Case Study: Coca-Cola in India:

Introduction About Coca Cola

Cola is a global brand. This accounted for 60% of $1.6 billion in retail sales. Coca-Cola faced so
me tough challenges in the Indian state of Kerala from 2006 to 2007. The company has been acc
used of using pesticide-laced water in its bottles in Kerala. The Center for Environmental Scienc
e and Environment team found 57 bottles of Coca-Cola and PepsiCo products containing harmfu
l pesticides in 12 states of India. Kerala Health
Minister Karnataka R. Ashok has ordered a ban on the production and sale of Coca-Cola product
s in the region. Coca-Cola later had its drinks tested in a British laboratory, and the report found t
hat the pesticides found in Pepsi and Coca-Cola drinks were not harmful to the body. 2 Coca
Cola then launched a major advertising campaign to restore consumer confidence in its products
and brands. But these efforts did not satisfy environmental groups and health officials.

India’s Changing Marketplace:

Economic Transformation of India During the 1960s and 1970s, the Indian economy faced many
challenges and grew at an average rate of only 3% to 3.5% per year. The political system change
d, many restrictions were lifted and economic reforms were implemented. With over 1 billion
consumers, India has become an attractive market. 5 From 2003 to 2006, foreign investment
doubled to $6 billion. Imported goods became a status symbol for the middle class. Foreign
direct investment in India stood at $27.31 billion in 2008/09. 7 According to the United Nations
Conference on Trade and Development (UNCTAD), India was the third largest recipient of
foreign direct investment in 2009 and is expected to be among the top five most attractive to
international investors in the next two years. . 8 A 2009 survey of Japanese investors by Japan
Bank for International Cooperation continues to rank India as the second richest country in term
of foreign investment after China. According to Mr. The ratio of foreign direct investment capital
inflow to GDP increased from 0.75 percent to 0.75 percent, said Commerce and Industry
Minister Anand Sharma.In 2008-08, 2008-08-08-2009.
In the 6 years between 2003/04 and 2008/09, India's GDP grew at an impressive annual rate of 8.
5%. Even the global financial crisis of September 2008 reduced growth by only 2-3 percent. The
economy continued to grow at an average annual rate of 6 percent in the third
quarter after the crisis. But China needs to increase manufacturing investment if it hopes
improve the lives of its 350 million poor people.
Coca-Cola and other beverage investments in India:
Coca-Cola was previously at odds with the Indian government. The Coca-Cola Company withdr
ew from India in 1977 after the Indian government demanded its secret formula. The situation fo
r Indian beverage retailers has improved over the years. Coca-Cola and PepsiCo invested nearly
$2 billion in India last year. They directly employ approximate12,500 people and indirectly supp
ort 200,000 people through the purchase of confectionery,
packaging and shipping services. Coca-Cola is the largest consumer of mango pulp in domestic s
oft drinks in India. Coca-Cola India is also the largest domestic buyer of sugar and green coffee b
eans. From 1994 to 2003, Coca-Cola sales in India more than doubled. Coca-Cola announce plan
s to invest more than US$250 million in India over the next three years from 2008 to 2009. The
money will be used for everything from bottling plant expansion to purchasing trucks and refrige
rators for small stores. The new money means CocaCola's total investment in India will increase
by 20%. 15 CocaCola's sales in India increased by 31% in the three months
ended March 31, 2009, compared to the same period last year. This is the largest volume growth
of any CocaCola business. RC Cola is the world's third largest beverage brand. The brand was ac
quired by Cadbury Schweppes in 2000 and entered the Indian market in 2003. The company has
tied up three licensed and franchise bottlers for production in India. RC Cola immediately sent th
e groundwater to the SGS India Pvt Ltd laboratory for testing to ensure it was pesticide-free agai
nst Pepsi-Cola and Coca-Cola.

