based on reports in the print and elec is meant for academic purpose only. The ion to sully the image of the corporate COCA-COLA'S GENESIS AND GROWTH oc-Cola was concocted by pharmacist John Pemberton Seheas first introduced as 2 ealth tonic in Atlanta, Georgia ‘he company claimed that its drink was a sugar 5 cine with several health benefits and that it could treat sdaches, impotence and morphine addiction. The drink ‘ant hit and became hugely popular after the com- ony decided to serve it to soldiers serving overseas in ‘World War Il. Presently, the company operates almost in all countries ofthe world selling as many as 12,500 drinks every FESPECITE Foreion ParricLes FOUND iN BOTTLES id Hirard The notorious discovery of a dead = Coca-Cola bole was widely publicized all ever the coun try." Other foreign particles also have been found in Coke bottles but the company put the blame on distributors and dealers for these occurrences (Hox 14.1), inside # sealed Excessive WarER UsaGt Ithhas been alleged by farmers in several Indian states that Coca-Cola's tremendous need for water has caused severe water shortage causing crop failures for local subsistence farmers .The company uses three times as much water to produce a litre of coke. Activists allege that in several states such as Untar Pradesh, Rajasthan, Maharashtra and Kerala, the establishment of Coke bottling plants has lead to severe shortage of water in and around the plants Coca-Cola's answer to these allegations has been quite pos- itive. They have started rain water harvesting projects in 26 of their plants, This has reduced water use by 25 per cent and the water saved has been made available to water-starved villages nearby. But Dr Sandeep Pandey, a prominent critic, is unim- pressed. “The visible employment that Coke generates is smaller than the large numbers of hidden and unorganized People, it puts out of business, like the vendors of traditional Indian fruit drinks and hence the farmers supplying them’ !? Environmental degradation in the form of depletion of the local ground water table due tothe over utilization of nat- tural water resources by the company poses a serious threat fo many communities. In March 2004, local officials in Kerala shut down a US$ 16 million Coke bottling plant blamed fora drastic decline in both quantity and quality of Water available to the local communities." Kerala Protest against Coca-Cola: On 15 January 2005, over thousand people took part in blockading the entrance tw Coca-Cola's single Vargo tomlin plant in tagig Plachimada, Keralato demand that the benting yay shutdown prmanentty The day who marked the Sotyey aniversary of permanet dharma i) tht has been nett in tom of the factory wate y the ca come groups ailing agains the Cova-Cola plane in Kerala oe? ‘twas set up in 1998, local villages have been com a depleting water levels for thet cultation. Further, Song the cleaning ofthe battles atthe plant, a waste says pt produced which the company dumped on the ad ofthe eg farmers claiming it was a useful fertilizer. Following 4 wiye Radio 4 programme, samples ofthe sudye were acayae y, scientits at Exeter University in England and found ¢ contain toxic chemicals including led and cadeniven ten vy which could be harmful to hursans, and confirmed ths g. sludge should not be used as a fertilizer. The beating pte remained shut down for over a year due to intense comenane, pressure, Earlier, the local village council rejected Coes. Cola's license to operate. In a surprising move, the High Court of Kerala permis ted on 18 April 2005 Coca-Cola to extract up to 504,69 liters of water from the common groundwater resource per day at its Plachimada facility in Kerala, ‘The Kerala High Court rejected water use claims, noting that wells there continued to dry up last summer, months afier the local Coke plant stopped operating. Purther, asc. entific study requested by the court found that while the plang had ‘aggravated the water scarcity situation’, the ‘most sige nificant factor’ was the lack of rainfall, Critics respond that Coke should not be locating bottling plants in deoughte stricken areas,!