The Indian soft drink market is expected to see “significant growth” as consumption is anticipated to increase steadily, which will deliver sustainable and healthy volume growth across all product categories, said Varun Beverages Ltd (VBL), PepsiCo‘s largest franchise bottler. This would be driven by factors such as shifting population demographics, the rising spending power of young consumers, accelerated urbanisation, and growing rural consumption.

The company is in the process of further expanding its capacities to meet the higher demand expectations, said VBL in its latest annual report.

Its distribution model and on-the-ground end-to-end infrastructure facilities continue to be the key growth drivers and VBL remains committed to extending it to newer areas and under-penetrated regions to further boost its market presence,” it added.

While from an operational standpoint, VBL continues to focus on new product categories and evolving customer preferences.

Launch of new products such as energy drink ‘Sting’ performed well across various geographical regions and recent launches in the value-added dairy segment have received positive consumer response.

“Overall, VBL is confident in its ability to deliver strong and sustained growth moving forward, owing to the exceptional performance during the year, normalisation of the environment, and the expanded capacities to meet the high demand expectations,” it said.

VBL is PepsiCo’s second largest franchisee (outside the US), possessing rights to manufacture, distribute and sell carbonated soft drinks, fruit juice-based drinks, packaged drinking water, sports drinks and energy drinks spanning across 6 countries. In India, VBL has a presence in 27 states and 7 Union Territories and accounts for 90 per cent of PepsiCo India’s beverage sales volume in the country.

VBL in the domestic market is consolidating existing distributors and increasing distribution in underpenetrated regions.

It is diversifying its portfolio by “periodically launch of innovative products in select markets in line with changing consumer preferences”, said VBL.

It will focus on non-cola carbonated beverages and non-carbonated beverages. In the bottled water segment, the company is looking at a “significant growth” opportunity.

VBL manufactures, markets and distributes PepsiCo-owned products like carbonated soft drinks, carbonated juice-based beverages, juice-based beverages, energy drinks, sports drinks and packaged drinking water.

The company, which follows the calendar year as its financial year, recorded a revenue of Rs 13,173.1 crore in 2022.