Pepsi’s Biggest Bottler Varun Beverages Wants To Build An Alcohol Business

By Pritha Pahari

What?

Pepsi's biggest Indian bottler, Varun Beverages, is set to enter the alcohol market.

In August, the company set up a new arm called Kiva Spirits, which will make beer, wine, spirits and ready-to-drink cocktails, once it clears approval from the Ministry of Corporate Affairs.

As Prabhu Gandhikumar, co-founder of TABP Snacks and Beverages, puts it, "Creating demand is the most expensive thing in this business", and that's exactly the challenge VBL has just signed up for.

The money going in right now is small change for VBL, just Rs 9 crore in paid-up equity, all funded by the company itself. But the plans are bigger than that number suggests.

Kiva is reportedly close to buying spirits maker Alcobrew Distilleries for Rs 2,000–2,500 crore, a deal that would bring in whisky, vodka, gin and rum brands, two factories, and rights to sell Campari's Old Smuggler Scotch in India.

VBL has also hired Prathmesh Mishra, a 30-year Diageo veteran, to run the new business.

Why?

Until recently, VBL simply couldn't do this. Its contract with PepsiCo said it could only work on Pepsi's business, nothing else. That rule was dropped in May 2026, when the two companies signed a new agreement extending their bottling deal to 2049.

VBL's soft drinks business has almost no debt and close to Rs 1,500 crore in free cash sitting around. Quarterly revenue is up 21% year-on-year.

Meanwhile, the ready-to-drink alcohol category in India is still small but growing fast, and no one brand owns it yet. For a company that already reaches four million stores, that's an opening worth going into early.

What Next?

VBL has spent 30 years getting other people's brands, mainly Pepsi's, into shops faster than anyone else, using 53 factories and 130-plus depots.

Alcohol doesn't work in the same way. Every state has its own licensing rules, its own excise taxes, its own advertising limits. Winning here depends on patience, regulatory know-how, and getting people to actually want your brand.

Investors are still unsure. VBL's stock dropped about 3% in the days after the announcement, and analysts are asking for more details, how big this bet will get, which price segment Kiva will target, and whether VBL plans to build these brands from scratch or buy its way in.

Some brokerages, like JP Morgan and CLSA, think this could open up real growth over the next few years.

That's the real question hanging over Kiva Spirits, can VBL build something people actually reach for?

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$3.18 billion

That is how much India's exports to China were worth in the fiscal year ended March, nearly tripling from the previous year. Electronics led the surge, with printed circuit board assemblies, smartphones, display modules and telecom equipment driving the gains. Industry executives point to demand from the global AI and data-centre build-out, Bloomberg reported.

The Lead: China's trade records do not show a matching rise in circuit board imports from India; the growth shows up under smartphones and telecom gear instead. Experts say this likely reflects differences in how the two countries classify goods. China still buys only 4.4% of India's total exports, far less than the US, which takes about a fifth.

Critical Moment: Other exports, like machinery and auto parts, grew too, and businesses expect the trend to continue.

The bigger picture has not changed much.

India still buys far more from China than it sells, as it imported $131.6 billion of Chinese goods in the year ended March.

India's Coal Stocks Dwindle

Nearly 40% of India's coal-fired power plants are running critically low on fuel, with 74 plants holding less than 25% of required stocks, as of September 19, up from about 60 a week earlier, according to Central Electricity Authority data.

Surbhi Kaushal, associate director at Crisil Intelligence, called the decline a temporary logistical issue rather than a structural supply problem. Stress is concentrated in Rajasthan, Madhya Pradesh and Andhra Pradesh, where over 60% of coal capacity faces critical shortages.

Context: The shortfall comes as hotter-than-usual, El Niño-linked weather pushed peak power demand to between 230 and 250 gigawatts over the past week, after hitting a record 270.70 gigawatts in May.

India's coal and railway ministries said in early September they were boosting supplies after erratic monsoon rains disrupted shipments.

Setting: Renewable generation rose 21% between April and August, but its intermittent nature keeps coal central to round-the-clock supply.

NSE IPO Sees Late Rush

The National Stock Exchange’s Rs 22,569-crore IPO drew bids worth about $10 billion, but investors took their time before piling in. 

