Varun Beverages Enters Alcohol Market, Partners with Carlsberg for Global Expansion

Varun Beverages Ltd. (VBL), one of India’s largest beverage manufacturers and a key franchisee of PepsiCo, has announced its entry into the fast-growing alcoholic beverage market. The company’s board has approved the addition of an alcoholic beverage business to its Memorandum of Association (MoA), signaling a major diversification beyond its traditional soft drink portfolio.

Expansion into Ready-to-Drink and Alcohol Segments

VBL stated that the move comes in response to the rising popularity of Ready-To-Drink (RTD) options and a growing appetite for premium alcoholic beverages in India and abroad. The company plans to manufacture and distribute a variety of alcoholic drinks including beer, wine, whisky, vodka, gin, rum, and brandy across domestic and international markets.

Carlsberg Distribution Deal in Africa

As part of its global expansion strategy, VBL’s African subsidiaries have entered into an exclusive distribution agreement with Denmark’s Carlsberg Breweries A/S to distribute Carlsberg beer across select territories. The company will first test the beer market in Africa before evaluating opportunities in India and other regions.

This partnership is seen as a strategic step toward building VBL’s presence in the global alcoholic beverage market, leveraging its strong distribution network and operational experience in beverages.

Competitive Landscape and Market Outlook

Varun Beverages’ diversification comes amid heightened competition in India’s non-alcoholic drinks segment, led by Reliance Retail’s Campa Cola, which has sparked a pricing war. With domestic beverage sales slowing due to prolonged monsoons, expanding into alcohol offers VBL a new growth avenue.

According to a Crisil report, India’s alcoholic beverage industry is projected to grow by 8–10% in FY25, reaching a market size of ₹5.3 lakh crore, and could touch $300 billion by 2035. Premiumisation trends and rising disposable incomes are also driving demand for higher-end alcoholic products.

Varun Beverages Q3 FY25 Performance

• Metric Q3 FY25 Q3 FY24 Change
• Revenue ₹4,897 crore ₹4,805 crore +2%
• EBITDA ₹1,147 crore ₹1,151 crore -0.3%
• EBITDA Margin 23.4% 24% ↓
• Net Profit ₹741 crore ₹620 crore +19.5%

While domestic volumes grew marginally due to weather disruptions, international operations surged by 9%, contributing positively to the bottom line.

VBL’s entry into the alcohol market marks a bold step toward portfolio diversification. With a strong supply chain, established brand partnerships, and growing international operations, the company aims to capitalize on India’s booming alcohol consumption trends.

Analysts believe that the Carlsberg collaboration could serve as a launchpad for VBL’s future alcoholic product line in India, pending regulatory approvals and market testing.

FAQs

1. What new business is Varun Beverages entering?

Varun Beverages Ltd. is entering the alcoholic beverage business, which includes beer, wine, whisky, vodka, and other spirits, along with Ready-To-Drink (RTD) products.

2. Who is Varun Beverages partnering with for its alcohol segment?

VBL has signed an exclusive distribution agreement with Carlsberg Breweries A/S for its beer products in certain African territories.

3. Why is Varun Beverages diversifying into alcohol?

The company aims to tap into the rapidly growing alcoholic beverage market in India and globally, driven by premiumisation and evolving consumer preferences.

4. How did Varun Beverages perform in Q3 FY25?

VBL reported a 2% revenue growth to ₹4,897 crore and a 19.5% rise in net profit to ₹741 crore, despite challenges in domestic markets.

5. What is the size of India’s alcoholic beverage market?

As per Crisil, the Indian alcoholic beverage industry is expected to reach ₹5.3 lakh crore in FY25, with a projected value of $300 billion by 2035.