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Coca-Cola on Wednesday announced to offload a 40% stake in its bottling arm Hindustan Coca-Cola Holdings (HCCB) to Jubilant Bhartia Group. This will make Jubilant Group a prime contender in the bottling space. The stake is reportedly pegged at ₹12,500 crore, valuing HCCB at ₹31,250 crore.
The news, however, has not had a positive impact on Jubilant Foodworks shares today on the NSE. The shares of the subsidiary of JB Group reached a low of ₹672.50, down 5% from the previous close of ₹707.80.
“Jubilant Bhartia Group brings a track record of building and growing consumer and other businesses in India with international partners. They are also committed to investing in the communities they serve,” Henrique Braun from Coca-Cola said in the official statement.
Starting as a drugs and chemicals company, Jubilant Bhartia Group has diversified into contract research and development, agricultural products, performance polymers, and food services. Its subsidiary, Jubilant Food Works, is India’s largest food services company and holds exclusive rights to operate Domino’s Pizza in India, Sri Lanka, Bangladesh, and Nepal.
Coca-Cola on Wednesday also named Henrique Braun as the new COO of the company, who had served as the EVP for international development focussing on markets like India. India is the fifth largest market for Coca-Cola.
“The investment by the Jubilant Bhartia Group family will contribute to the company’s ongoing success and help strengthen its position in the Indian market,” Coca-Cola said in a press release.
The transaction is however subject to regulatory approval.
In India, Coca-Cola bottles products like Thums Up, Sprite, Fanta, Limca, and Coca-Cola through HCCB and independent bottlers. HCCB operates over 13 factories in 12 states across the country.
While HCCB’s revenue reportedly rose 10% to ₹14,021.54 crore in FY24, with net profit surging to ₹2,808.3 crore, according to Tofler. However, Coca-Cola India reportedly saw a 42% decline in consolidated profit to ₹420.29 crore in FY24, despite a 4% rise in revenues to ₹4,713.38 crore.
The latest deal is in line with Coca-Cola’s long-term strategy shift towards an asset-light operational model and medium-term efforts to streamline its bottling operations.
Earlier this year, HCCB sold operations in Rajasthan, Bihar, the northeast, and parts of West Bengal to independent bottlers. This follows a 2019 divestment of operations in north India, aimed at optimising the supply chain, expanding distribution, and improving execution.
In its latest move, HCCB has reportedly divested its Jharkhand bottling operations to Moon Beverages, a key franchise partner.
The Indian beverage packaging industry is expected to witness heightened competition with the recent outsourcing and entries. Rival PepsiCo also recently outsourced bottling operations in India to Varun Beverages. As Reliance Industries announced plans to revitalise Campa Cola, the sector is expected to see increasing rivalry, given its size and dominance by only two major players. High margins in the industry are also expected to provide scope for aggressive strategies to capture market share.
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