No bottling up: What makes Ravi Jaipuria take new challenges in business

Ravi Jaipuria | illustration by Ajay Mohanty
In 1999, Ravi Jaipuria and 16 members of his extended family flew down to Hawaii to cheer him when he received a coveted award from none other than former US President George Bush Sr.  PepsiCo had crowned him Bottler of the Year from among thousands across the world, for growing volumes in India by a staggering 39 per cent in a year. His importance to the multinational was underscored by the fact that a special chef was hired to ensure that members of his Marwari family, who were strict vegetarians, got to eat their meals.  

This week Jaipuria added another feather to his cap when PepsiCo decided to sell him the bottling, sales and distribution rights in west and south of India giving him sway in virtually the entire country (27 out of 29 states). The US beverage company, which has struggled to make money in the bottling business, has now decided to follow an asset-light strategy, as it is doing globally, and focus on selling soft drink concentrate, marketing, brand building and on its foods business.  

The move will bring Jaipuria closer to achieving his ambition: he wants RJ Corp, the holding company through which he controls the various businesses, to hit a revenue target of ~32,000 crore by 2022.

But before that, he has to fork out about ~1,850 crore to buy nine bottling plants from PepsiCo, for which he is raising money through a qualified institutional placement. Jaipuria is averse to taking on too much debt, having learnt from experience. In 2013-14, Varun Beverages, the company through which he runs the beverages business, went into the red due to burgeoning interest payments which went up by 50 per cent within a year. It was one key reason he admits he took the company public in 2016. And, he is planning to do the same with Devyani International, through which he controls the franchisees for KFC, Pizza Hut, Costa and some home-grown brands where he is planning massive expansions.

 
A compulsive risk-taker, whose Holi parties in his home in upmarket Prithivraj Road are legendary for celebrities and the Who’s Who of Delhi, Jaipuria’s tryst with business, after returning from the US, started in the eighties. His father gave him the responsibility of running just one bottling plant (the family were Coke bottlers, then shifted to Parle, then Pepsi), as he had done with all his sons.

But few years after the family split the business, the youngest Jaipuria son had built a bottling empire and straddled new businesses, from Quick Service Restaurants (QSR), dairy, schools, real estate, retailing and hospitals.

Yet his diversifications out of bottling have been a mixed bag. His tryst with real estate as well as in FM radio, for which he tied up with UK-based business Avtaar Litt who owned the ethnic radio station Sunrise, came a cropper.  In the QSR business, tough competition from Café Coffee Day and Starbucks has forced him to reduce the number of Costa Coffee outlets from 100 to 46 to curb losses, and it has a mere 2 per cent share of the coffee outlet business. Also, the Costa brand has been recently bought over by Coke, his chief rival in the business, so the future looks uncertain, though he says he will continue with the franchise.  

Jaipuria has also tried to make a dent in the dairy business, but in a market in which Nestle and Amul hold sway it has been a slow go. Even in ice creams, Crèam Bell is facing tough competition from Unilever and even Vadilal. And his entry into retail through J Mart convenience stores is limping along — again owing to over-competition.

But Jaipuria is not afraid to take these gambles. He is now looking at investing over ~1,000 crore to increase the number of KFC and Pizza Hut outlets each by 150-200 in the next four years and spread to more cities.  

Many years ago, Jaipuria had shocked his family, especially his father, when he announced that he was taking the Pizza Hut franchise, which meant serving meat on the menu. They naturally opposed to the move but Jaipuria could not be stopped by such trifling considerations. Or to put it another way, the strict vegetarian relishes meaty business challenges.

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