PEPSI Zimbabwe, the local unit of Varun Beverages, is struggling to recoup its US$50 million investment in the country due to a turbulent economic environment characterised by an acute foreign currency shortage, the Zimbabwe Independent can report.
Varun Beverages made a foray into the Zimbabwean market in 2018, injecting US$50 million to set up a beverage manufacturing plant in the capital. Initially, the projected capital expenditure to install the plant was pegged at US$30 million, but soared to US$50 million as the country reeled under severe foreign currency shortages.
During that time, Varun Beverages, the largest bottler of PepsiCo carbonated drinks — Pepsi, Mirinda, Mountain Dew and Seven Up — outside the United States, had spelt out plans to spend US$150 million over the next five years to establish additional bottling lines and food processing units.
By 2030, Varun Beverages had also asserted its ambitious plans to grab 50% of the market share. The company is owned by Indian billionaire Ravi Jaipuria.
However, the company last week told the Independent that after setting up shop in Zimbabwe two years ago, the beverages manufacturer was not getting a “fair return” on its multi-million dollar investment project—although it expressed optimism that business can potentially thrive in the long term.
The company said: “We have made about US$50 million investment in Zimbabwe and generated direct and indirect employment for about 4 000 citizens of Zimbabwe. We are committed to our investments in the long term.
“We may not be getting a fair return on our investment as of now, but we are confident about the potential of Zimbabwe. . .”
There are also reports that Varun Beverages has been failing to repatriate millions of dollars to its parent investor in India, although the company would not comment on the matter. In 2016, local beverages market leader Delta Corporation was also struggling to settle US$30 million to its foreign creditors.
Varun Beverages, also present in Zambia, Kenya, Uganda, Mozambique, Morocco and Nigeria, said in Zimbabwe the unrelenting currency volatility crisis posed an immediate risk to its operations.
“Shortage of foreign currency and volatility in currency are becoming major risks to our operations. However, we are committed to this country for the long term and ready to absorb this short-term pain as we are confident about the potential of Zimbabwe,” the company told the Independent this week.
Currently, the company imports 45% of its raw material requirements.