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Feb, 08 2018

Ravi Jaipuria eager to own PepsiCo's bottling operations

PepsiCo already owns nine manufacturing facilities in the south and west.

Ravi Jaipuria, the endorser of RJ Corp, is keen to acquire PepsiCo’s bottling operations in India that his group doesn’t already own.

Jaipuria, promoter of the $1.6-billion diversified RJ Corp replied when asked about the national interest in bottling rights of Cola Company, “Whether PepsiCo wants to give us more is a call they have to take. We are keen. But it depends on themterested in acquiring the bottling rights of the cola company nationally. RJ Corp is PepsiCo’s second-biggest bottler globally.

He said, PepsiCo contributes close to half of the group’s business now. RJ Corp owns the bottling business of PepsiCo in north and east India through listed entity Varun Beverages, which acquired bottling franchises in five more states over the past three-four months.

A top official directly involved with PepsiCo said opinion is divided internally on whether the entire bottling operations should be managed by one franchisee or split between different companies.

Last month, PepsiCo said it was handing over the distribution of some products in northern and eastern India to RJ Corp.

Jaipuria said, “PepsiCo has already transferred distribution of Tropicana, Gatorade and Quaker Oats. So obviously they have faith in us — that’s why they are transferring more and more business to us. What we’ve got in the five states is 320 million people. But we have to first consolidate that.”

For aerated drinks, RJ Corp manages the franchisee for PepsiCo products across 20 states and two Union Territories, besides overseas markets such as Sri Lanka, Mozambique, Zambia and Morocco.

In October that PepsiCo is looking to divest its bottling, sales and distribution operations to franchisees in the south and west, the two regions where it bottles soft drinks on its own, to focus on foods. PepsiCo owns nine manufacturing facilities in the south and west.

A majority of PepsiCo’s bottling is run by franchisee partners in the US and Europe, with companies increasingly opting to be asset-light.

Jaipuria, whose association with PepsiCo spans over two decades, said the soft drinks category, which went through a rough patch over the past couple of years, is now looking positive.

“After the rollout of the goods & services tax last year, it’s been positive. Ultimately, consumers are not going to stop drinking beverages. The question is what will they drink? PepsiCo is getting into flavoured water, juice variants. You can’t ignore if people are conscious about wanting less sugar or other products. Companies are already making those changes,” he said.

PepsiCo, which makes Pepsi cola, Mountain Dew lemon drink, Kurkure snacks and Quaker oats, sold the India bottling operations of its fizzy drinks in the north and east to Jaipuria three years ago. RJ Corp’s businesses also include restaurants and dairy besides soft drinks.

RJ Corp is also handling the franchise for Pizza Hut, KFC and Costa Coffee. Group Company Devyani International has inked a franchise deal for Singapore-based luxury tea brand TWG in India and the UK. RJ Corp also sells Cream Bell ice-creams and runs grocery retail chain JMart. The company has other interests like healthcare and education.

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