The Competition Commission has approved the acquisition of The Beverage Company, commonly known as Bevco, by Varun Beverages, a significant player in the global beverage market.
This decision, announced on Friday, came with a series of conditions designed to safeguard competition and protect public interest within the local market.
Following an analysis of the transaction under Rule 38(3)(c) of the ‘Rules for the Conduct of Proceedings in the Competition Commission’, the Commission concluded that the merger was unlikely to substantially impede competition in any significant way.
The approval marks a milestone for Varun Beverages Limited, which aims to consolidate its presence in the South African beverage landscape.
To address potential employment concerns surrounding the merger, the Commission noted that both parties agreed to a condition ensuring no job losses will result from this transaction.
Further commitments were made to bolster public interest alongside the merger, including substantial capital investment over the following five years, the installation of additional fridge coolers at retail and spaza outlets, an increase in local procurement, and the introduction of an owner-driver scheme.
A notable highlight is the implementation of a worker share ownership scheme which aims to empower the workforce directly benefiting from the merger.
In their submission, the merging parties asserted that while Bevco did not have direct shareholding by historically disadvantaged persons (HDPs), there existed an indirect stake held by HDPs, referenced as confidential in their documentation.
This reflects a broader commitment to inclusivity and support for disadvantaged groups in South Africa’s economy.
Varun Beverages, incorporated in India, operates a variety of beverages, predominantly carbonated soft drinks under familiar trademarks owned by PepsiCo. Currently, Varun Beverages does not have any active operations in SA, with a dormant subsidiary—Varun Beverages South Africa—having never conducted operations since its establishment.
Bevco, on the other hand, is a well-established SA company based in Johannesburg, recognised for its production of carbonated soft drinks, mixers, energy drinks, water, and serving as a registered bottler for Pepsi in SA. This merger positions Varun Beverages to potentially enhance and expand Bevco’s product offerings and distribution channels in the competitive South African market.
BUSINESS REPORT