Blame Coca-Cola:
Pesticide The problem started in 2002 in Prachi Motor, India. Villagers believe that water is runn
ing out and drinking water is contaminated from the CocaCola factory. They exercised caution at
the factory, and two years later CocaCola's license revoked. CocaCola's latest pesticide problem
started at its bottling plant in Mehdiganj. The plant is accused of using groundwater and pollutin
g it with toxic metals. Health Minister Ashok Karnataka from the Indian state Kerala has banned
the sale of all CocaCola and Pepsi products, claiming that the drinks contain harmful pesticides.
Socalled water pollution sparked debate on everything from pesticides India's average addiction
to junk food. “This is amazing,” CSE Director Sunita Narin said. - Pepsi and CocaCola do our jo
b for us. Now the whole country knows that there is a pesticide problem. CocaCola backed down
from the allegations. - Although products such as milk and tea bottles may contain pesticides, In
dian beverage companies have not been prosecuted for similar violations. If there are pesticides i
n the soil, why aren't others tested? “We are constantly pushing who we are,” said Atul Singh, m
anaging director of CocaCola India. “If you focus on diversity, you will attract more attention,” a
dded researcher Arvind Kumar of the Toxic Links watchdog. - Everything in India has pesticides
. India's claims After the CSE found harmful pesticides, some believe that most of the pesticides
come from sugar, which accounts for 10% of the sugar in the Indian diet. However, the laborator
y found that the sugar samples did not contain pesticides. Kerala is ruled by a communist govern
ment and a president who claims to be fighting against the evils of capitalism. CocaCola advocat
es say this is the main reason pesticides are found in CocaCola products. CocaCola filed a lawsui
t in the state court to protect its product and name after the state of Kerala imposed a ban on all
CocaCola and Pepsi products. The court said the state government has no power to restrict the
production and sale of goods. 25 Kerala later revoked the statewide license of CocaCola products
. In March 2010, after several years of conflict, CocaCola's Indian company was ordered to pay $
47 million in compensation for environmental damage caused by its bottling plant in India's sout
hern state of Kerala. CocaCola subsidiary Hindustan CocaCola Beverages Private Limited (HCB
PL) drank groundwater and dumped toxic waste around its Palakkad plant between 1999 and 200
4, a state government commission has said. In 2005, farmers protested pollution, forcing Coca-
Cola to close its factory. CocaCola said that HCBPL is not responsible for the pollution in Palak
kad, but the final decision on compensation will be taken by the state government

Coca-Cola's Corporate Social Responsibility & overcome Blames :