* Kerala Government assures action against Coca-Cola: ima ‘major boost for the campaign to hold Coca-Cola accountable, the newly elected state government of Kerala assured come munity leaders on 19 June 2006 that the government wold take proactive measures against the Coca-Cola bottling plant in the state. Key community leaders met the Chief Minis and his cabinet colleagues on June 15 and submitted randum outlining their demands, including the i Wotuaratsas dist, ‘Scanned wih CamScanner- sof the Plachimada bottling plan, compensation to ge dm nity members andthe prosecution of the Coca. ae for criminal offences. The meeting resulted in os at comments ffm the State government towards 9g the crisis.” Yionever. on appeal from the cola companies, the Kerala jh Court struck: down the order of the state government via the manufacturing and sale of the colas in Kerala tating thatthe government had exceeded its jurisdiction on spe issue uttor Pradesh prosests against Coca-Cola: Utter Pradesh community jeaders from Mehdiganj in north India began a hunger strike in November 2005 to demand the closure of the Coca-Cola toiting plant. They accused the bottling plant in Mehdiganj of creating severe water shortages affecting over twenty villages, polluting agricultural land and_ groundwater, itlegally occupying land, evading taxes and treating workers unfairly. The hunger strike was organized three months ater the community initiated an indefinite vigit in front ofthe Coca-Cola factory. These men have been frustrated by the lack of action from the government, and embarked upon the hunger strike to emphasize the severity of the situation facing the communities. Police attacks Coca-Cola protesters: A massive demonstra- tion, with over 1,000 people, was held at the Coca-Cola bot- tling plant in Mehdiganj, Uttar Pradesh on 25 November 2004 to demand that the bottling facility shut down, Armed police reacted violently, beating and injuring many, including, many women. Over 350 people were arrested in an incident that is rapidly becoming part of a pattern in Coca-Cola's response to the growing resistance in India—using violence to suppress opposition."” Crowd condemns violence at Coca-Cola protest in Mehdiganj: Over $00 community residents from Mehdiganj ‘and surrounding villages marched towards the gates of Coca- Colas bottling plant in Mehiganj on 6 January 2005, Protesters marched with their mouths covered by black rib- ‘bons and their hands tied to specifically bring attention to the ‘non-violent nature of the community-led campaign and to ‘against the violence directed atthe demonstrators on a met ‘Mehdiganj and surrounding villages have ‘tw contend with a Coca-Cola plant that sucks groundwater at rate and dumps toxic sludge into their fields, ‘also blatantly violates Indian labour laws by ‘ts workers, illegally laying them off and dis- who date to unionize." ity strugeles against Coca-Cola all across India ‘the giant multinational in a major crisis. Coke oftheir public relations to India to try to con MARKETING EIICS 419 trol the crisis, and then the news came that farmers in India ane now using the sat dink, appropriately enough, pst cide, ‘The company has been trying to regain the plant's Vicense, fighting a case that has gone to the Supreme Court of India, Meanwhile, near the holy eity of In wanasi in north 1 local water official blamed a Coke plant—which has been the scene of many protests by NGOs and local resi- donts—for polluting groundwater by releasing wastewater into surrounding land. A Coke official confirmed there had been a drainage problem with treated wastewater several years ago, but confirmed that the company built a long pipeline to correct it Tamil Nadu Water wars and bottle battles: On 24 May 2005, another ‘community in India, Gangaikondan in Tamil Nadu, decided that it did not want a Coca-Cola bottling plant, Shrouded by secrecy and conflicting data, the plant (being set up by a franchisee) is stil being built. But the community has already demanded that the license be revoked, claiming that such a plant has no place in a community where drinking water and agricultural requirements are not currently being ‘met. The local struggle is being led by Dalits and political parties are also involved." Rajasthan Major rally against Coca-Cola in Rajasthan: Over 1,500 villagers marched to shut down Coca-Cola's bottling plant in Kala Dera in Rajasthan, on 12 December 2005, accusing the company of depleting water and polluting the water and soil ‘The major protest in Rajasthan came less than two weeks after the Mehdiganj rally in Uttar Pradesh demanding that the plant shut down. Maharashtra There have also been agitations against the Hindustan Coca-Cola Beverages factory at Kudus village in Wada taluka, Thane district in Maharasthra. Farmers complain that the much-needed water from Vaitarna river for agriculture in the area is being sold cheaply to the cola company.” ‘The Coke plant at Wada has attracted several protests, since it started production in February 2000. In 