NEW DELHI: The return of Campa Cola under Reliance Industries’ umbrella would only help expand the carbonated soft drink (CSD) market, feels Ravi Jaipuria, chairman of Varun Beverages Ltd, PepsiCo’s India franchisee.
“The good part is competition is making all of us put in more chilling equipment, more go-to-market (GTM) efforts. As a result, the overall market is growing faster than it has in recent years,” Jaipuria said in an analyst call. He added that lower price-point entries like Campa Cola are helping broaden consumer access.
According to Jaipuri, India remains significantly underpenetrated when it comes to soft drink distribution. Out of nearly 12 million FMCG outlets in the country, VBL currently reaches only about 4 million. “There is still so much room for everyone to add new outlets through increased GTM and by putting in more chilling equipment,” he said. Moreover, due to logistical challenges, any serious player must build proximity to market — transporting water over long distances is not viable, Jaipuria noted.
Reliance Industries, in its recent investor presentation has noted in the perspective of its retail business that Campa Cola has gained double-digit market share in key markets in India. Coca Cola remains the market leader in the carbonated soft drink market.
Despite the heightened activity, Varun Beverages does not anticipate a major squeeze on margins. In Q1 of 2025, the company posted an EBITDA of ₹12,639.6 million, up 27.8% year-on-year, broadly aligned with net revenue growth. Gross margins in India declined by 171 basis points to 54.6%, mainly due to a higher share of lower-margin carbonated drinks and smaller pack sizes. Yet, EBITDA margins in India actually improved by 111 basis points, thanks to operational efficiencies and volume growth.
On the international front, South Africa — where VBL recently expanded — saw margins of 14.4%, a rise from around 10% before the acquisition, though still trailing India. “Margins remain lower due to a higher share of own brands,” Jaipuria explained, adding that increasing the share of PepsiCo’s portfolio will help improve profitability in that region.
VBL is also betting on backward integration and new Greenfield facilities to improve long-term margins, targeting an EBITDA margin of 21% or higher in India. “Our margin outlook is stable. We don’t expect any major dips going forward,” Jaipuria affirmed.
As for marketing, VBL is not following competitors into big-ticket sponsorships like the IPL or Kumbh Mela. “We remain aligned with PepsiCo’s ATL/BTL strategy. There’s no need to match aggressive spending from new entrants,” he said.
Above the Line (ATL) marketing involves broad, untargeted campaigns designed to build brand awareness and reach a wide audience through mass media channels. In contrast, Below the Line (BTL) marketing focuses on highly targeted efforts aimed at specific individuals or segments, offering measurable returns on investment and clear audience engagement.
Varun Beverages shares were trading at Rs 500 at 1:00 pm (IST) on Thursday. The shares are under pressure from intense competition in the market especially from re-entry of Campa Cola. The share prices have fallen by 22% since January this year.