipuria in a presentation to investors.
The company’s total volumes rose by 30.1% to 312.4 million cases, driven by growth of 15.5% in India and contributions from South Africa and the Democratic Republic of Congo.
Varun Beverages, which operates in about 10 countries, has been expanding its presence in African countries for more than 2 years, citing robust demand potential.
The company’s revenue from operations rose 29% to 56.8 billion rupees.
However, its gross margins slipped 171 basis points to 54.6% due to lower profitability in South Africa, as the company sold a higher mix of its own drinks, which have a lower brand recognition and margin than Pepsico’s drinks.
Varun Beverages added that it is working to scale Pepsico’s portfolio in the country.
(Reporting by Ananta Agarwal in Bengaluru; Editing by Varun H K)
