Varun Beverages' ₹1,119 Cr Africa Push: Acquires Twizza

Varun Beverages Deepens African Presence with Major Acquisition

Varun Beverages Ltd. (VBL), one of the largest franchisees of PepsiCo outside the United States, has announced a significant move to bolster its African operations. The company's Board of Directors has approved the acquisition of 100% of the share capital of South Africa-based Twizza Proprietary Limited. The deal, valued at an enterprise level of ZAR 2,095 million (approximately ₹1,118.7 crore), will be executed through VBL's wholly-owned South African subsidiary, The Beverages Company Proprietary Limited (Bevco).

This strategic acquisition underscores VBL's ambition to become a dominant player in the African beverage market. The transaction is structured as an all-cash deal and is anticipated to be completed on or before June 30, 2026. However, the completion is contingent upon receiving necessary regulatory approvals, including clearances from the Competition Commissions of South Africa, Botswana, and Eswatini.

Unpacking the Deal: Transaction Details

The acquisition of Twizza is a calculated step in VBL's expansion strategy. The company will pay the entire consideration of ₹1,118.7 crore in cash, reflecting its strong financial position. Following the completion of the transaction, Twizza will be integrated as a step-down subsidiary of Varun Beverages. This move follows VBL's earlier acquisition of The Beverage Company (Bevco) in March 2024, which established its initial manufacturing and distribution footprint in the region. The addition of Twizza is set to significantly enhance this presence, providing VBL with greater scale and market access.

Who is Twizza?

Founded in 2003, Twizza has established itself as a key player in the South African non-alcoholic beverage sector. The company manufactures and distributes its own portfolio of branded beverages, with a strong focus on carbonated soft drinks. Twizza operates three manufacturing facilities strategically located in Cape Town, Queenstown, and Middelburg. These plants have a combined annual production capacity of approximately 100 million cases. For the financial year ending in June 2025, Twizza reported a turnover of ZAR 1,689 million (about ₹901.9 crore) on sales of 71 million cases.

A crucial aspect of Twizza's operations is its backward integration capabilities. The company has five preform lines and one closure line across its facilities, which aligns perfectly with VBL's model of operational efficiency and cost control. This integration allows for better management of the supply chain and reduces dependency on external suppliers.

Strategic Rationale for the Acquisition

The acquisition is primarily aimed at deepening Bevco's market penetration across South Africa, which is the largest soft drink market in Africa with an estimated industry size of 1.25 billion cases. Twizza provides VBL with immediate access to a wider distribution network and additional manufacturing capacity. Analysts note that with Bevco's existing facilities largely utilized, Twizza's plants can be leveraged to scale up production for Bevco's portfolio, including PepsiCo's international brands.

Furthermore, the deal allows VBL to tap into the significant 'B-brand' or value-for-money segment of the South African market. This segment, where Twizza is a strong player, accounts for nearly 45-50% of the total market. By acquiring a leading local brand, VBL can cater to a broader consumer base without diluting the premium positioning of its PepsiCo portfolio.

Key Financial Metrics of the Acquisition

Analyst Commentary and Market Reaction

The announcement was met with positive reactions from global brokerages, who view the acquisition as a strategically sound move. Citi reiterated its 'Buy' rating on Varun Beverages, maintaining a target price of ₹675 per share, which suggests a potential upside of 44% from the current price. The brokerage highlighted that Twizza's volumes represent about 6% of VBL's consolidated volumes, making the deal significant. Citi also praised the alignment of Twizza's backward integration with VBL's operational strategy.

Other firms like JM Financial and Emkay Global also endorsed the deal. JM Financial noted the attractive valuation, implying an EV-to-sales multiple of 1.24x based on FY25 financials. Emkay Global suggested the acquisition could help VBL capture a 20% market share in South Africa by 2027, up from the current 10%.

Following the news, Varun Beverages' share price saw an intraday gain of over 2% on the bourses, reflecting investor confidence in the company's growth strategy.

VBL's Expanding Footprint in Africa

This acquisition is not an isolated event but part of a broader, aggressive expansion strategy across Africa. In addition to the Bevco and Twizza deals in South Africa, VBL has recently entered into agreements to acquire PepsiCo's bottling operations in Tanzania and Ghana. The company also has a growing presence in Morocco, where it manufactures and distributes PepsiCo's snack portfolio, including Lay's, Cheetos, and Doritos.

With operations spanning multiple African nations, including franchise rights in Zambia, Zimbabwe, and the Democratic Republic of Congo, VBL is positioning itself to capitalize on the continent's favorable demographics and rising consumer demand. The company's proven execution capabilities, demonstrated by its success in markets like Nepal and Zimbabwe, provide confidence that it can replicate this success in the competitive South African landscape.

Conclusion

The acquisition of Twizza is a multi-faceted strategic move for Varun Beverages. It provides immediate scale, enhanced manufacturing capabilities, deeper market penetration, and access to a new consumer segment in Africa's largest beverage market. Backed by a strong balance sheet and positive analyst sentiment, this deal solidifies VBL's long-term growth narrative and reinforces its ambition to be a global beverage powerhouse.