Twizza buy to add fizz to Varun Beverages' pricing power, market share in South Africa: JM Financial

Gurugram-headquartered Varun Beverages (VBL), which is one of the largest franchisees of PepsiCo globally, on Sunday announced the acquisition of 100% equity stake in Twizza Proprietary Limited, a South African beverage manufacturer, for an enterprise value of ₹1,120 crore. In its latest brokerage report, JM Financial has maintained 'Buy' rating for Varun Beverages which is strengthening its presence in South Africa.

The acquisition was done through VBL's subsidiary The Beverages Company Propreitary Limited (Bevco), which already holds franchise rights for PepsiCo products in South Africa.

Twizza operates three backward-integrated manufacturing facilities in Cape Town, Queenstown and Middleburg with a combined annual capacity of approximately 10 crore cases. Combined with VBL's existing subsidiary (Bevco), the new entity is expected to hold a 20% market share in South Africa. Twizza's portfolio is heavily dominated by carbonated soft drinks at 97.7%, followed by functional drinks/mixers (1.4%), and energy drinks (0.9%). The deal is expected to be completed before June 2026.

Market opportunity

South Africa is largest soft drink market in Africa with an industry size of 125 crore cases (which is about 50% of India market), with high per capita consumption of 244 servings, according to JM Financial. The brokerage expects VBL to focus heavily on the PepsiCo brand to gain market share from Coca-Cola and other local brands in South Africa.

The consolidation with Twizza is also expected to help VBL rationalise promotional intensity and improve pricing power for its PepsiCo products within the largest soft drink market in Africa.

The brokerage expects steady growth for VBL over the next few years. The company's net sales is expected to grow from ₹19,530 crore in CY24A to ₹23,890 crore by CY26E. The EBITDA margins are projected to remain stable, hovering between 22.7% and 23.3% through CY27E. The brokerage estimates VBL's adjusted net profit to reach ₹3,390 billion in CY26E, up from actual ₹2,590 crore in CY24.

India market opportunity

Even as PepsiCo brands have a major presence across India, Varun Beverages is confident that there is room for further growth in the next 10-15 years. Speaking to Fortune India in November 2025, Varun Jaipuria, the executive vice chairman and whole-time director of Varun Beverages, said that his vision is to create “long-term, sustainable value for the company, investors, and people”. He said that during his travel through rural India, he noticed improvement in road infrastructure,  electricity for up to 22-24 hours, and above all safety at night.

"We are very pro-capex. In the past three years, we have invested more than $1 billion in capex, as we believe in the India growth story. We have done both greenfield expansion and added lines to the existing facilities. Capex is the starting point to get revenue growth,” he added.

Even as the shares of Varun Beverages rose over 3% on Monday, a day after the deal was announced, company's stock price is on a downtrend today in line with the broader markets. The company's stock price fell nearly 24% in the last one year, underperforming the Nifty 50 index which has risen close to 10% during the same period.