Abstract

This case explores how Varun Beverages Ltd. (VBL), PepsiCo India’s key bottling partner, achieved rapid market penetration through a strategic franchising model. After a 2019 re-franchising deal, VBL expanded its coverage from 50% to over 92% of PepsiCo’s Indian beverage business. By investing in capacity, widening its distribution network, and leveraging rural infrastructure improvements, the company added over 500,000 new outlets within a year. The case highlights the theory of market penetration under the Ansoff Matrix and illustrates how franchising, when well-executed, can drive scale, profitability, and long-term competitive advantage.

Learning Objectives

By the end of this case learners will be able to:

1. Define the concept of market penetration within the Ansoff Matrix framework and explain how it differs from other growth strategies.

2.Analyze the role of franchising as a strategic tool for achieving market penetration in geographically diverse and underpenetrated markets.

3.Evaluate the execution strategies employed by Varun Beverages Ltd. in expanding its retail footprint, production capacity, and distribution efficiency.

4.Assess the financial and strategic outcomes of VBL’s expansion and identify key enablers such as infrastructure readiness and leadership vision.

5.Reflect on the potential risks associated with heavy reliance on a single brand partner in franchising based business models.

6.Apply the insights from this case to recommend growth strategies for firms operating in similar industries or market contexts.