Varun Beverages Builds Six-Month Inventory to Mitigate Cost Increases Amid Global Tensions
Varun Beverages says six-month inventory to cushion cost spike
Mint
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Varun Beverages Ltd, the largest franchise bottler for PepsiCo, has secured six months of raw material inventory to shield against rising costs of plastic and aluminium due to the US-Iran conflict. The company reported a 20% increase in net profit for Q1 2026, reaching ₹872 crore ($105 million USD).
- 01Varun Beverages has built a six-month inventory of raw materials to mitigate cost spikes.
- 02The company reported a 20% year-on-year increase in net profit for Q1 2026.
- 03Sales volumes grew by 16.3% in the quarter, driven by strong performance in India and international markets.
- 04Analysts predict a 10% CAGR for India volumes from 2025 to 2028.
- 05The company is expanding its market presence by increasing outlet coverage significantly.
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Varun Beverages Ltd, PepsiCo's largest franchise bottler, has proactively built up to six months of raw material inventory to cushion against rising costs of plastic and aluminium amid the ongoing US-Iran war. In a recent quarterly analyst call, Raj Pal Gandhi, the company's whole-time director, stated that this strategy will allow Varun to maintain stability in its operations, with minimal impact expected on its international markets. The company reported a 20% year-on-year increase in consolidated net profit for the March quarter of 2026, amounting to ₹872 crore ($105 million USD), compared to ₹726 crore in the same quarter last year. Revenue from operations also rose by 18.3%, reaching ₹6,721 crore ($810 million USD). Sales volumes surged by 16.3%, with India contributing a 14.4% increase and international markets showing a 21.4% growth. The company anticipates continued success, particularly with its growing product lines, including a 50-60% year-on-year growth in its lemon drink Nimbooz and 60-70% growth in its dairy brand Cream Bell. Analysts view Varun Beverages as well-positioned for future growth, expecting a 10% CAGR in India volumes from 2025 to 2028.
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The company's strategy to stockpile raw materials could stabilize product prices, potentially benefiting consumers by keeping prices steady despite rising costs in the market.
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