Varun Beverages stock rises as it expands snack portfolio in Zimbabwe, Zambia

So far this year, the stock of this beverage company rallied over 31 percent, as compared to benchmark Nifty 50 11 percent rise during the same period

Shares of Varun Beverages surged by 2.4 percent to Rs 1,622 per share on July 15 after it entered into an exclusive snacks franchising appointment with Dubai-based Premier Nutrition Trading. This agreement allows Varun Beverages to manufacture, distribute, and sell 'Simba Munchiez' in Zimbabwe and Zambia.

So far this year, the stock of this beverage company rallied over 31 percent, as compared to benchmark Nifty 50 11 percent rise during the same period. Earlier, Varun Beverages had hit 52-week high of Rs 1,673 per share on June 19, 2024.

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As part of its strategy to diversify its snacks portfolio, Varun Beverages, through its subsidiaries Varun Foods (Zimbabwe) and Varun Beverages (Zambia), has entered this exclusive franchise with Premier Nutrition. The company plans to invest around $7 million in a manufacturing facility with an annual capacity of 5,000 metric tonnes (MT) to produce Simba Munchiez in various SKUs for the Zimbabwe and Zambia markets.

The subsidiaries will utilise their distribution strengths to launch a new, affordable range of snack products under the PepsiCo brand. PepsiCo generates approximately 59 percent of its revenue from snack foods.

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Earlier, on February 20, 2024, Varun Beverages' Morocco subsidiary secured an exclusive snacks franchising deal for Morocco, with plans to start manufacturing Cheetos by May 1, 2025.

The snack food market in Morocco is estimated to be $500 million in 2024, while Zimbabwe and Zambia's markets are expected to be $177 million and $156 million, respectively, and are projected to grow steadily.

Analysts at Anand Rathi recently re-initiated a 'buy' rating on Varun Beverages with a target price of Rs 1,900 per share, citing strong growth prospects due to strategic investments in production capacity enhancement and new acquisitions, bolstering its global footprint.

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