According to PTI, Coca-Cola Co. sold Jubilant Bhartia Group 40% of its ownership in Hindustan Coca-Cola Holdings Pvt Ltd.
In a deal reportedly worth between ₹12,000 crore and ₹12,500 crore, the Jubilant Bhartia Group, which runs India’s biggest food services company, would purchase a 40% share in the biggest Coca-Cola bottler in the nation.
Through its subsidiary Hindustan Coca-Cola Beverages Pvt. Ltd (HCCB) and a number of independent bottling firms, The Coca-Cola Co. bottles brands like Thums-Up, Sprite, Fanta, Limca, and its flagship brand Coca-Cola in India. Through Jubilant Beverages Ltd., the Jubilant Bhartia Group will purchase a 40% stake in Hindustan Coca-Cola Holdings, the parent company of HCCB. In the south and west of India, HCCB runs 13 factories that serve 236 districts in 12 states.
According to a source familiar with the matter, Coca-Cola made the agreement with the “long-term” goal of choosing a partner that could manage reputable companies in India. According to the source, who spoke on condition of anonymity, Goldman Sachs is funding a portion of the transaction, and the eventual goal is to go public with the bottling company.
Originally a pharmaceutical and chemical corporation, the Jubilant Bhartia Group has expanded into contract R&D services, agricultural products, performance polymers, and food services. The largest food services firm in India, Jubilant FoodWorks Ltd., is the only owner of the rights to create and run Domino’s Pizza in Bangladesh, Nepal, Sri Lanka, and India.
Shyam S. Bhartia, the founder and chairman of the Jubilant Bhartia Group, and Hari S. Bhartia, the founder and co-chairman, said in a statement on Wednesday that the acquisition demonstrates Jubilant’s faith in the long-term growth potential of the nation’s food and beverage sector.
“The Coca-Cola Company’s global perspective and our in-depth knowledge of the Indian market will further enhance HCCB’s value and accelerate its impressive growth trajectory,” the founders stated. The expansion and diversification into high-growth areas is in line with our strategic aim.
The purchase is expected to increase competitiveness in the beverage packaging industry, according to industry analysts.
Given that Jubilant Group has demonstrated good execution capabilities through Jubilant Foods, we anticipate that competition to Varun Beverages may increase as a result of this development. In any event, since there are only two major participants in this enormous industry, competition will progressively increase with Reliance Industries’ entry through Campa Cola, as we have been emphasizing. Additionally, the large margins in this sector allow a firm to become aggressive in an attempt to gain market dominance, according to Abneesh Roy, executive director of Nuvama Institutional Equities.
India, which it re-entered in the 1990s, is now Coca-Cola’s fifth-largest market worldwide. According to a survey by think tank ICRIER, the nation’s carbonated drink industry brought in over $18 billion in 2022. India’s year-round hot and muggy climate generates a significant beverage market.
Sanket Ray, president of the Coca-Cola India & Southwest Asia operating unit, stated, “Jubilant’s decades of rich experience in a variety of sectors will help accelerate the Coca-Cola system, enabling us to win in the market and provide greater value to local communities and consumers.”
According to data from business intelligence platform Tofler, HCCB’s net profit increased 246% to ₹2,808.3 crore in FY24, while its consolidated income from operations increased 10% to reach ₹14,021.54 crore.
This announcement is a part of Coca-Cola’s efforts to use HCCB to streamline bottling operations in India. The beverage company collaborates with 11 major bottlers around India in addition to HCCB. In India, rival PepsiCo has also contracted with publicly traded Varun Beverages Ltd. to handle its bottling operations.
At a roundtable in Lucknow last year, Coca-Cola president and chief financial officer John Murphy informed reporters that the business will continue to sell bottling plants in the nation in a “thoughtful” and “deliberate” manner. HCCB sold bottling business to independent bottlers earlier this year in Rajasthan, Bihar, the northeast, and portions of West Bengal. This action and the 2019 sale of operations in northern India are intended to improve execution, increase distribution, and streamline the supply chain.
With plans to establish new operations in Telangana and Maharashtra early this year, HCCB has been expanding its capacity in India. It declared in December that it would invest ₹3,000 crore to establish a factory in Gujarat for juice and aerated drinks.
Morgan Stanley served as Jubilant Bhartia Group’s sole finance advisor, and Shardul Amarchand Mangaldas & Co. served as the transaction’s legal counsel. The Coca-Cola Company’s sole financial advisor was Rothschild & Co.