2002-03, there were agitations onthe issues of water and employment, mostly spearheaded by the Communist Party of India (Marxist) and the All-India Democratic Women's Association (AIDWA). oi ‘A few years ago, AIDWA led an agitation against Coke saying it was paying very low rates for water, did not use locals for work in the plant and paid poor compensation to the families who gave up their and for the plant, denied the company’s claim that locals are employed: plant. They asked why a Coke plant is running im water ‘Scanned wih CamScanner420 SUSE: AN INDIAN PERSPECTVE Mes. starved Waa, while one was closed in Ker, Daily water use by the plant is about 90-100 units, each unit being 10,000 litres. Accorilin ‘manufacturing plant, spread over 67 the-art facility and an environment ma water harvesting fiilty. At the zero d ‘water used in the manufacturing process was recycled t0 be used for gardening and for toilets, Rainwater was being har- vested since 2003 to recharge ground water, The plant had its own effluent treatment plant and waste sludge was packed off tothe centralized hazardous waste dumping Unit at Taloja, near Mumbai, The Maharashtra Pollution Control Board (MPCB) ha given it clean chit. The company the plant employs more than SSO people of whom 95 per cent are local people. It states that there is a community pro- gramme in place, which benefits 21 villages around the plant. In addition, there are health care programmes, a free ambulance service and provision of drinking water supply in summer, apart from mini water supply schemes in some villages in Wada taluka" to the company, the Hindustan Coca-Cola acres, had a state of yement and rain= 01, ‘Very Low COMPENSATION PAID 10 THE USE OF Resources®> The cola companies have been oversexploiting the country’s vund water resources by paying a pittance to the society, While they make millions. Despite using ground-water as the Principal ingredient for its products, Coca-Cola, like other soft-drink companies, pays nothing apart from a marginal ‘water cess on the raw material. Despite drawing nearly 13 mil- Hon litres of water in 2003, the botling plant at Mehdigan} Paid a water cess ranging from 3 to 30 paise a thousand litres ‘depending on usage. The product, by contrast, is being soldat INR 9 per 200 mi Itis disparities such as these that fuel peo- Plc movements —disparties that need to be addressed before all common property ket forces we left at the merey of mar- PEPSICO INDIA HOLDING PRIVATE LIMITED PepsiCo is another American cola company that i inthe midst ‘ofthe cola controveay in India. This USS 32 billion Fortune jot, New York-based company was founded by Don Kendal in 1898, The company became known as PepsiCo only after In terms of brand value, product brands. The com. markets and sells variety of carbonated ‘Company, having almost th ree times as many lnrger revenues, but smaller net profit gy Noyyi succeeds Steve Reinemund as the of PepsiCo, She isthe first womay CBO ofthebevenge mk “ PepsiCo gained entry to Eni in 1988 hyp eos it nel government-owne,, Poa Join Industrial Corpora lon (PAIC) and Vols Indi iy ety joint venture marketed and sold Lehar Pepsi yn too tht these of foreign brands was allowed Psi pn partners and ended the joint venture in 1994, Others cians Peps vainly tame fom impor in nin yen having ese to release thelist ofits ingredient ye that 1993, the ban was ied, with Peps ariving gn ye ei shortly afterwards.”” Though PepsiCo has hee : Coca-Cola inthe pesticide controversy both of hen ter business rivals and it is the fortuitous Siteumstnce have clubbed them together to Fight thir detracts a benoted here that in Asian markets, Pepsi, compare, tons is oma stronger wicket with double digits sales tOWth in Ne pat ew yea, Peps als is ying 1 sti ima India one of PepsiCo global hubs fr sourcingan Sy cessing fruits into a reality, 1 Om | resident ang ct St MOM-Amerigg, 40 PESTICIDE CONTROVERSY 2003 In 2003, the Centre for Science and Environment (CSE), an NGO in New Delhi, contended that aerated waters Drodiced by soft drinks manufacturers in India, including ‘multng- tional giants, PepsiCo and Coca-Cola, contained toxins including lindane, DDT, malathion and chlorpyrit ticides that can contribute to can rand a breakdown, of the iumune system, Tested products included Coke, Pigs, Seven Up, Mirinda, Fanta, Thums Up, Limca, and Spee CSE found that the Indian produced Pepsi's soft drink prod ucts had 36 times the level of Pesticide residues permitted under European Union (EU) regulations; Coca-Cola 0 fimes. CSE said it had tested the same products in the United States and found ‘no such residues.