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Prof. M. V. Rajeev Gowda Indian Institute of Management Bangalore email@example.com 98451 62171
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Pesticides in Colas
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the Centre for Science and Environment (CSE). Limca. CSE said it had tested the same products in the US and found no such residues. a non-governmental organization. Coca Cola's had 30 times. Thums Up.Flashback … 2003 In 2003. contained toxins such as DDT that can contribute to cancer and a breakdown of the immune system. Mirinda. and several other soft drinks (SevenUp. & Sprite). Tested products included Coke. Fanta. . CSE found that the Indian-produced Pepsi had 36 times the level of pesticide residues permitted under European Union regulations. said soft drinks produced by multinational giants Pepsico and Coca-Cola. Pepsi.
Corporate Reactions Coke and Pepsi both denied CSE’s allegations. . publicizing its own tests that showed the drinks met tough European standards and pointing out that India's Health Ministry had taken issue with CSE's testing methods. Coke only "hinted at the issue" in ads as it didn't want to legitimize the interest group's claims. Coke became mired in technical detail. That was the start of a two-year slide for Coke's case sales. (15% drop) which analysts say was made worse by a troubled distribution system and a decision to raise prices in the midst of the pesticide controversy.
The Bureau of Indian Standards met over 20 times to deliberate on the standards. Until standards are officially notified. it finalised the standards. In October 2005. The JPC validated the findings of CSE and in early February 2004 asked the government to set standards for carbonated drinks. they have no value. . But these standards had not yet been notified in 2006. This was the first time standards were being formulated for pesticide residues in soft drinks by the BIS.Parliament’s Response Parliament banned the drinks in its canteen. after months of data analysis and discussion with all stakeholders — including the two soft drink majors and CSE. It also set up a Joint Parliamentary Committee to examine the issue.
it finds a cocktail of 3-5 different pesticides in all samples —on an average 24 times higher than BIS [Bureau of Indian Standards] norms.” .2006: Deja Vu The controversy flared up again in August of 2006. 200 times the standard. Similarly. when CSE released its new test results. a Coca-Cola sample manufactured in Thane contained the neurotoxin Chlorpyrifos. Coca-Cola bought in Kolkata—exceeded the BIS standards by 140 times for the deadly pesticide Lindane. which have been finalized but not yet notified. “The study finds pesticide residues in all samples.” “The levels in some samples—for instance.
and none of the levels found exceeded "statutory limits. .Counterevidence India's Health Ministry said in a sworn statement to the Indian Supreme Court that Coke and Pepsi beverages tested in three government labs contained little to no pesticide residue." A prominent government lab in the United Kingdom also reported it found none of the pesticides cited by the public interest group.
The levels that Coke and Pepsi were said to exceed—by 24 times—were still proposals that wouldn’t go into effect until early 2007. chief executive of PepsiCo International. New Delhi had not even formalized its own regulations." says Mike White. They had participated actively in the government’s standard setting process. Both companies had been strong supporters of new standards. .Standards? Which? For Whom? o o o When the controversy broke. n "It's absolutely in our interest to have clear regulations that are scientifically verifiable.
.Media Makes It an Emotive Issue o o Newspapers printed images of cans of the drinks with headlines like "toxic cocktail." News channels broadcast images of protesters pouring Coke down the throats of donkeys.
. The state of Kerala banned the drinks altogether. Seven of India's 28 states imposed partial bans on Coke and Pepsi. Officials there have ignored a subsequent high court ruling overturning the ban (on the grounds that only the central government can ban a food product).Political Response o o Governmental response was harsh.
including the permissible levels of pesticides and chemicals. filed an appeal in Supreme Court against this order . 2006 for Coke and Pepsi to disclose contents of soft drinks.Judicial Response: Disclose! o o The Rajasthan High Court set a deadline of August 3. Coke & Pepsi. on bottle labels.
the sludge from the factory had heavy metal concentrations like lead. They alleged that around 25 lakh litres of ground water was being depleted daily by these companies pushing down the water level. National Coordinator of the NAPM. this was exactly what had happened in Plachimada in Kerala that resulted in the Coca Cola factory being closed. .) According to Dr Sandeep Pandey. (Incidentally.Civil Society Response: Expanding Fronts of Attack n n n National Alliance of People's Movements coaxed the Central Pollution Control Board in Varanasi to visit a Coke bottling plant at Mehndiganj to check if toxic effluents were polluting water bodies & fields close to the unit. chromium and cadmium that was over the permitted limit.
