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NEW DELHI, India -- When it comes to managing brands, Coca
Cola Co. and PepsiCo Inc. are rated among the best in the world. But
three weeks after allegations erupted in India that their drinks
contain pesticide residues, the companies have done little to address
the issue, apparently hoping it will blow over.
The companies have taken a beating since a New Delhi-based private
research group, the Center for Science and Environment, made the
allegations Aug. 3.
Seven of India's 28 states have since imposed partial or complete
bans on Coke, Pepsi, Sprite and other drinks from the companies. More
than 10,000 schools have banned the beverages.
So far, there have been scattered, small demonstrations, but
environmentalist groups are threatening larger protests to blockade
the companies' 90 plants in India for five days in November. They're
calling the campaign, "Coke, Pepsi, Quit India."
In response, Coca Cola India and PepsiCo India have taken out
newspaper advertisements saying their products adhere to uniform,
international standards, and released brief statements to the media
making the same claims.
Three of Coca Cola's bottling agents have held press conferences
for local reporters in the cities of Jaipur, Lucknow and Calcutta,
and officials from a British laboratory that tested Coke samples --
and said they contained no unsafe pesticides -- spoke to journalists
in New Delhi.
But the companies' executives haven't held any news conference
since the allegations surfaced. They have generally kept a low
profile and also haven't released sales figures since the allegations
"So far we haven't seen a swift response," said Atul Phadnis,
chief analyst at Media e2e, a Bombay-based company that tracks media
For nearly three weeks, officials from Indian units of Coke and
Pepsi failed to respond to telephone messages left by The Associated
Press seeking additional comment.
However, Coca Cola officials responded saying the issue is very
complex from a technical point of view and requires extensive
briefing by scientific experts, and that the company has been holding
meetings with major Indian media organizations to do this.
The company is also reaching out to other stake holders such as
government departments, business groups and nongovernmental groups,
including the Center for Science and Environment, the group that made
the allegations, said Kenth Kaerhoeg, Coca Cola's Asia Pacific
In his e-mail, Kaerhoeg said the company has also organized visits
by consumer groups to some of its plants. But he won't disclose sales
figures, which many believe have declined in recent weeks.
"As things stand today, it is difficult to predict the impact of
the pesticide controversy on sale of soft drinks," Kaerhoeg said.
Indians -- commoners and experts alike -- have urged the companies
to take a more public stance.
"It looks as if they are hiding something from us. They need to
communicate more to come clean on the issue," said Anirban Sarkar, a
senior manager at New Delhi's upmarket Olive Bar and Kitchen.
Phadnis, the media analyst, said the cola companies' crisis is
more serious this time than three years ago, when the same group, the
Center for Science and Environment, first brought allegations of
pesticide contamination in Coke, Pepsi and other soft drinks. No
state banned the beverages then and there were mild street protests.
Although state government officials insist that health concerns,
not ideology, were guiding their decisions, business leaders warn the
festering controversy could jeopardize foreign investment into India.
Some experts say it underscores how quickly foreign companies can
get hurt by nationalism in a developing country like India whose
economy for decades was largely closed to the outside world.
"We have had a history of taking potshots at multinational
corporations," said Suhel Seth, a top Indian marketing executive who
is on the board of Coca-Cola India. "It is not that we love American
companies less, but we love fake nationalism more."
Although many food products in India contain harmful pesticides,
the Center for Science and Environment said it focused on Coca Cola
and PepsiCo because they account for nearly 80 percent of India's $2
billion soda market.
Officials from the seven states that enacted bans insist their
only concern is health.
"Public health is our priority," said R. Ashok, the health
minister for the southern state of Karnataka, which is suing the cola
companies in court for alleged food adulteration.
Karnataka was the only one of the seven states that did its own
tests before announcing a ban. None of the other states followed
proper legal procedures, such as seeking explanations from the
companies before banning their products.
Karnataka and five other states have prohibited the sale or
consumption of the drinks in state-run state schools and hospitals as
well as in government offices. One state, Kerala in the south, has
completely banned the manufacture or sale of the drinks, a
prohibition temporarily upheld by the state's High Court.
None of the states has reversed its decisions even after India's
federal Health Minister Anbumani Ramadoss told parliament the CSE's
data was flawed.
Complicating matters further is the lack of national standards for
many consumer products in India, which yet to institute a regulatory
framework that would help address consumer, corporate and investor
The lack of standards also raises suspicions, and the CSE alleges
Coke and Pepsi have pressured the government to delay regulations so
that the companies can avoid stricter filtering of pesticides and
other chemicals in the polluted groundwater used to make their
The companies counter that they are helping Indian government
agencies come up with standards, but say the process takes time.
Ramadoss has promised regulations by next year.
Media analyst Phadnis said he believes both Coca Cola and PepsiCo
will realize the stakes in India are too high and adopt a more public
approach to the issue.
"We have not heard the last word yet," he said.
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