Online Reporter
Nelson Gahadza
VARUN BEVERAGES’ emergence as the frontrunner to acquire a controlling stake in Dairibord Holdings represents one of the most significant corporate developments in Zimbabwe’s food and beverages sector in recent years.
The company is one of the largest global franchisees for PepsiCo, a leading American multinational food and beverages corporation.
Founded by Indian billionaire Ravi Jaipuria in 1995, it manufactures, bottles and distributes a massive portfolio of beverages — including Pepsi, Mirinda, Mountain Dew, 7Up and Aquafina — across 10 countries.
The multinational recently signed a revised agreement extending its PepsiCo bottling licence until April 30, 2049, from the earlier expiry date of April 30, 2039, according to a regulatory filing issued by the company.
The firm’s African footprint now spans Zimbabwe, South Africa, Zambia, Morocco, Lesotho, Eswatini and the Democratic Republic of Congo, while it also holds distribution rights in Namibia, Botswana, Mozambique and Madagascar.
Varun has invested more than US$100 million into its Zimbabwe operations and plans a further US$650 million investment into fast-moving consumer goods (FMCG) manufacturing, agriculture and renewable energy.
The company recently opened a US$40 million snacks, juice and dairy manufacturing complex, including a Cheetos production facility and a juice and dairy blend plant, marking another major investment in Southern Africa’s consumer goods market.
On the other hand, Dairibord Holdings is a leading manufacturer and marketer of dairy products, foods and beverages in Southern Africa.
Listed on the Zimbabwe Stock Exchange, the group operates several subsidiaries: Dairibord Zimbabwe, Lyons and NFB Logistics.
It manufactures dairy and non-dairy foods, including yoghurts, ice creams, condiments, sauces and spreads (via Lyons Zimbabwe).
Its beverages arm produces cordials, dairy blends and ready-to-drink beverages, while the logistics business operates a dedicated transport and logistics arm to manage its regional supply chain and exports.
If successful, the transaction would be more than a mere change in ownership.
It could reshape Dairibord’s strategic direction, alter the competitive landscape of the dairy industry and redefine the future of one of Zimbabwe’s major consumer brands.
Market analysts say the proposed acquisition presents a delicate balance between opportunity and risk.
While Varun could inject fresh capital, advanced technology and world-class operational expertise into Dairibord, questions have arisen regarding the potential impact on local dairy farmers, employees, minority shareholders and competition within the sector.
The speculation follows a cautionary statement issued by Dairibord advising shareholders that three major investors — Equivest Asset Management, Mega Market and Mutare Mart & Exchange — are negotiating the disposal of their combined shareholding of more than 51 percent to an unnamed third party.
If the deal materialises, it will trigger a change of control of the company.
Although the prospective buyer has not been officially revealed, market sources say Varun Beverages is in a commanding position to acquire the stake and has reportedly been quietly accumulating additional shares on the open market.
Varun continues to spread its tentacles in Zimbabwe following its entry in 2018 when it established a bottling plant in Harare.
Since then, the Indian multinational has transformed the soft drinks industry through aggressive pricing, sustained investment in production capacity and one of the country’s most extensive distribution networks.
Industry observers believe the investment firm’s strengths could now be extended towards revitalising Dairibord and positioning it for long-term growth.
Economist Mr Walter Mapfumo believes the acquisition could significantly enhance Dairibord’s competitiveness if supported by sustained investment.
“Dairibord would immediately benefit from access to a larger capital base, enabling investment in modern equipment, production expansion and product innovation.
“Varun also brings global operational experience, efficient procurement systems and stronger supply chain management. These capabilities could substantially improve Dairibord’s competitiveness both locally and within regional export markets,” he said.
Mr Mapfumo said the partnership could help reposition Dairibord amidst increasing competition from imported dairy products while creating opportunities to diversify into higher-value consumer goods.
However, he suggested that preserving Dairibord’s longstanding relationships with local milk producers should remain a strategic priority.
“The dairy value chain depends heavily on local farmers. Any restructuring that weakens these relationships could undermine raw milk supplies and negatively affect rural livelihoods,” he said.
Market observers also view the proposed acquisition within the broader trend of consolidation across Africa’s fast-moving consumer goods sector.
