Varun Beverages - Reaping Benefits Of Increasing Semi-Urban, Rural Presence: Motilal Oswal

Varun Beverages to benefit from improving rural household electricity supply.

<div class="paragraphs"><p>Pepsi bottles. (Source: Unsplash)</p></div>
Pepsi bottles. (Source: Unsplash)

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Motilal Oswal Report

Increasing access to electricity in rural households (up by 13% over CY15-20) and an improving duration of power supply, coupled with rising penetration of refrigerators in semi-urban and rural areas, should further boost growth for Varun Beverages Ltd. (~60% of revenue contribution from semi-urban/rural areas).

Electricity access for rural households in India grew from 83% in CY15 to 96% in CY20. The improved duration of power supply, along with better rural connectivity and higher disposable income, should lead to a higher penetration of refrigerated products.

Refrigerator penetration is still lower in rural areas (~17%) versus urban areas (~79%). Further, the penetration is much lower (single digits) among the bottom half of the wealth pyramid. Strong demand from first-time fridge buyers in semi-urban and rural areas is likely to improve penetration.

Varun Beverages has aligned itself with changes in semi-urban and rural dynamics over the years with capacity and channel expansions. As a result, it has witnessed robust demand growth from under-penetrated states such as Madhya Pradesh, Bihar, Jharkhand, Chhattisgarh and Odisha

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Motilal Oswal Varun Beverages Company Update.pdf


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