Coca Cola India Crisis Case Study Analysis Template



12.01.06
ISSN:1528-3836
© 2006 Jonathan Bernstein
Circulation: 4,000+
Estimated Readership: 14,000+


JUST A THOUGHT

The Internet provides many would-be Davids with ready-made slingshots

Jonathan Bernstein

CRISIS MANAGER UNIVERSITY

The Real Thing? The Rising Power of NGOÕs
Coke & PepsiÕs India Adventures Mark a New Generation in Defending Brands
By Richard S. Levick

Coca-Cola and Pepsi sit together atop a market of great potential in India as that nationÕs populace sips its way through 355 million cases of beverage each year. The cola giants - true to their status as world-leading brands - share 90% of IndiaÕs soda market, dominating the demand for soft drink in this land of Bollywood blockbusters, dire poverty, and superpower ambitions.

Yet India has given entirely new meaning to the term "cola war." It is an ongoing war that persuaded two of the fiercest rivals in the history of commerce to stage a separate peace. The real adversary is not a competing brand, but separate political force that, in some senses, opposes all brands. In some ways, the non-governmental organizations -- NGOs -- that played the decisive role in Coke and PepsiÕs India fracas distrust the global economy as a whole.

Attack the global marketÕs leading brands, and you attack the market itself. ItÕs a war of attrition likely to last as long as capitalism, with new found powers in the age of the Internet.

India, the worldÕs largest democracy, has an economy that is now booming with a growth rate of 8% per year and foreign investments of $8.4 billion last year. Coke and Pepsi themselves have invested nearly $2 billion in India over the years, money that their boards no doubt thought was well spent. Imagine their shock when an Indian environmental group leaked a report alleging the soft drinks were unfit for human consumption.

The health scare was surreal as farmers emptied cola bottles into their fields. There had already been earlier instances, before the environmental group leaked the report, of farmers using the worldÕs most valuable brand and its rival as pesticides. Now, one popular TV personage was regularly telling his cable-TV audience to use the colas only as "toilet cleaners."

What went wrong in India can easily go wrong elsewhere as new players - namely NGOÕs - exert ever more influence in markets around the world. India offers a crash course for facing down the challenges of NGOs and maintaining a global momentum that no corporation can afford to relinquish.

Toxic Cocktails

The soda kingsÕ troubles began in earnest this past August, when the Centre for Science and Environment - or CSE - released a report on the results of a lab study that allegedly found 57 bottles of Coke and Pepsi products from 12 Indian states to contain unsafe levels of pesticides, including a "cocktail of 3-5 pesticides" in all samples.

These levels allegedly exceeded by 24 times proposed environmental regulations that are still being formalized. WhatÕs more, the report came three years after another CSE study found higher-than-allowable pesticide levels in Coke and Pepsi soft drinks, although the Minister of Health issued a statement saying that the conclusions were not warranted by the tests that CSE had done.

Coke and Pepsi are to be commended for their willingness to confront the issue directly and, in so doing, provide a fundamentally salutary example for other companies. Coca-Cola, for example, had its products tested by one of the worldÕs most respected laboratories, the Central Science Laboratory, an Executive Agency of the UK Government Department for Environment Food and Rural Affairs. Test reports detected no residues of the four pesticides allegedly found in the products by the Centre for Science and Environment (CSE).

However, Coke and Pepsi made an unfortunate timing error. CSEÕs accusations had already fired the public imagination and the crisis swept the nation. Subsequent attacks, far from quelled, were unrelenting and ferocious, in some cases led by publicly hostile local bureaucrats. Members of the Hindu nationalist Bharatiya Janata Party called for a nationwide ban, as outraged activists staged mock funerals that focused on "tainted" colas.

Problems grew from there. Seven of IndiaÕs states refused to lift partial bans on the drinks. One state, Kerala, a left-leaning state government in the south, has totally banned the production and sale of the drinks (a ban which the Kerala High Court would rule against just a month later). Environmentalists are still planning nationwide protests.

No doubt, CSE had succeeded in part because it is viewed as being credible and is considered a well-respected voice in the marketplace of ideas. Just last year it won a $150,000 Stockholm Water Prize presented by King Carl XVI Gustaf of Sweden for its research and advocacy in rainwater harvesting. CSE had also campaigned successfully against air pollution in the 1990s, finally getting Delhi buses, taxis, and "autorickshaws" to use compressed natural gas.

Coke and PepsiÕs troubles illustrate the problem of doing business in an argumentative grassroots democracy, where controversy can spell trouble for big brands and where multinational corporations are victimized by easily slighted nationalism. NGOs may have credibility in the United States, but here - in a nation that counts a socialist like Nehru among its revered founders, and where governments like KeralaÕs are strongly entrenched - they enjoy a particularly emphatic legitimacy.

The "Other" Governments

The cola companies first resorted to textbook communications plans, commissioning independent lab tests and working out coordinated public relations responses. So far, so good, but their public response was bogged down in technicalities, waiting for the lab results before aggressively addressing accusations. The delay fanned the flames of suspicion.

