After months of speculation, Varun Beverages on Tuesday announced its entry into the alcoholic beverages (alcobev) sector, marking a significant diversification beyond soft drinks and non-alcoholic beverages. The company's board on Tuesday approved the incorporation of a wholly-owned subsidiary, KIVA Spirits and Company Limited, to manufacture and sell ready-to-drink (RTD) alcoholic beverages and allied products.
“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 and allied products, subject to receipt of applicable requisite approvals,” said the company in a regulatory filing.
As per the filing, KIVA Spirits is yet to be incorporated and will be wholly owned by Varun Beverages. It will have a proposed authorised share capital of Rs 10 crore and paid-up equity capital of Rs 9 crore, funded in cash by the parent company.
The Ravi Jaipuria-owned RJ Corp company’s entry into the alcobev comes as the domestic market continues to hold demand even as global consumption has slowed down in recent years. India’s alcoholic beverages industry, with a market size of 1,100 million cases (beer and IMFL account for 400 million cases each), is one of the largest/fast-growing markets globally, as per JM Financial.
The industry will keenly watch Varun Beverages’ foray into the space, as the high-volume beer and spirits market is dominated by foreign players due to the high investment required and the need for extensive distribution networks. Varun Beverages is one of PepsiCo's largest franchise bottlers outside the US and manufactures and distributes a range of beverages under PepsiCo-owned brands across its markets.
Late last year, when the company partnered with beer maker Carlsberg Breweries to distribute its products in Africa, the move was seen as a potential precursor to a similar tie-up in India. The company was earlier reported to be exploring the acquisition of Bira 91 founder Ankur Jain’s 17.8% stake following his exit.
To lead the highly competitive alcobev business, Varun Beverages has appointed Prathmesh Mishra as chief executive and managing director of the proposed subsidiary.
Mishra is a seasoned business leader with over 30 years of experience across consumer businesses. He most recently served as Managing Director for Korea and Japan at Diageo, where he was responsible for driving business growth and strategic leadership across two premium, complex markets in Asia.
Prior to this international assignment, Mishra held several senior leadership positions at Diageo India. He served as Chief Commercial Officer for seven years, leading the company's commercial strategy and execution and earlier as Chief Operating Officer – West for three years, overseeing regional operations and business performance.
Before joining Diageo, Mishra spent 14 years with Pernod Ricard, India, where he held a range of leadership roles, including Vice President – North, Region Head roles in West, Central & CSD. He also served as Chairman of Royal Challengers Bangalore (RCB), where he helped transform the franchise into one of the most commercially successful sports brands in India.
Separately, the the company board approved plans to set up a joint venture in Tunisia. The proposed company, to be called Varun Beverages Tunisia SA or another name approved by local authorities, will produce and distribute carbonated soft drinks, juices, water and dairy products.