Interlude: The Cola Companies in India .
Coca-Cola and Pepsi together held 95% market share of soft-drink sales in India. for the "criminal cheating" it had indulged in by passing on to the farmers of the area "toxic wastes" in the guise of fertiliser.Coca Cola’s History in India India's leading soft drink until 1977. Greenpeace urged the Kerala government to close down the Coca-Cola bottling plant at Plachimada. opposed by farmers . That plant was closed down also because of allegations that it was depleting the groundwater of the area. it returned post-liberalization In 2005. in Palakkad district. it left after the Janata government ordered it to turn over its secret formula & dilute stake in Indian unit as per FERA In 1993.
Gained entry into India in 1988 by creating a joint venture with Punjab Agro Industrial Corporation (PAIC) and Voltas. selling Lehar Pepsi till 1991. Joint venture ended in 1994. Pepsi arrived on the market shortly after.Pepsi’s History in India Banned from import in 1970s for refusing to release list of ingredients. Pepsico bought out its partners. After liberalisation. .
That means companies have to look for future growth in countries such as India. India made up about 1. water. Sales of cola-type soft drinks are on the decline in the US. sports drinks & other noncarbonated beverages.Can Coke & Pepsi Walk Away From the Indian market? India is a small part of the global soft drink business. In 2005. Profits were even thinner Yet.6 billion cases of beverages Coke sold worldwide.4 percent of the 20. India is key to Coke & Pepsi for their future. while Mexicans consume 1500. where consumers are turning to diet sodas. where there are lots of people and a growing economy Indians consume only seven 8 oz servings per capita per year. scope for growth enormous! .
Coke and Pepsi have invested nearly $2 billion in India They employ about 12. there is probably an adverse health impact from consumption of Coke & Pepsi But details of such externalities are unavailable . Coke is even India's No. packaging material.500 people directly and support more than 200.000 indirectly given their huge purchases of India-made sugar.Coke & Pepsi’s Economic Impact Together. and shipping services. 1 consumer of mango pulp for one of its local soft drink offerings Of course.
Back to the Action: How to Manage the Controversy? .
CSE’s director. birth defects and damage to nervous and immune systems if consumed over a long period. . as well as in raw ingredients such as sugar. CSE o o Trace amounts of pesticides can be found in India's water supply and in its crops. n Coke says it treats the local water in its plants before using it to produce soft drinks. says pesticide residue can cause cancer.The Two Sides: Coke vs. Sunita Narain.
Risk Regulation & Implications Refuting these allegations is difficult because: Standards for safe pesticide levels in drinks have been agreed on in India but never made a legal requirement. . The industry continues to argue over whether tests are needed for the final product or the water that goes into the drinks. There is also debate over how to cleanse sugar of its pesticide traces and a recognition that India's groundwater is so badly contaminated that most food products contain some pesticide residue.
" Bakshi.parts per billion . a vice president of Coca-Cola India. "I have tried my level best to communicate this information. the Pepsi executive.Science: Explaining the specifics Asim Parekh. It is hard to explain the entire story. "The subject is extremely technical. also struggled with the message. But even terminology like PPB . said his "heart sank" when he first heard the allegations because he knew consumers would be easily confused .is difficult to comprehend. This makes our job very challenging. " .
