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Motilal Oswal Report
Varun Beverages Ltd., being one of the prominent players in the carbonated soft drink segment, is targeting adjacent categories to maintain its robust growth trajectory.
As per IMARC report, Indian flavored milk market is set to register a compound annual growth rate of ~25% to Rs 158.6 billion by CY28. Varun Beverages, after receiving positive feedback for products in this category, is increasing its capacity in the segment. It aims to triple its capacity in CY23, and follow it with a national rollout of its products in CY24.
Varun Beverages has already established its presence in the juice-based beverage market through its brand ‘Tropicana’. Recognising the potential in the sports drink segment (expect to register 14% CAGR up to CY28), the company has also entered this market with its product ‘Gatorade’.
To expand its international presence, Varun Beverages has recently incorporated a wholly owned subsidiary in South Africa (carbonated soft drink market size is $3.8 billion in CY21 and expects ~2.9% CAGR over CY21-26).
The volume growth is expected to be muted on a YoY basis for Q2 CY23, due to unseasonal rainfall. However, the increasing share of energy drinks, juices, and value-added dairy products is expected to drive the overall revenue.
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