CocaCola recently hired the Energy and Resources Institute (TERI) to evaluate its operations in I
ndia. The investigation follows allegations that CocaCola was involved in unfair production prac
tices in India. These accusations include causing severe water shortages, installing water drainag
e facilities in "critical" areas, further restricting access to water through contamination of land an
d groundwater, and lacking any responsibility for the disposal of waste. Colleges and universities
in the US, UK and Canada have banded together to hold the company accountable for its foreign
business practices by banning the sale of Coca-Cola products. Coke at school until good results a
re announced. But critics say TERI's assessment is flawed because the organization is heavily fu
nded by CocaCola. CocaCola has done much to improve drinking water around the world. He pl
edged support for the United Nations Global Action and coordinated the World Water Campaign
, which aims to improve access to water and sanitation in countries in need. It increases energy ef
ficiency by using HFCfree insulation in 98% of
the new refrigerators it sells and markets. Specifically, CocaCola said that in India "more than a
third of the water used in operations is recycled and returned to groundwater." State water agenci
es, schools, NGOs and local communities are responding to water scarcity. According to Coca-
Cola India's 20072008 environmental report, the company has partnered with 400 rainwater harv
esting projects across 17 states. These efforts will help the company achieve its goal of becoming
a "net zero" groundwater user by the end of 2009.At the World Wildlife Fund (WWF) annual co
nference held in Beijing in June 2007, CocaCola announced a multiyear partnership with the org
anization to protect and preserve freshwater. E. Neville Isdell, Chairman and Chief Executive Of
ficer of The CocaCola Company, said: "Our mission is to transform every drop of water use in
our beverages and the production of our products, drinking water, packaging, recycled water use
d in construction, to ensure it can be safely returned to the environment." and renewing society a
nd nature through local projects.
Case Study: Coca-Cola in India
Coca-Cola is a brand name known throughout the entire world. It covers 60 percent of the $1.6
billion soft drink market.
In 2006–2007, Coca-Cola faced some difficult challenges in the region of Kerala, India. The
company was accused of using
water that contained pesticides in its bottling plants in Kerala. An environmental group,
the Center for Science and
Environment (CSE), found 57 bottles of Coke and Pepsi products from 12 Indian states that
contained unsafe levels of
pesticides.
The Kerala minister of health, Karnataka R. Ashok, imposed a ban on the manufacture and sale
of Coca-Cola products in
the region. Coca-Cola then arranged to have its drinks tested in a British lab, and the report
found that the amount of
pesticides found in Pepsi and Coca-Cola drinks was harmless to the body. 2 Coca-Cola then ran
numerous ads to regain
consumers’ confidence in its products and brand. However, these efforts did not satisfy the
environmental groups or the
minister of health.
India’s Changing Marketplace
During the 1960s and 1970s, India’s economy faced many challenges, growing only an average
of 3–3.5 percent per year.
Numerous obstacles hindered foreign companies from investing in India, and many
restrictions on economic activity
caused huge difficulties for Indian firms and a lack of interest among foreign investors. For many
years the government
had problems with implementing reform and overcoming bureaucratic and political
divisions. Business activity has
traditionally been undervalued in India; leisure is typically given more value than work.
Stemming from India’s colonial
legacy, Indians are highly suspicious of foreign investors. Indeed, there have been a few well-
publicized disputes between
the Indian government and foreign investors.
More recently, however, many Western companies are finding an easier time doing business in
India. 4 In 1991, political
conditions had changed, many restrictions were eased, and economic reforms came into force.
With more than 1 billion
consumers, India has become an increasingly attractive market. 5 From 2003–2006, foreign
investment doubled to $6
billion. Imported goods have become a status symbol for the burgeoning middle class.
In 2008/09 FDI in India stood at $27.31 billion. 7 In 2009, India was the third highest recipient
of FDI and was likely to
continue to remain among the top five attractive destinations for international investors during
the following two years,
according to a United Nations Conference on Trade and Development (UNCTAD) report. 8 The
2009 survey of the Japan
Bank for International Cooperation conducted among Japanese investors continued to rank
India as the second most
promising country for overseas business operations, after China. According to the Minister of
Commerce and Industry,
Mr. Anand Sharma, FDI equity inflows as a percentage of GDP have grown from 0.75 percent in
2005–2006 to nearly 2.49
percent in 2008–2009.
India’s GDP has grown at the impressive average annual rate of 8.5 percent during the
six years spanning 2003/04–
2008/09. Even the global financial crisis, which began in September 2008, has cut the
rate of growth by only 2–3
percentage points, and the economy continued to grow at the annual rate of 6 percent during the
three quarters following
the crisis. But the country needs more investment in manufacturing if it hopes to improve the
lives of the 350 million
people living in poverty.
Coca-Cola and Other Soft Drink Investment in India
Coca-Cola had experienced previous confrontations with the Indian government. In 1977, Coke
had pulled out of India
when the government demanded its secret formula.
Circumstances have dramatically improved over the years for soft drink providers of India. Coke
and Pepsi have invested
nearly $2 billion in India over the years. They employ about 12,500 people directly and support
200,000 indirectly through
their purchases of sugar, packaging material, and shipping services. Coke is India’s number one
consumer of mango pulp
for its local soft drink offerings. Coca-Cola in India is also the largest domestic buyer of sugar
and green coffee beans. From
1994 to 2003, Coca-Cola sales in India more than doubled.
In 2008–2009 Coca-Cola announced its plans to invest more than $250 million in India over the
next three years. The
money would be used for everything from expanding bottling capacity to buying delivery trucks
and refrigerators for small
retailers. The new money will mean around a 20 percent increase in the total Coca-Cola has
invested in India. 15 Coca-
Cola’s sales in India climbed 31 percent in the three months ended March 31, 2009, compared to
a year earlier. That’s the
highest volume growth of any of Coke’s markets.

Organization points out, “Agriculture is the world’s largest water consumer. Any water crisis
will therefore also create a
food crisis.”
There have been attempts to improve the water conditions around the world. The United Nations
recently released the
World Water Development Report. This report was compiled by 24 UN agencies and claimed
that, in actuality, only 12
percent of the funds targeted for water and sanitation improvement reached those most in need.
The United Nations
stated that more than 1.1 billion people still lack access to improved water resources. Nearly
two-thirds of the 1.1 billion
live in Asia. 47 In China, nearly a quarter of the population is unable to access clean drinking
water. Over half of China’s
major waterways are also polluted. The Institute of Public and Environmental Affairs reported
that 34 foreign-owned or
joint-venture companies, including Pepsi, have caused water pollution problems in China. Ma
Jun, the institute’s founder,
said, “We’re not talking about very high standards. These companies are known for their
commitment to the
environment.”
According to the 2009 UN World Water Development Report, the world’s population is growing
by about 80 million people
a year, implying increased freshwater demand of about 64 billion cubic meters a year. An
estimated 90 percent of the 3
billion people who are expected to be added to the population by 2050 will be in developing
countries, many in regions
where the current population does not have sustainable access to safe drinking water or adequate
sanitation. The world
will have substantially more people in vulnerable urban and coastal areas in the next 20 years.
With businesses expanding globally every day, water is a crucial resource, and water issues will
increasingly affect all
industries. With water conditions improving at a slower rate than business development,
businesses will have to take on
the responsibility of not only finding an adequate supply of the diminishing resource but also
making sure the water is
safe for all to consume. This responsibility is going to be an additional cost to companies, but a
necessary one that will