CEO of Coca-Cola India. New Delhi has largely ignored the problem. . But Indian soft drink makers have been tested for similar violations.Tactical Aspects: Identity Politics? Have Coke & Pepsi been singled out because they are foreignowned? "We are continuously challenged because of who we are. While pesticide residues are present in virtually all groundwater in India. and many people believe that pesticide levels are even higher in Indian-made milk and bottled tea." says Atul Singh.
. for a broader issue of pesticides in the food chain in India. Bakshi." . accused Sunita Narain.Brand Vulnerability Isdell of Coke said CSE "picked on carbonated soft drinks because that would get the headlines . "You are not just up against the person holding the press conference. of "brandjacking" — using Coke's brand name to draw attention to her campaign against pesticides. the head of Pepsi in India. said. Coke's Hong Kong-based communications director for Asia. the other constituencies who jump on the fray.“ David Cox.. but also the people who seize on the allegations.
Gaining Leverage Sunita Narain acknowledged she targeted the soft drink giants to bring attention to the issue of pesticide contamination of food products but has stood by her testing. . it means there is widespread contamination in India. "Our concern was that if we are finding pesticides in a product that is supposedly clean and safe." Narain told National Public Radio's "Morning Edition" Coke has joined Narain in calling for limits on pesticide residue in finished soft drinks. not just the water used to make them.
Similar letters were given to retailers. . within a week of the CSE report. The ads were in the form of a letter from India's more than 50 companyowned and franchised Coke bottlers saying their products were safe." said Kini. Coke India's marketing chief.Crisis Response In 2006. Merchandisers pressed stickers onto drink coolers that proclaimed Coke was "safety guaranteed." "We had a communication that took the bull by the horns. Coke launched the first of three rounds of newspaper ads refuting the claims.
Worked around the clock fashioning rebuttals They commissioned their own laboratories to conduct tests and opted to wait until the results came through before commenting in detail. instead of focusing on winning back the emotional support of their customers. This approach quickly backfired: their reticence merely fanned consumer suspicion. They became bogged down in the technicalities of the allegations. working in parallel on legal & PR issues. .Standard Operating Procedures? Coke & Pepsi formed committees in India and the US.
though indirectly. n They directed reporters to blogs containing large quantities of uniformly pro-Coke entries n They handed out the cellphone number for the director of an organization called the Center for Sanity and Balance in Public Life.o Coca-Cola also decided to go on the attack. . n Coke officials from Delhi gave briefings during which they questioned the scientific credentials of their accusers.
printing an advertisement asking.o o o o Coke also decided to address customers directly. of course. Coke said it had received about 2. Coke used the Aamir Khan ad . Experience has shown that consumers are often reassured by the sight of the water filtration process in the factory. "Is there anything safer for you to drink?" and inviting Indians to visit its plants to see how the beverage was made. And.000 calls from people interested in the tour.
two of the world's biggest brands failed to do what they do best: pitch the virtues of their products directly to their customers.Assessing the Crisis Response Coke and Pepsi stumbled badly in their response to the pesticide allegations: they underestimated how quickly this would spiral into a nationwide scandal misjudged the speed with which local politicians would seize on an Indian environmental group's report to attack powerful global brands failed to respond swiftly to quell the anxieties of their customers. In short. .
they are symbols of the West." "Large multinational corporations are still seen by pockets of consumers and opinion makers as marauders and not as contributors. "Much more than companies. regardless of how eager they are for their investment. Advisor to Coca Cola "Fringe politicians will continue to be publicly hostile to big Western companies. They don't realize how powerful that is. an American PR consultant.PR Consultants’ Gyaan Coke & Pepsi should have known better—Suhel Seth. agrees: "They underestimated their own importance." Levick." .
S.” said Seth. You have to roll up your sleeves and get into a street fight." . the Indian public relations expert . Coke and Pepsi didn't understand that. They needed to show leadership. These minimalist statements were not adequate. and the West there is a certain dignity to silence. "In the U."Crisis abhors a vacuum." —Levick Because they failed to anticipate the political potency of the story. "But here people interpret silence as guilt. Coke and Pepsi initially hoped that the crisis would blow over and adopted a policy of virtual silence.
