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Coca-Cola Using Up Water, Foes in India Contend
 

'We Want Coke to Ao Away'

By Moni Basu in Varanasi, India, Scott Leith in Atlanta
The Atlanta Journal-Constitution
May 29, 2005

In the holiest of Hindu cities, water is worshipped every day. To touch the Ganges River in Varanasi is to be blessed; to die on its banks and have your ashes scattered in the waves is to find eternal peace.

But Coca-Cola has found little peace at its plant in Mehdiganj, a village near Varanasi where life's essential elixir is turned into 600 bottles of soda pop a minute.

Some villagers want to close the bottling plant because they say Coke uses too much water, making wells go dry and crops suffer. They've joined global anti-Coke activists whose campaign has already closed, if temporarily, one of 68 plants that make Coke products in India.

"Water is central to our livelihood," said Nandlal Master, a Mehdiganj schoolteacher.

Coke counters that it uses only a very small portion of India's available water and said there was no scientific evidence the company was to blame for shortages.

The protesters "are making spurious claims about water practices and using them to promote their own political agendas," said David Cox, Coke spokesman in Asia.

But the water war here twists and turns in societal undercurrents that, like the mighty Ganges, flow through a land of contradictions. It's a complex environment the Atlanta-based soft drink giant will have to learn to navigate to keep from drowning in the fast-growing Indian market.

A booming economy and burgeoning middle class has helped Coke's cause, but India remains a land of tradition mired in heart-wrenching poverty.

More than 300 million people survive on less than $1 a day and would rather sip cheap, milky tea from terra-cotta cups that cost a fraction of 15-cent bottles of soda. Indians drink, on average, nine servings of Coke products per year; Americans and Canadians gulp down 411.

India's government, too, has not always cozied up to foreign multinational corporations. The shackles of post-independence socialism are not all broken, and the memories of the 1984 Union Carbide tragedy in Bhopal are fresh in the minds of many Indians.

In that context, even the most ardent activists acknowledge that it's easy to single out Coke the world's most recognized brand as the poster child for the perceived evils of economic liberalization. Fair or not, the water issue has become a persistent and prickly problem for the company.

In Mehdiganj, it's easy to spot Coke's bottling plant from a mile away. It's the only burst of vermilion set against blue sky and verdant farmlands.

It's a powerful symbol for residents like Master, who believes the company is robbing villagers of their most precious resource.

In India, just four Coke bottling plants tap into municipal water supplies. In most places, Coke uses its own wells. In Varanasi, Coke draws an estimated 158,503 gallons a day.

The company meters its usage and pays fees to the Uttar Pradesh state government. But it's not enough for some villagers.

"They pay us nothing," said Master, who heads a non-profit group called Lok Samiti (People's Committee). "Water levels are down everywhere. We want Coke to go away."

While Master wants to shut down the plant, Coke officials said they didn't spend a lot of time worrying about the activists' threats.

"We have the facts on our side," Cox said.

Water drying up

Mehdiganj farmer Raj Narayan Patel drank a Coke once, five years ago. He couldn't remember what it tasted like except that it was sweet.

Now Patel is sour on the sugary brown stuff. He walked under the shade of a mango grove that butts up to the walls of Coke's plant and pointed at fruitless branches.

He accused Coke of drying up village wells and dumping contaminated plant waste on his fertile land. "My crops stopped growing. My mango trees are without fruit," he said.

Villager Mithailal Patel said his well was once 40 feet deep. These days, he said, he has to go 150 feet to strike water.

It's true that water tables in India are dropping, as in other parts of the world where consumption has outpaced aquifer replenishment. India, like its neighbor China, could start to go thirsty in the next few decades, thanks to having too many people and too little fresh water.

The U.N. World Water Development Report ranks India 133rd among 180 countries for water availability. India almost hits rock bottom when it comes to water quality.

But Coke said it was not to blame. The company points to a study done by the University of Rajasthan in western India that showed the beverage industry uses 0.002 percent of India's water; 81 percent goes toward irrigation for farms.

"The answer to India's water shortage is in the agricultural sector, not in the soft drink industry," Cox said.

When a court ruled in the company's favor concerning a closed plant in the southern state of Kerala, Coke noted that water supplies continued to decline after the facility was shut down. Still, the local village council appealed the decision, preventing Coke from reopening the plant for now.

Coke attributes falling water tables to drought and India's monsoons, finicky rains that sweep the subcontinent from June to October. If rains aren't plentiful, wells and taps can start to run dry, affecting agriculture and, in turn, India's entire economy.

"If the monsoons are good, these problems don't come up," said Harry Ott, director of Coke's Global Center for Water Excellence.

Today, the land around Coke's Mehdiganj plant looks lush. Fields brim with mustard plants, potatoes, peppers, wheat and rice.

Patel said his crops were starting to come back, but he demanded compensation from Coke for lost crops. He wants the company to give him assurances about his future. "How can we know what the long-term damage is?" he said.

Boost to economy

Coca-Cola was booted from India in 1977 after clashes with the government. It returned in the 1990s after India threw open its doors to globalization.

The company's road to success, however, has been rocky in the world's second-most populous nation.

When the United States slapped $20 billion in sanctions on India for testing nuclear devices in 1998, protesters poured Coke down drains to make their point. In 2001, angry Indians threw explosives at a Coke plant to let Americans know of their opposition to the war in Afghanistan.

"There's still a strong belief here that American foreign policy is unmitigated evil," said Ashok Mitra, a Calcutta economist. "We have been brought up with an anti-colonial, anti-Western ethos that America just wants to grab the world. That is how Coca-Cola is perceived."

