Coca Cola has a billion-dollar offer for four India Inc. biggies, and it is...

In an effort to divest a portion of its wholly-owned bottling operations, Hindustan Coca-Cola Beverages (HCCB), Coca-Cola has reached out to the promoters of at least four prominent Indian business families for a potential investment between $800 million and $1 billion. These families include the Bhartias of the Jubilant Group, which runs the Domino’s pizza chain; the Burmans of Dabur; the Parekhs of Pidilite Industries, renowned for brands like Fevicol, M-Seal, and Dr. Fixit; and the founding family of Asian Paints.

A report in the Economic Times, indicates that some of the targeted families are considering channeling the proposed investments through their group companies. Given the substantial size of the deal, it’s uncertain whether these families will join forces to create a consortium or opt to invest independently.

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A leaf out of PepsiCo

In contrast to PepsiCo, which has fully outsourced its bottling operations to Varun Beverages Ltd (VBL), owned by billionaire Ravi Jaipuria, Coca-Cola retains HCCB to manage part of its local bottling operations. The rest of the business is managed by approximately 4-6 independent franchisee bottlers.

VBL, PepsiCo’s bottling partner, went public on the BSE in 2016 and has seen its stock value more than triple over the past two years.

HCCB’s IPO consideration

As part of its growth strategy, Hindustan Coca-Cola Beverages (HCCB) is exploring the possibility of launching an initial public offering (IPO). While internal discussions on the IPO are underway, the exact timing for its market debut is yet to be established.

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A report by Business Standard revealed that in January, HCCB transferred control of its operations in Rajasthan, Bihar, West Bengal and the northeastern region to local business partners. HCCB’s footprint in India includes 16 factories. In the fiscal year 2023 (FY23), the company achieved a notable 40 per cent increase in revenue, totalling Rs 12,840 crore.

Surge in carbonated drink sales

After a slow start to the year, Coca-Cola India has reported a surge in sales, driven by heightened demand across the beverage sector. The company remains optimistic about its sparkling drinks, hydration and juice segments. Market research by Kantar Worldpanel, cited by Business Standard, shows that carbonated drinks saw a 19% year-on-year growth in volume in April 2024.