That won't work any more." said Amit Agnihotri. by ignoring it. "We have 36 news channels. They tried to wish this problem away. a public relations analyst in Delhi." . very aware India. by not responding to it. Coke and Pepsi haven't understood the power of this new India. People are interested in what is happening around them.The companies also failed to realize how fast news travels in modern India "We are living in a new.
The pesticide industry wants the focus not to be on pesticides but on heavy metals & other contaminants. then building our processed food industry. They also say that they are being singled out.Sunita Narain Counterattacks o Takes on Cola cos: “What a line of attack!” n n n n n Pepsi’s ads denying it had pesticides in its drinks. rice & apples. We will have to clean both ends of the food chain—the farm & the fork. . eggs. its drinks are safe. because they are big brands & US multinationals. has similarly argued that as everything in India is contaminated. in its defense. said there were more pesticides in tea. We also do not have the luxury of first cleaning agricultural raw material. Coca-Cola. They say this is being done to target them.
The polluters want 'conclusive' & 'incontrovertible‘ evidence that there is cause & effect. . We the victims have to prove our science. The health minister (Anbumoni Ramadoss) did exactly this when he used a halfbaked report to try & discredit our laboratory and our work on soft drinks and pesticides. Even though science has created modern toxins. it is slow on generating knowledge about the impact of toxins and pollutants on our bodies and our environment. n The second is to Deny. n The third tactic is to Discredit and Dismiss: your science is not good.Sunita Narain Analyses MNC Tactics o Tactics used by MNCs against opponents n Diversion is just one of the ploys. This is where 'science' becomes a handy weapon. n The fourth step in the polluter's game-plan is to Damn and to Destroy. it is not validated or peer reviewed.
these three drinks are the ones targeted by CSE as being unsafe. 60. (More nutrition?) Banning colas will increase pesticide intake.700 times in vegetables. Pepsi or bottled water. cane juice & fruit juices. 69. 111.080 times higher in milk. These are priority items in diet. and so are permitted high levels. Ironically. Cola has far less bacteria. Anklesaria Aiyar on Risk-Risk Tradeoffs Colas are safer than alternatives. is 3.Paradox! Swaminathan S. which kill millions. If you ban colas. what will people switch to? Water. the actual pesticide level.600 times in fruit. & nothing else. That is why many foreign tourists drink Coke. Besides. So OK . not decrease it.000 times for tea leaves than in proposed cola standards. The cost is entirely bearable for cola companies. tea. The biggest health risk comes not from pesticides but bacteria.
and then work with industry to retrofit plants and recycle.The Final Word—Indra Nooyi "One thing I should have done was appear in India three years ago and say: Cut it out. in educating communities in how to farm better. collect water. These products are the safest in the world. And your tests are wrong." [OK! This sounds like a good strategy] "We have to invest." [Really? Doesn’t sound like a typical Pepsico agenda!] . bar none. too.
Tata Tea and ULFA .
adult literacy centres.The History Tata Tea had a major presence in Assam and owned several tea gardens In 1990. support for handicapped children Took Lifeline Express to Assam in 1995 August 1993: Bolin Bordoloi kidnapped . ULFA contacted them for the first time. and instead set up hospitals. childcare centres. a technical training institute and schools + scholarships. asked for cash Tata Tea refused.
sent copy of communication to State govt. demanded protection But no response January 1996: Tata Tea expressed willingness to participate in development projects. requested central govt for help Talks at Bangkok in early 1996: Tata Tea . Tata Tea CEO received threats from militant groups.Company officials met Home Secretary.
links between Tata Tea and ULFA were publicly revealed Interrogation. cases against Tata Tea top management followed Tatas threatened to pull out of Assam Mediation by politicians Assam government decided to soft pedal the case .Following arrest of an ULFA member.