That ethos, however, can quickly evaporate when Coke, like other foreign companies, represents a ticket out of poverty. Even opponents acknowledge Coke has given a boost to the poor Varanasi area, plagued by unemployment as high as 65 percent.

In season Coke is a hard sell in winter months when tropical Indians shy away from cold drinks the company can employ up to 1,200 people at the Mehdiganj plant.

Few here, from employees to suppliers to truckers who carry thousands of Coke bottles away on the dusty Grand Trunk Highway, want to see the plant close.

Ramdeo Shastri, director of a Varanasi charity, thinks anti-Coke protesters are misleading villagers and that the company's departure would leave an economic void.

Farmer Birender Yadav operates a five-and-dime store at the plant's gate. He earns up to $50 a day when the plant runs full steam by selling tea and snacks to Coke workers.

"The protesters want this plant to shut down," Yadav said. "It's not right. What about people like us?"

Rajesh Pandey, shipping officer at the Coke plant, said up to 90 percent of Coke's Mehdiganj employees were from neighboring villages.

Five years ago, he was a farmer, like most of the villagers here. "There has been a total change in my lifestyle," he said. "My children wear good clothes. I bought a motorcycle last year, so I am mobile now. Could the people who are protesting have given me a job?"

Shastri said Coke's departure would leave a void. "If it shuts down, who will compensate the community for the loss in taxes?" he said. "There will be development in India only when you have investment in rural areas."

Coke's economic impact, however, is often dismissed by activists, many of whom are from the United States.

Boston-based Corporate Accountability International has adopted the water issue as a favorite cause. Executive Director Kathryn Mulvey said Coke was an obvious target, even though India's water problem has many layers. "Our approach has been to target an industry leader," she said.

One goal of the anti-Coke forces is to compel the company to deal with the issues. At Coke's annual meeting this year in Wilmington, Del., activists picketed and complained about India. Students on a few college campuses are interested in the issue, too.

"One of the things that I tell them," Coke's Ott said, "is 'Why would we want to destroy something or drain something that is so critical to our business?' "

Corporate Accountability wants Coke to close two plants in India, including the one in Varanasi. That would cost jobs, Mulvey said, but lead to better access to water for all and "open up other opportunities" for economic development.

Pesticides an issue

Ott said Coca-Cola understood water was a critical issue. The company collects and stores rainwater, which recoups as much as 20 percent of Coke's water usage. It has also started building more wells for villagers.

Ultimately, Coke would like to see 100 percent of its water usage returned by good water practices. "But we can only put back what falls out of the sky," Ott said.

Coke opponents don't buy this story. Amit Srivastava, who heads the San Francisco-based India Resource Center, said the company can "spin the story all they want" but ultimately must make operational changes.

Villagers who remain convinced water woes are due to Coca-Cola say the real battle is over who owns the rights to the water.

"Tell people in Atlanta that when they drink a Coke, they are drinking the blood of Mehdiganj," Master said.

Water isn't the only issue that has afflicted Coke. Much attention also has fallen on pesticide contamination, a serious byproduct of India's push to expand its farm output.

In 2003, an independent Indian group, the Center for Science and Environment, tested Coke and Pepsi products and found pesticide residues in excess of European Union standards that were used as benchmarks. Late last year, an Indian high court ruling left both Coke and Pepsi looking at possible product labels warning consumers their drinks might be contaminated. That issue also remains up in the air.

Coke recognizes pesticide contamination is a problem in India but said its products are safe. Cox said allegations Coca-Cola had lower standards were preposterous. "A bottling plant here is essentially the same as the plant in Atlanta."

Swami Nath Ram, the Uttar Pradesh pollution board's chief regional officer, said contamination was common in a nation that once used pesticides indiscriminately. "Tell me which product in India doesn't contain traces of pesticide."

All of the attention on water use, on pesticides is ultimately a distraction for Coke in a market it wants to crack open.

What Coke has on its side is the money it brings to poor places such as Mehdiganj. Even Raj Narayan Patel, the Mehdiganj farmer who has participated in several anti-Coke protests, said most of his neighbors could be swayed.

"We'd cut them some slack if they gave us all jobs."

COCA-COLA IN INDIA
  • History: The government tossed Coke out of India in the late 1970s. Coke returned 15 years later.
  • Business potential: Generally strong. Over the last decade, Coca-Cola has invested $1 billion in India. Last year, the company turned its first profit, at $20 million. Sales volume has grown substantially at times, although in the first quarter of this year, it declined 14 percent as Coke raised prices to cover rising costs for raw materials and distribution. Coke has much room to grow because annual per capita consumption of the company's beverages in India is nine servings (compared with 411 in the United States and Canada).
  • Difficulties: India has a strong undercurrent of hostility toward multinational companies, in part because of the country's socialist history and because of the Union Carbide disaster at Bhopal more than 20 years ago that killed thousands.
  • India's importance to Coke's worldwide sales: India accounted for less than 2 percent of the company's global sales volume in 2004.
  • Major Coke products sold in India: Coca-Cola, Diet Coke, Sprite, Fanta, Thums Up, Limca, Maaza, Kinley bottled water.
  • Employees in India: About 10,000
  • Production plants in India: A total of 68 24 are company-owned, 25 are owned by franchises and 19 are co-packers that make products on behalf of Coke. The majority get water from their own wells. Coke pays taxes on the amount of water it pumps.

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