PepsiCo to move beyond soft drinks in India
What's the story
Varun Beverages Ltd (VBL), PepsiCo's largest global bottling partner outside the US, is considering expanding its partnership with the beverage giant to include alcoholic drinks in India. Ravi Jaipuria, chairman of RJ Corp, VBL's parent company, said they are exploring the possibility of starting with some ready-to-drink (RTD) low-alcohol products from PepsiCo. This would be a major development in their three-decade-long partnership.
Strategic move
VBL's distribution partnership with Carlsberg
Jaipuria's statement comes after VBL announced a distribution partnership with Danish brewer Carlsberg Breweries for select African markets. PepsiCo already has global partnerships with spirits makers AB InBev and Diageo through its subsidiaries. The company had teamed up with Labatt Breweries, AB InBev's Canadian subsidiary, to launch SVNS Hard 7Up, an alcoholic drink made with 7Up, last year.
Market exploration
PepsiCo's existing partnerships for alcoholic drinks
PepsiCo also partnered with Diageo to launch an alcoholic drink combining Captain Morgan rum and sugar-free Pepsi Max for the UK market. Jaipuria clarified that their talks on RTD cocktails are still exploratory. He said, "We have free cash flows. We have to utilize our cash. We have to grow the business." If they go ahead with this partnership, it would be a major expansion beyond soft drinks in their long-standing relationship with PepsiCo.
Gradual growth
VBL's plans for entering the alcoholic beverage market
VBL has said it will "test opportunities for expansion into ready-to-drink and alcoholic beverages, including beer, wine, liquor, brandy, whisky, gin, rum, and vodka in India and abroad." Jaipuria said they would take a gradual approach in different countries. He added that it would be easier for them to grow in other categories in markets where they have a stable business.
Market potential
RTD alcohol consumption trends in India
The demand for RTD alcoholic beverages in India is expected to grow at a CAGR of 6.0% from 2025-35, higher than the global average and second only to China. The growth is concentrated in urban areas such as Mumbai, Delhi, and Bengaluru, where rising disposable incomes and Western lifestyle adoption are driving consumption. Urban millennials and Gen Z consumers are increasingly seeking convenient, premium alcoholic beverages for social occasions and home entertainment.