Varun Beverages has launched a new subsidiary, KIVA Spirits, to enter the ready-to-drink alcoholic beverage market, appointing former Diageo executive Prathmesh Mishra to lead the venture. This diversification follows a recent update to its agreement with PepsiCo, allowing the bottler to expand into new categories. Additionally, the company announced a new joint venture in Tunisia to grow its international non-alcoholic beverage business.
Varun Beverages, one of the largest PepsiCo bottling partners, is making a major strategic shift by entering the alcoholic beverages market. The company has formed a new wholly-owned subsidiary, KIVA Spirits and Company Limited, which will focus on the production and sale of ready-to-drink alcoholic beverages. This move allows the company to step beyond its core soft drink business, a transition made possible by the revision of its exclusive bottling agreement with PepsiCo in May 2026, which removed previous restrictions on the company’s ability to operate in new categories.
To lead this new business, the company has appointed Prathmesh Mishra as the Chief Executive Officer and Managing Director of KIVA Spirits. Mishra brings extensive experience from the alcohol industry, having previously held senior leadership roles at global giants such as Diageo and Pernod Ricard. His appointment suggests that Varun Beverages intends to build a professional, experienced team to navigate the complexities of the alcohol sector, which differs significantly from the soft drink business in terms of distribution, marketing, and regulations.
While KIVA Spirits is starting with a paid-up capital of ₹9 crore, the real story for investors lies in the shift in business model. Entering the alcohol space involves unique challenges, including strict state-wise regulations, different tax structures, and a separate retail distribution network. Investors should monitor how the company manages the execution of this expansion without diverting resources or focus from its primary PepsiCo operations. The success of this move will depend on whether the company can effectively leverage its existing manufacturing and distribution strengths to compete in a crowded and highly regulated alcohol market.
Alongside its domestic diversification, Varun Beverages is also growing its international footprint. The board has approved a joint venture in Tunisia, named Varun Beverages Tunisia SA. The company will hold a 75% stake, with the remaining 25% held by a local partner, Bevanda. This venture will manufacture and distribute carbonated soft drinks, juices, water, and dairy products, extending the company's proven non-alcoholic model into a new geography.
The key monitorables for investors moving forward will be the timeline for product launches under KIVA Spirits, the regulatory approvals required in various states, and the company’s ability to maintain its profit margins while managing the initial costs of setting up a new business segment. Additionally, tracking the performance of the new Tunisian venture will be important to understand the company's success in scaling operations outside its home markets.