After competing hard in the soft drinks market, Varun Beverages is getting ready for a new fight – the competitive snacks business.
Varun Beverages announced on Monday an agreement with PepsiCo to manufacture snacks in Zimbabwe, a market where Varun estimates that customers spend $177 million on snacks per year.
The company, the largest Pepsi bottler outside the US, plans to invest around US$7 million in Zimbabwe to make Pepsi’s Simba Munchiez brand of snacks. Varun hopes to build the new line by October next year, according to a filing on the Bombay Stock Exchange on Monday. The plant would produce 5,000 metric tonnes of snacks per year. Currently, Simba snacks are imported into Zimbabwe.
“VBL subsidiaries shall leverage its distribution prowess to introduce the new affordable range of snacks products from the house of PepsiCo. As part of the understanding, PepsiCo shall give a strong push in certain fast-moving SKUs through price initiatives,” Varun says.
The company is also building another snacks plant in Zambia, a market that it estimates at US$156 million.
Varun entered Zimbabwe in 2018, and sells Pepsi’s soft drinks brands such as Mountain Dew, Mirinda and 7-Up. The market entry was aggressive, gaining market share by selling drinks at a discount at a time when larger rival Delta was struggling to meet soft drinks demand. In 2019, Varun said Zimbabwe, alongside Morocco, was one of its fastest growing markets. Delta says it has recovered market share and estimates it holds 67% of the soft drinks business.
Beyond beverages, Varun expanded its portfolio in 2022 by striking a deal to sell PepsiCo snacks such as Lay’s, Doritos, and Cheetos in Morocco. Varun’s African operations make up around 15% of its revenues.
In the Zimbabwe snacks business, Varun will compete with imported brands as well as homegrown brands, among them National Foods, which makes the ZapNax snacks, as well as Cairns’ Willards.
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