** Coca-Cola and PepsiCo angrily denied allegations that their products manufactured in India contained toxin levels far above the norms permitted in the developed world. The companies launched a virulent campaign against the ty decrying it as unscientific and biased, David Cox, Coke$ communications director for Asia, accused Sunita Narain, CSE% director, of ‘brandjacking’, using Coke’ bran mie Xv draw attention to her campaign against pesticides Ms Narain argued CSE’s study of pesticide esduesinsot rinks was a natural follow-up to a previous study it didoa bottled water. Coca-Cola had: registered a 15 per cent drop" sales after the pestici allegations were made in 2003” ; But such was the political storm kicked up by it! Parliament not only banned such bottled drinks fom bei Served in its canteen, but also. instituted 2 ‘Scanned wih CamScannerpaniamentary Committee (IPC) to ook into the charges Fe JHC moved with surprising alacrity and by Janvary {pos came out with a comprehensive report fquing CSE its whistle-blowing at’ Kealted fora total review and 1 np of regulations for fixing standards for safe eves af See resi for the various i Fedients used in the xing of soft drinks including water, its major constituent rhe JPC. in its report, had expressed its “deep concern that the soft drink business with an annu INR 60,000 million is unregulated” % tty though water is al turnover of ‘as Surprised that major constituent for soft drinks, for as much as 86 to 92 per cent ofits comp aceount- i ition, no standards had been fixed for maximum residue levels (MRLs) for pesticides. Only after the CSE exposed this jacuna in its first study, did the Health Ministry move to qvolve an MRL standard for packaged water, A governmen appointed committee has been for long, trying to develop the world’ first pesticide standards for soft drinks, Coke and PepsiCo opposed the move, arguing that lab tests were not reliable enough to detect minute traces of pesticides in come plex drinks such as soda. The Ministry of Health then entrusted the task o! evolv- ing suitable amendments in the Prevention of Food Adulteration Act (PFA) to its Central Committee on Food Standards (CCFS). Simultaneously, the Bureau f Indian, Standards (BIS) that comes under the Ministry of Consumer Affairs (MCA) was asked to evolve MRLs for pesticides in the finished product. (BSc ria ponte [sonannes 05060) Peetcide residues ( ond waren PESTICIDE CONTROVERSY 2006 Coca-Cola and Pe nd Pepsi have India with dan i SECS 421 adequately proved by an + 4 leading public interest Y group in India, CSE tested $7 sam. and PepsiCo carbons different bottling plants across 12 sta researeh and ie ples of Coca-Co ated produets from 25 es and found pesticide residues inal samples (Fig 14.2), The stay fom tail of between three to five different pesticides in all sam ples’, On an averag the pesticide residues were 24 times higher than EU standards and those proposed by the BIS, the government body respor ity control. 1 ible for standardization and qual- ye Cente said, “The companies say milk and vegetables have more pesticides than colas. But mile and vegetables also have nutrition. They give us something inthis poison-nutrition trade-off, We get nothing with colas’2! COLA COMPANIES’ DEFENCE Both Coca-Cola and Pepsi claim that their soft drinks are safe and that they conform to all Indian and international andards. They refute CSE’s studies as unscientific and biased stating that it is comparing levels of pesticides to norms that are yet to be fixed. They point out that nowhere in the world are MRLs of pesticides fixed for the finished wise nk BT apo: Anas of Pesci Reiues in of ins” August 2006p, 14 woke ey jdt Repintad wih perrisson fom CSE ‘Scanned wih CemScanner422 WGINESS ETHICS-—AN INDIAN PERSPECTVE ‘According to them, only sugar and product as is being done in Ind , norms for individual ingredients such as favouring shoul be ad down fir The cla rujor ague tat pests in oer foods Another prose f th oa companis i thatthe CSE indicted both MNCs and local players. Yet the mei od he public remember mainly the accusations against Coke at Pepsi.'* % ‘elean chit’ from The Energy Coe is got a ‘clean chit’ from TI id Resources In I) in an audit that did not find pestivides in the water used for making soft drinks. Its plants in compliance with applicable Indian envi- regulatory norms, TERI suid.'