How Jubilant Bhartia's Stake Acquisition In Hindustan Coca-Cola Could Fizz Up Competition
The acquisition is expected to intensify competition for players like Varun Beverages Ltd., Coca-Cola’s primary bottling partner in India.
The Jubilant Bhartia Group is set to make waves in the Indian beverage industry with its acquisition of a 40% stake in Hindustan Coca-Cola Holdings Pvt., as per recent media reports. The deal, valued at approximately Rs 10,000 crore, highlights the growing significance of India as a strategic market for global beverage players like Coca-Cola.
India: A Key Market For Coca-Cola
India holds the distinction of being the fifth-largest market globally for Coca-Cola. In 2022, Coca-Cola's operations in the country contributed over $18 billion in revenue, underscoring its importance in the company's global portfolio. Hindustan Coca-Cola Holdings, the local arm, plays a pivotal role in maintaining this stronghold with an impressive lineup of 37 products, 3,500 distributors, and 13 state-of-the-art factories across the country.
Financial Snapshot Of Hindustan Coca-Cola
Hindustan Coca-Cola has shown robust financial performance, reporting revenues of Rs 14,000 crore and a profit of Rs 2,800 crore in fiscal 2024. The company's extensive product portfolio includes iconic brands such as Coca-Cola, Thums Up, Sprite, Minute Maid, Maaza, SmartWater, Kinley, Limca, and Fanta, which collectively enjoy a significant share of the Indian beverage market.
Jubilant Bhartia Group’s Growing Portfolio
The acquisition aligns with Jubilant Bhartia Group's strategy of diversifying its business interests. The group, which already operates successful companies such as Jubilant Pharmova Ltd. (market cap: Rs 18,301 crore), Jubilant Ingrevia Ltd. (Rs 13,535 crore), Jubilant FoodWorks Ltd. (Rs 46,759 crore), and Jubilant Industries Ltd. (Rs 2,469 crore), will gain a foothold in the thriving beverage market through this deal.
"With its diverse experience in various sectors, Jubilant brings decades of rich experience that will help accelerate the Coca-Cola system, enabling us to win in the market and provide greater value to local communities and consumers," said Coca-Cola India President Sanket Ray.
Impact On Market Dynamics
The acquisition is expected to intensify competition for players like Varun Beverages Ltd., Coca-Cola’s primary bottling partner in India. With Jubilant Bhartia Group entering the beverage space, analysts anticipate increased competition, especially in distribution and market penetration strategies.
Up till now Domino's has been selling Pepsi and brands of Pepsi in its stores. Now, it could start selling coca-cola instead.
Nuvama Institutional Equities expects competition for Varun Beverages to potentially go up due to this development, as Jubilant group has shown strong execution capabilities via Jubilant Foods, said Executive Director Abneesh Roy.
In any case, with entry of RIL via Campa Cola, competition in this sector will gradually go up as it is a large industry with only two large players. It also has high margins, which gives players ability to turn aggressive in order to take market share.