“The determination of the state government to prosecute managers of the company for consorting with the enemy is sheer hypocrisy. With the Assam state government's writ barely extending beyond Guwahati and its compromised police and paramilitary forces unable to provide even minimal protection to the far-flung properties and personnel of tea companies.According to an analyst…. they had no option but to parley with militant .
” .And according to Pritish Nandy… “A government that cannot protect its people and its corporates. has no right to punish anyone who is protecting himself.
“It is the moral responsibility of companies to inform the government..” . the police or intelligence agencies about extortion by militants. the funding of extremists by business houses was an anti-national act. Mahanta said.But the Assam government argued that… ….
The Course .
institutional factors affecting corporations Very interdisciplinary. lots of great thinkers! . environmental. societal forces that affect corporations and markets Emphasis is on political. social.Overview of the Course Rationale: Everything you study in the MBA is focused on the world of the corporation This course takes you outside. to examine the external.
Subject to Revision 10% Film or Book Review 25% Group Project Case Study on BGS Theme Let us immediately form groups of 5-6 (PGP) Identify topics and clear them with me 30% Mid-term Examination 35% Final Examination ...Course Evaluation .
Introducing the Professor
Born Oct 29, 1963, Bangalore, India St. Joseph‘s Boys High School, Bangalore BA: History, Economics, Political Science
St. Joseph‘s College, Bangalore University, 1984
Fordham University, New York, 1985
PhD: Public Policy and Management
Wharton School, University of Pennsylvania, Philadelphia, 1992
I have never left school! But …
John M Olin Postdoctoral Fellow
Law School, University of California, Berkeley, 1990-91
Associate Professor and Research Fellow
Political Science + Science and Public Policy, University of Oklahoma, 1992-2000*
Economics and Social Sciences, Indian Institute of Management-Bangalore, 2000 – present**
Chairperson, Centre for Public Policy, 2009-
*Assistant Professor, 1992-1999; **Associate Professor, 2000-2007
1983 BBC TV Mastermind India National Runner-up. aimed at youth empowerment . Karnataka Quiz Association.Some Other Things I Do Quiz Founder Secretary. Government and Society in India Run an NGO Resurgent India Trust.com Write Book on Understanding India: Paradigm Shifts Book on Business. 2001 Agitate Triggered ‘Bengaluru Unites’—protests in Bangalore against attacks on women by Sri Rama Sena Blog Check http://hamaracongress.
A Flavour of the Course .
Topics Covered/Class Sessions Introduction & Overview. BGS Mini Debates Role of the Corporation/Corporate Social Responsibility Rationale for Government Regulation Interest Groups Social Capital Media How People Reason and Respond Institutions .
Indian Politics Indian Society Indian Economy India on the Global Stage: Foreign Policy Globalization Urbanization Environmental Issues Agrarian Crisis and the Rural Economy Innovation and the Knowledge Economy .
Comment.com Dedicated to discussions. topical material A platform for all of you to engage with ideas To make the BGS class come alive Check. debates. and links to interesting. . Contribute. in the hope that students read beyond class materials (if they read that at all :-) We are happy to unveil … http://bgsatiim.wordpress. in the belief that ~350 student brains make up intellectual critical mass.The BGS Course Blog In the spirit of Wiki.
Therefore “paid news” is acceptable Society: Artists and authors should have complete freedom of expression.Mini-debates on BGS Themes Media: The media is fundamentally a business. even if their work offends the sentiments of certain sections of society Indian Society and Politics: .
we should pay MPs salaries higher than similar jobs in the private sector Values and Indian Society Caste-based Census is a regressive idea. Equity All non-government schools must reserve at least 25% of seats for poor children from the neighborhood .Themes … Professional Politicians Like Singapore. Junk it.
And … IIM’s Social Responsibility Since the IIMs have been established by the government and heavily subsidised. all graduates must do a year’s rural service before taking up jobs of their choice .
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