“Large multinational companies are increasingly pursuing strategic acquisitions instead of building businesses from the ground up because acquisitions provide immediate market access, established brands and existing distribution networks,” said one investment analyst who declined to be named.
“Dairibord already possesses one of Zimbabwe’s strongest consumer brands. Combined with Varun’s financial strength and operational expertise, there is significant potential to unlock long-term value.”
Economist Mr Eddie Cross said Dairibord had played a pivotal role in developing Zimbabwe’s dairy industry over a long period.
“Dairibord was responsible for building Zimbabwe’s dairy industry and by the time of independence in 1980, it had more than 800 suppliers, processed about 250 000 tonnes of milk annually and employed around 3 500 people.
“It supplied the entire country with a wide range of dairy products through factories in Harare, Bulawayo, Gweru, Kadoma, Mutare and Chipinge, supported by distribution centres in every major town . . . ,” he said.
“While I am saddened to see control of this once great company potentially pass to Varun, the investor has demonstrated remarkable enterprise in every sector it has entered. It is also a major dairy operator internationally. I, therefore, believe Zimbabwe stands to benefit from its investment.”
Financial analyst Mr Tinevimbo Shava said Dairibord’s production systems could undergo significant transformation through automation and advanced manufacturing technologies.
“Modern processing equipment improves efficiency, reduces wastage and enhances consistency in product quality.
“Automation across production lines can minimise downtime, improve inventory management and strengthen food safety through enhanced quality assurance systems,” he said.
He said investments in digital manufacturing technologies would also improve traceability throughout Dairibord’s supply chain, allowing better monitoring of milk collection, processing and product distribution.
According to Mr Shava, cold-chain logistics and packaging technology are among the areas likely to benefit immediately.
“Improved refrigeration systems and modern packaging technologies would extend product shelf life, reduce post-production losses and enhance export competitiveness.”
He added that Varun had already demonstrated exceptional capabilities in manufacturing efficiency, procurement and route-to-market execution.
“Dairibord’s distribution network could become significantly more efficient by leveraging Varun’s nationwide logistics infrastructure, enabling products to reach retailers faster while reducing transportation costs.”
Mr Shava also highlighted the potential procurement efficiencies arising from Varun’s global sourcing relationships and economies of scale, which could help reduce input costs and improve operational margins.
Despite the optimism surrounding the proposed transaction, analysts caution that large acquisitions rarely come without challenges.
They argue that any post-acquisition strategy should prioritise strengthening Zimbabwe’s dairy value chain by improving farmer productivity through access to finance, technical support, modern farming practices and enhanced milk collection infrastructure.
Mr Mapfumo said the long-term success of the transaction would ultimately depend on maintaining strong partnerships with local milk producers.
“The long-term success of Dairibord cannot be separated from the sustainability of Zimbabwe’s dairy industry. Investment should strengthen, rather than replace, local supply chains,” he said.
The proposed acquisition also comes at a time when many local manufacturers continue to grapple with ageing production equipment, constrained access to affordable capital and rising operating costs.
Varun has been associated with PepsiCo since the 1990s and has, over two-and-a-half decades, consolidated its business association with PepsiCo, increasing the number of licensed territories and sub-territories covered by the company, producing and distributing a wider range of PepsiCo beverages, introducing various stock keeping units in the portfolio and expanding the distribution network.
The company manufactures, distributes and sells a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo.
PepsiCo CSD brands produced and sold by Varun include Pepsi, Pepsi Black, Mountain Dew, Sting, Seven-Up, Mirinda Orange, Seven-Up, Nimbooz Masala Soda and Evervess.
PepsiCo NCB brands produced and sold by the company include Tropicana Slice, Tropicana Juices (100 percent and Delight), Seven-Up Nimbooz, Gatorade, as well as packaged drinking water under the brand Aquafina.
Varun holds franchises for various PepsiCo products across 27 states and seven union territories in India (responsible for 90 percent of the beverage sales volume of PepsiCo India).
It is also the franchise holder for the territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.
Varun Beverages Limited is part of the RJ Corp group, a diversified business conglomerate with interests in beverages, quick-service restaurants, ice creams and healthcare.
