Coke, Pepsi: To Drink or Not to Drink?
This Day Online
August 30, 2006

President George W Bush of the United States of America (USA) has come under fire for backing embattled international brands, Coke and Pepsi, over allegations in India that the drinks contain "dangerously high levels of pesticides." Both companies deny the claim. But unfolding events show they need to do a lot more than that to regain public confidence and lost markets writes Laurence Ani

There's hardly any part of the world without a Coca-Cola plant. Even in crisis-ridden Darfur, where the temperature is unbelievably hot, a bottle of chilled coke is easy to come by. But Coca-Coca is currently embroiled in what, perhaps, is its worst crisis in India, and which may have a spiralling effect in other parts of the world. It is not alone though. It's main rival, Pepsi, is getting similar knocks.

Both companies have been forced to halt their multi-billion operations in Kerala, India following allegations of dishing out substandard products to the public. Specifically, the Indian Centre for Science and Environment (CSE) recently published a report claiming that its findings reveal high levels of pesticides in Coca-Cola and Pepsi, which it said is 24 times higher than in European Union (EU) standards. Both companies have strongly disputed the report.

President George W Bush promptly came to their rescue, backing the American companies which already face full or partial ban in about six Indian States. The controversy has thus taken a political shape, with critics lambasting the Bush administration for what they say is an attempt to turn a blind eye to the evils of a company that partially bankrolled his re-election campaign in 2004.

An Indian Resource Centre claims Bush's 2004 presidential campaign received more than $380,000 from Coca-cola and its affiliates.

With a sixth of the world's population, India is a major market for Coke and Pepsi, just as it is for several other products seeking an increased market share. Annual growth rate for the soft drinks sector in India is said to be between seven and eight per cent. So it's no surprise that the US has voiced strong disapproval over the decision by some Indian states to ban Coke and Pepsi.

An official of the US trade ministry, Frank Lavin, hinted last week that the action was capable of hurting India's chances of attracting investment from Washington. Lavin reportedly told a foreign news agency that "it would be unfortunate if it appeared foreign companies were not being treated fairly in India."

CSE insists the issue is by no means an international trade dispute and frowns at any attempt to make it seem so. The group describes Lavin's implicit threat as a "shameful act of desperation."

What are the details of CSE's findings? The centre alleged that its study revealed an average pesticide residue of 11.85 parts per billion in 57 samples of Coca-Cola and Pepsi drinks produced in 12 Indian states. The group says that figure is about 24 times higher than limits agreed, although not yet implemented, by the Bureau of Indian Standards. According to CSE, the study revealed the presence of four toxic chemicals: lindane, DDT, malathion and chlorpyrifos. CSE noted however that the pesticide levels "were not necessarily any higher in cola than in any other foodstuffs consumed daily by Indians," but adds that the "difference is that soft drinks do not have substantial nutritional value, which would make drinking them worth the risk."

The Indian government has however rejected the report. But it has not prevented some Indian states from enforcing a ban on the products. The government's rejection of the report has been condemned by the CSE which accused it of "being more concerned about the health of business than the health of the people."

Legislators in the country seem to agree with CSE, whose report they have upheld. The government was obliged to set up a committee comprising fifteen members of the country's (from both the government and opposition) parliament after a sustained public outcry.

"The committee has appreciated the whistle-blowing act of CSE in alerting the nation to an issue with major implications to food safety, policy formulation, regulatory framework and human and environmental health," the committee said in a statement it issued and urged the government to ensure that a very high safety standard is set for soft drinks.

"(We) felt that claims made by Coca-Cola companies in their advertisement is tantamount to misleading the public as their products do contain pesticides which have ill effect on human health in the long run.' CSE director, Sunita Narain, hailed the legislators action. "It endorses our agenda that the issue of public health care and food safety is central to the country."

Although both companies have maintained their products meet international safety standards, Coca-Cola's Vice President in India, Sanjiv Gupta, said his company would be willing to comply with "whatever new standards the government decides to bring." Both firms have however launched a massive advertising campaign to refute CSE's claims and stave off a possible dip in sales.

CSE's recent report is the second time in three years it would be publishing an indicting report concerning the presence of pesticides in Coke and Pepsi drinks bottled in India. The ban on sale of the products in public places. has been backed by a state court pending a full hearing of the case.

The sale of the drinks in government offices and educational institutions have been stopped in big states such as Gujarat, Madhya Pradesh and Rajasthan. Reports say the move will affect thousands of schools and is likely to deprive the companies of a potential market of thirty million households. Similar actions have been taken by the Indian Parliament and the defence ministry. Both institutions have banned sales at their cafeterias and clubs. But the government of Karnataka, in Southern India, has gone further than that. The state has filed a lawsuit against Coca-Cola.

The Supreme Court in India early this month issued notices to both Pepsi and Coca-Cola that seeks to compel the companies to disclose the drinks' "secret recipe." The court gave both companies four weeks to file a reply. The companies have yet to make a formal response but chairman of PepsiCo India has described the accusations as "wild allegations...calculated to spread consumer panic."

Even if the allegations are eventually nullified, the interest it has so far generated elsewhere cannot be muffled. For instance, it has elicited concerns in Nigeria especially with regard to whether similar cases of pesticides residues exist in soft drinks here. Perhaps, this should be the question: Is there anything like an accepted level of pesticide residue for soft drinks in Nigeria?

NAFDAC spokesman, Abubakar Jimoh, could not confirm to THISDAY if such provision exists. He denied knowledge of the pesticides controversy in India and said he would study the situation to ascertain if a response from NAFDAC will be necessary. He promised to get in touch with THISDAY but did not at press time.

Several consumer protection agencies conduct frequent tests to ascertain the pesticides level. In most cases, says a report, leading consumer brands have fallen below the requisite standards. But the reaction has largely been insignificant, by no means comparable to the outrage generated by the recent Coca-Cola controversy.

A similar report by CSE about the soft drinks in 2003, prompted Coke to hire a leading Public Relations agency, at a substantial cost, to help rebuild its sullied reputation and dipped sales. It faces yet another daunting challenge in the near future just like its rival Pepsi.

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