Why the Coke-Bhartia deal may not be good news for PepsiCo

After years of deliberation, Coca-Cola, one of the world’s largest bottled beverage manufacturers, was able to find a contractor for its remaining bottling operations in India. Noida-based Jubilant Bhartia Group, which has diversified interests across industries like food services, pharma and agribusiness, among others, has decided to acquire a 40% stake in the bottling arm of Coca-Cola India for nearly Rs 12,000 crore.

The agreement – between a newly formed group entity, Jubilant Beverages, and Hindustan Coca-Cola Beverages Holdings (parent entity of Coca-Cola Indian Bottling Company, Hindustan Coca-Cola Beverages Limited or HCCB) – marks Jubilant Bhartiya Group’s entry into the Indian market. Branded drinks market. The move could prove costly for PepsiCo, Coca-Cola’s archrival, in India.

The Bhartia family-promoted Jubilant Group operates one of the largest quick service restaurant (QSR) chains in India under the popular US-based pizza chain Domino’s. With over 2,000 outlets across 421 cities in India, Jubilant FoodWorks’ Domino’s is the largest franchise in the industry.

While it currently offers drinks like Pepsi Cola, Mountain Dew and Mirinda from the PepsiCo group across its outlets, with Jubilant taking ownership of Coke’s India’s bottling arm, the consumer may soon see Coca-Cola and Sprite replacing its rival brands in Domino’s menu in India. Closure of a business route for PepsiCo in the country.

According to sources, with Jubilant Beverages all set to acquire its stake in HCCB, a change in the offer is now a matter of time. “Moreover, the rollout is expected to be rapid across Jubilant Group’s QSR brand outlets as the synergies between the group will come to light here,” says a senior executive familiar with the developments. Apart from Domino’s, Jubilant Bhartia Group operates multiple outlets under the popular QSR brands Popeyes – a Miami (US) based restaurant chain known for its chicken sandwiches and tenders. In collaboration with Dunkin’ and Hong’s Kitchen, Jubilant operated 2,793 stores at the end of FY24.

The deal is expected to boost Coca-Cola’s fortunes in India as Jubilant now plans to double the number of Domino’s outlets to 4,000 by 2030. According to Art Delia, executive vice president of international business at Domino’s, India is already Domino’s largest market. Brand outside the US in terms of stores operated and in the top five in terms of revenue.

According to Coca-Cola management, the deal is expected to help “strengthen its position in the Indian market.” Shyam S Bhartia, Founder and Chairman, and Harry S Bhartia, Co-Founder and Chairman, Jubilant Bhartia Group, say the investment is a perfect addition to their business. “Together, we will leverage opportunities to grow the business to greater heights and ensure that more Indian consumers can enjoy Coca-Cola’s refreshing portfolio of iconic local and global brands.”

In FY24, Jubilant FoodWorks reported a 9.6% increase in its net sales to Rs 5,654 crore – up from Rs 5,158 crore in the previous year. While its net profit increased by 13.3% year-on-year to reach Rs 400 crore.