° TERI is headed by UN's top climate scientist R. K. Pachauri. US-based NGO Meridian Institute had recommended Coke for mandating TERI to conduct the independent audit The report compiled after a 16-month study found no pesticides in any of the intake and treated water used to make beverages.” THE BATTLE RAGES ON ‘Once the issue of pesticide residues in the colas has been highlighted by CSE, the battle lines have been clearly drawn (on predictable lines. Exactly as they did in 2003, Coca-Cola and PepsiCo, the arch rivals in business have come together and refused to accept the findings of the CSE as unscientific and discriminatory. While the general public seems to sym- pathize with those affected by the cola companies” unhealthy practices and have been demonstrating against them, other soft drink manufacturers have come to the rescue ofthe cola companies. Sensing trouble, the Indian Soft Drinks Manutcturers Association (ISDMA) has reiterated that soft drinks being manufactured inthe country, strictly maintained all applicable national norms. In a statement, the ISDMA said: “The soft drinks manufactured in India comply with nt international norms’. It added that over the past sas, the soft drink industry has been cooperating with ¢ Union Ministry of Health, BIS, the scientifie community and NGOs to establish stringent science-based norms, There are apprehensions that a decision to ban the sale of Coke and Pepsi might send wrong signals to industry. There have been murmurs of protest from the American establishment. The American Ambassador to. India, David C. Mulford, has cautioned that the bad reports and actions against the cola companies would adversely affect American investments in India. Commenting on the mass agitation against the cola companies, the US Government indicated thatthe bans by the state governments in the coun- ty could affect American investment in India, The US Government has also been withholding ate ies such as ICICI, State B banking compa : ; Pan Barto ope aes in he oun yt 1 opposition to the move tats there has been some OPD to ban et alleged attempt to discriminate gy. %f alleged attemp' te aan lt ® logic of some writers andl economic newyar Tt nce “Ministry of Health on the purity of drinking wate ee the stir ingredients locally manufactured, we canny strict rules only for the colas manufactured py ie ‘American companies in India. According to them, © beverages such as milk, ta, coffee and other cay diced soft drinks, apart ftom the fruits and vegeup” cat, conan. great deal of impermissible residues ype? cides and nobody mses any voie aginst them, yk Popsi-Coke companies are often targeted and aug Industrialsts and even the chambers of commerce su the Confederation of Indian Industry (Ci) ang Federation of Indian Chambers of Commerce and indy (FICCI have raised objections to what they called “yn hunting’ against the American companies. Their fearsuon to be based on the kind of backlash Indian exporter, ac likely o face in the United States because of the aes against their companies in India. There are aso a iy gr Indians, including some notable leftists, who feel that wey not on firmer grounds. Their muted response to the hiss pitch of criticism raised against the cola companies in mary quarters is ample evidence to the lack of sympathy forthe cause of anti-cola agitations. ‘To some extent, the cola controversy seems to have ere ated a certain degree of dissension among the Indian public in the sense it has divided them into pro and anti coas, though the latter is more voeiferous. In the meanwhile, pres reports suggest that there has been a 20 to 21 per cent dap in the sale of colas in the country in the wake of Pepsi-Cola pesticide controversy. With an 8+ per cent growth in he country’s GDP this much fall in the colas” sales will tans late into a much bigger loss to the MNC soft drink mame facturers. drinks and the POSTSCRIPT? The expert committee, which reviewed the CSE repo? pesticide residues in soft drinks, has rejected the resulting ings, saying it cannot be accepted ‘on face valu’. The second report of the committee, which was putolt on the Health and Family Welfare Web site, says: “Theea mittee has concluded that based on the informationandat provided earlier and subsequently by the CSE, th! conclusions reached by the CSE in their repoft cafe! © accepted on its face value and the data provided! |. The cight-member committee, headed by a 4 ‘ays the laboratory where the tests were ‘Scanned wih CamScannerdemonstrate the competence of the laboratory to oft etal val data and resus’ also noted that pote jing procedure followed in collecting samples docs shesention the quantity of each samples, and tha its lett soe culation as to how much