Kerala Takes the Fizz out of Coke & Pepsi
Financial Express
August 10, 2006

THIRUVANANTHAPURAM, NEW DELHI: The Kerala government on Monday clamped a blanket ban on production, distribution and sale of all carbonated beverages sold by Pepsi and Coca-Cola in the state. “The ban is on with immediate effect,” chief minister VS Achuthanandan said after a meeting of his cabinet.

Though the Rs 300-crore Kerala market accounts for only 5% of the 500-million cases of carbonated beverages sold in India, it is the first state to ban both production and sale of colas. The industry fears this can trigger a similar ban by other states. Delhi, Karnataka, Rajasthan, Madhya Pradesh and Gujarat have either banned sale of colas in and near educational institutions or at government offices and establishments. Tamil Nadu said it would ban the drinks only if the Centre banned it.

The move is a severe setback for cola majors that are still grappling with allegations of pesticide contents in the carbonated beverages sold by them in India. The ban also means cancellation of licences of Coke’s Plachimada plant and Pepsi’s plant at Kanjikode. The fate of the stocks in the plant and in the distribution chain is unclear. The withdrawal of licences is also likely to hit the production of their mineral water brands - Kinley and Aquafina.

Both Coca-Cola and Pepsi did not comment on the issue but the Indian Soft Drinks Manufacturers’ Association—of which both are members—said its products manufactured in India met every safety standard set by food, health and regulatory bodies in India and abroad.

The ban covers all prominent brands sold by the two companies—Pepsi, Coca-Cola, Mirinda, Mountain Dew, Diet Pepsi, Pepsi Blue, Fanta, Limca, Sprite, Thums Up, and 7-up.

Sale of carbonated beverages has fallen 15-60% in different parts of the country since the pesticide controversy broke. Coca-Cola and Pepsi account for roughly 50:50 of the Rs 6,000-crore carbonated beverages market.

Kerala sells 25 million (5%) of the 500-million cases sold in India. But the state had a share of 9.5% of the domestic market before the controversial campaign against water depletion in the village of Plachimada brought down sales.

Asked if public health was a reigning priority and whether cigarettes and beedis would also be banned, Achutanandan, who is also a CPI(M) politburo member, groped for an answer. “The ban on tobacco and tobacco products will be considered in a phased way. Today’s decision concerns only colas,” he replied.

On Sunday, a meeting of the liaison committee of Left Democratic Front (LDF) had unanimously decided to recommend the ban to the state government.

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