Varun Beverages Ltd (VBL) on Monday said that its board has approved plans to acquire franchise rights from PepsiCo in the South and West regions.

The company is the leading bottling partner of the American snacks and beverage major and already runs PepsiCo’s bottling operations in the north and east region. The company however did not reveal the financials associated with this agreement.

In a BSE filing, the company said the board has approved company’s intent to enter into a binding agreement with PepsiCo India Holdings to acquire franchise rights in South and West for a national bottling, sales and distribution footprint in 27 states and 7 Union Territories in India.

PepsiCo India said the decision to franchise its company-owned bottling operations in South and West regions to VBL, will unlock full potential of PepsiCo’s operation model in India.

Ahmed El Sheikh, President & CEO, PepsiCo India said, “With this agreement, VBL will acquire a national bottling, sales and distribution footprint. The move will profitably drive synergies of scale, operational productivity and efficiency across all facets of PepsiCo’s beverage business. PepsiCo will retain responsibility for category creation, brand building and development of the beverage portfolio in line with its vision of driving Sustainable, Responsible and Profitable growth.”

Ravi Jaipuria, Chairman, Varun Beverages Ltd said that this move will enable the two companies to further strengthen their "close to three-decade long partnership. “

"Our franchising agreement, subject to receipt of necessary statutory approvals, in South and West regions will enable VBL to acquire a national bottling and sales footprint,” he said.

“We are confident that this development will help us acquire greater scale, operational productivity and efficiency leading to higher revenues and profitable growth. This comes as a welcome force multiplier to our efforts to aggressively expand our beverage business across geographies,” he added.

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