quantity of each brand (of werent batch) was collected sine CSE claimed that “the quantity of sample (500 ml) acted was sulTicient to give clear quantifiable results out pestide residues in soft drinks’ i ‘The committee members said that there isa deviation jm the recommended method. However, the report main. tins, Since, the sampling itselfis far from satisfactory. the results may also not be accepted beyond the reasonable explanation.” CONCLUSION ‘The cola controversy has once again brought to the surface the fact that the most popular soft drinks our people drink ate alleged to contain dangerous chemicals and pesticides such gs lindane, DDT, malathion and chlorpyrifos in higher quan- ites than the stipulated norms. The drinks are sid to be unsafe because the pesticide residues detected are way above the permissible standards. Various NGOs have been demand- ing a ban on the sale of these drinks. Karnataka, Gujarat Punjab, Madhya Pradesh, Rajasthan and Chhattisgarh have already banned their sale in educational institution, govern- ment offices and canteens. The Kerala government has tanned production and sale of the soft drinks in the state, though the High Court has eventually turned dewn the order ofthe government as bad in law. A public intrest litigation in the Supreme Court has been filed and taken up. The Coca- Cola Company and PepsiCo have been asked by the Supreme Courtto name all the ingredients in their beverages following allegations of high level of pesticides. The court ha asked the companies, which together have 95 per cent market share of Inds sofdrink sales, to also provide details ofthe chemi- cal composition of their brands. In the meanwhile, a study by Danan Chronicle in Andhra Pradesh bas revealed that most ‘prands available in ‘the market have packaged drinking water cae failed quality tests. Water samples inclu national and inter feat created and very Once in a while. On offering a lasting solution to the sont ii er Seon public authorities who have failed ‘The onus, obviously. 80° fy problem. There are also oer A ode tobe tackled by the central and state ly lager issues criminate use of pesticides, fungi- ents. The Hg contaminated ground-water and soil fertilizers Se ually no cereals, vegetables or fruits Te ida. Miltyielding animals are fed for want of pasture and fodder. In many MARKETING EMACS. 429 cities, vegetables grown on { ‘Water are highly toxic, Carrots, red pumpkins and water: melons are artificially coloured by ve dors to iaipeovs the saleability, The government and the bureaucrats responsible for safeguarding public health, have failed i i duty to take a holistic approach in the ma lands irrigated with the drain ably in their KEY WORDS Marketing ethies fe products # Latent needs « Financial and insurance products Telemarketers # Safe treatment + Financial incentives # Housing solutions # Satisfying cus tomers ¢ Corollary © Addictive or compulsive consumption © Organizational function © Product development + Packaging ¢ Branding # Advertising # Promoting Selling ‘* Distributing © Pricing and customer servicing ¢ “Smash brand ¢ “Pro-skin technology” © © Maximum retail. pric Direct mar © Minimum moral standards © Normative ethics © Legal and ethical # Shareholders © Owners ¢ The middlemen # Liberated communications ‘© Unethical marketing practices # State-owned enterprises ‘© Marketers’ perspective * Organization culture + Ethical capacity Championing ethical practices # Informed choice «© Proximate stakeholders # Substantial risks # Mandatory warnings © Scorching pace of growth # Flavour enhancer « Appropriate capacity * Harmful chemicals # “Junk” older models Add-on-feature ¢ Marketing channel « Rat stereotyping * Manipulative * Impulse buy products Marketing planners DISCUSSION QUESTIONS +. Explain in your own words, the Cola controversy in Init Do you think MNCs like Coca-Cola and PepsiCo seem to adopt different standards when it comes tothe use of mate- rials in their soft drinks—a high standard of inputs for developed countries and poor quality material for devel- coping countries? 2. Having gone through the Cola case study, would you ‘advocate that the government of India bans these soft drinks forever? 3, Put yourself in the position of the CEO of a Cola eom- ‘pany and present your viewpoint as to why Your ongai> “ation attracts so much of adverse publicity inthe Indian media and with the general public NOTES 1. Coca-Cola India, “Environment Policy” online document 22007, available at www.coca-colaindia, com/aout ws porate-governance/environment-policy SP ‘Scanned wih CamScanner