Varun Beverages and PepsiCo Sign an Exclusive Agreement for Zimbabwe, Zambia

On Monday, July 15, Varun Beverages announced that it has entered into an exclusive snacks franchising appointment with PepsiCo to manufacture, distribute, and sell ‘Simba Muncheiz’ in the territory of Zimbabwe and Zambia. 

Key Takeaways from Varun Beverages Exclusive Agreement

• Varun Beverages on Friday entered into an exclusive snacks franchising appointment with PepsiCo.
• The agreement will focus on the manufacture, distribution, and sale of ‘Simba Muncheiz’ in the territories of Zimbabwe and Zambia. 

According to the New Delhi-based corporation, snack items account for 59% of PepsiCo's revenue. Given the scale of the snack food opportunity, VBL India, through its Morocco subsidiary, signed an exclusive snack contract for the Moroccan region on February 20, 2024, to produce 'Cheetos'. 

Through its subsidiaries, Varun Foods (Zimbabwe) (VFZ) and Varun Beverages (Zambia) (VBZ), VBL has discussed with PepsiCo entering into an exclusive snack franchising agreement with Premier Nutrition Trading LLC, Dubai, to manufacture, distribute, and sell "Simba Munchiez" in Zimbabwe and Zambia. This move is intended to strengthen VBL's relationship with Pepsico and expand its footprint within PepsiCo's snack portfolio.

According to the agreement, an estimated $7 million investment in manufacturing facilities would be required for an annual capacity of roughly 5,000 MT for the production of Simba Munchiez in several SKUs at each Zimbabwe and Zambia sites. 

The appointment will take effect on or before October 1, 2025, in Zambia and April 1, 2025, in Zimbabwe following the opening of the corresponding industrial facilities. 

VBL subsidiaries will use their distribution expertise to launch the new, reasonably priced line of PepsiCo snack foods. PepsiCo will use pricing efforts to aggressively market a few fast-moving SKUs. 

The company's consolidated net profit rose 24.9% to Rs 547.98 crore in Q1 CY24 compared to Rs 438.57 crore in Q1 CY23. The revenue from operations increased 10.9% YoY to Rs 4,317.31 crore in Q1 CY24. 

About Varun Beverages Limited

Varun Beverages (VBL) is a major player in the beverage business and one of PepsiCo's biggest franchisees outside of the United States. The firm manufactures and sells a broad variety of carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs), including packaged drinking water marketed under PepsiCo-owned brands. As of now, VBL has been awarded franchises for a number of PepsiCo goods in 27 Indian states as well as seven union territories. Additionally, VBL has been awarded the franchise for many PepsiCo products in the following countries: Morocco, Zambia, Zimbabwe, Nepal, and Sri Lanka. 

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