By the Numbers: The issue received bids for 5.7 times the shares on offer by the close of bidding on September 21. On the first day, however, investors subscribed to just 43% of the shares, with demand picking up sharply in the final two days.

Context: The IPO is the largest in India so far this year and one of the country’s biggest public offerings. Existing shareholders are selling their stakes, so NSE itself will not receive the proceeds.

The strong finish comes as India’s primary market continues to expand. As Pranav Haldea recently told The Core Report, 81 companies had already raised Rs 1.04 lakh crore through IPOs in 2026, while hundreds more companies are waiting to enter the market. But investors are becoming more selective, with some issuers cutting valuations or delaying their offerings.

Starbucks Bets On Chennai

US coffee chain Starbucks has signed an agreement with the Tamil Nadu government to establish a global capability centre (GCC) in Chennai and hire roughly 800 technology professionals, Reuters reported.

Fast Facts: Starbucks operates around 500 cafes in India through its joint venture with Tata Consumer Products. The Chennai centre will tap the city's skilled technology workforce, infrastructure and comparatively lower employee attrition.

Starbucks technology chief Anand Varadarajan said these factors would support the company's plans, according to a Tamil Nadu government release.

Context: India has more than 2,100 GCCs employing about 2.36 million people and generating nearly $100 billion in revenue, according to a 2026 Nasscom-Zinnov report.

GCCs increasingly handle higher-value functions including software development, finance and research.

The Tamil Nadu government did not disclose the investment value, while Starbucks has not yet commented on the agreement.

Core Growth Slows

India’s core sector output grew 4.8% year-on-year in August, easing from a 5% growth in July, government data showed. 

Pivot: Cement and electricity supported growth, rising 12.5% and 11.6%, respectively, while steel output grew 3.4%.

Outcome: However, coal, crude oil, fertiliser and natural gas output contracted. Fertiliser production fell 12.4%, extending its decline to a sixth consecutive month.

Rahul Agrawal, principal economist at credit rating agency ICRA, said the slowdown was “broad-based”, with six of nine sectors deteriorating from July. He added that coal and iron ore together pulled down core output growth by 130 basis points. Excluding electricity, core output grew only about 1.6%, he said.

Agrawal attributed the continued weakness in fertiliser output to the onset of the West Asia crisis, saying the contraction widened to double digits in August.

Indian Founders Worth $560 Billion Abroad

Founders who grew up in India account for $560 billion of founder-share-attributed company value in current and former unicorns abroad, according to the new Indian Diaspora Index from Prosus and Dealroom released on September 21, 2026.

Fast Facts: The Index tracks 205 overseas unicorns with at least one founder who grew up in India.

Seventy unicorns totalling $243 billion in value were built by all-Indian founders such as Jay Chaudhry (Zscaler), Arvind Jain, Arvind Nithrakashyap, Bipul Sinha and Soham Mazumdar (Rubrik), Ajeet Singh, Dheeraj Pandey and Mohit Aron (Nutanix), and Deepak Pathak and Abhinav Gupta (Skild).

By The Numbers: In contrast, 102 unicorns based in India account for approximately $349 billion on a founder-share basis, led by Flipkart ($36 billion), Zomato ($30 billion), and Groww ($16 billion).

91% (187 of 205) of overseas unicorns in the Index are based in the US.

A broader birth-origin analysis shows 62% of its companies are based in the US, with 200 of 323 companies started or relocated there.

Prosus India Principal Investor Saurav Jain said founders no longer have to leave India to build at scale as the market, capital and talent are now here.

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Oil Prices Fall And Indian Markets Rise

On Episode 986 of The Core Report, financial journalist Govindraj Ethiraj talks to Vivek Lohia, Managing Director of Jupiter Wagons. We also feature an excerpt from our recent Special Edition featuring Dr. Rajiv Kumar, former Vice Chairman of NITI Aayog and Chairman of Pahle India Foundation.

• UN General Assemby Meets In New York, Will It Provide The Path To Peace

• Oil Prices Fall And Indian Markets Rise

• What Bernstein Does Not Like About Older Large Cap Indian Companies

• Coal Stocks Are Running Low

• The Western Dedicated Freight Corridor Is Fully Commissioned

• How India Can Step Up To Receive More Chinese Investments