Many NGOs, including small ones, have proven that their own brands have all the cachet and global reach of multinational corporations. Some NGOs are critical players in national development, often channeling individual, institutional, and government funding to communities. Others see their mission as hunting down corporate malfeasance, most often non-Indian corporations.

According to Joseph Nye, dean of the Kennedy School of Government at Harvard, many NGOs claim to act as a "global conscience," representing broad public interests beyond the purview of individual states. While they may not wield the "hard power" of government, they can still coerce by persuasion rather than compulsion.

Some NGOs make the world more democratic, while others act irresponsibly and with little accountability, Nye adds.

Good or bad, NGOs are a fact of life and companies must strategize accordingly.

What the Major Media Missed

There are many types of NGOs - consultancy or research organizations, training or capacity building groups, grassroots organizations, city-based organizations that restrict their focus to cities, national and international organizations, self-help groups, and religious NGOs. Although chartered as Not for Profit, they can still turn a profit.

The rise of the NGO - particularly in India - is a story the major media seem to have missed. IndianNGOs.com estimates there are 1.5 million NGOs at work in India, some 55,000 registered in Bombay alone, including places of worship, sports associations, hospitals, and educational institutions. The Society for Participatory Research in Asia estimates 19.4 million people work in IndiaÕs NGO sector, many of them volunteers.

For every corporation doing business in India, thereÕs an NGO to match. NGOs seemingly know how to cut conglomerates down to size by captivating the public imagination with stories that reach the "Indian heart." They bear witness to an intrinsic truth - the truth behind every sensational headline - that a news item is first and foremost a story.

The best news stories, those that go national and last for days or months on end, contain three basic elements: a victim, a villain, and a vindicator. ItÕs easy to see that CSE painted the cola kings as villains, Indian consumers as victims, and itself as vindicator. They know the law of KISS - "Keeping it Simple, Stupid."

The cola wars underscore their strategies to a tee. CSEÕs prior study found pesticide residues in bottled water brands sold in India and in everything from milk and baby milk powder to honey, fruit jam, and fresh fruit. But milk and bottlers almost certainly would have made for lousy national villains. TheyÕre too small, and big stories demand big villains.

Not just Coke and Pepsi, other multinationals have gotten caught in the crosshairs of IndiaÕs "other government." Fast-food chain KFC was reduced to a single restaurant three years ago after Bangalore farmers ransacked a restaurant and accused the company of selling chickens tainted with carcinogens. (KFC has since made a comeback with a menu tailored for a vegetarian culture. It will soon have 30 outlets in India.)

Fighting Back

Coke and Pepsi were armed with an unprecedented resolve to work with each other. They were both ready to fight. They were both ready to be responsive, and the fact patterns were on their side. They had even started the ball rolling with a colorful and persuasive metaphor. Then came the crucial delay, the loss of momentum, and the proliferation of inimical messages nationwide and Internet-wide.

Central Science Laboratory had a national press conference announcing the results of their tests on August 14 attracting more than 100 journalists - a strong response, but one that occurred nearly two weeks after the CSE pushed their story into the mainstream. The Cola companies acted forcefully and with speed, but not as fast as the proactive NGOs. For large companies, acting as rapidly as their own internal decision making and uncovering of the facts will allow, often puts them at a disadvantage in the media.

Run Toward A Crisis, Rather Than From It

The earlier one meets a crisis head-on, the better. When the cola crisis began, Coke referred journalists to supportive blogs and the phone numbers of interest groups, including the Centre for Sanity and Balance in Public Life, whose message points were widely quoted: "What is all the fuss about? Yes colas have pesticides [but] the amount is so low compared to other things Indians consume that they can be ignored."

The message may have been substantively accurate but it was interpreted to mean, "DonÕt worry. Just be happy." It was an unfair interpretation by the media, but it was one repeated frequently.

A pro-company blog strategy is as essential as it is brilliant. But for it to be effective as an echo chamber, there must be a central controlling voice. The beverage companies - or any companies under attack - need to provide that initial voice. The blogs and third parties will then provide the reverberations that form public opinion. They cannot be left on their own to do it or you will lose control. Unfortunately, in the early days of this crisis, the cola companies, while highly active, were fairly quiet publicly.

Running toward a crisis means confronting the other sideÕs ostensible messages head-on, but without legitimizing them.

Publish Passionate Pictures

Controversial business stories are ultimately battles involving visuals. Some pictures are worth a thousand words; others millions. While the cola kings did many things right in responding to this crisis, including print ads and commercials which focused on pictures and emotions -- they lost time at the outset of the story, when emotional opinions were being formed.

Pepsi, in particular, allowed a propitious moment to pass when it had the ultimate weapon at hand - its own freshly minted CEO, Indra Nooyi, a woman as comfortable in a sari as in a business suit. Born and raised in India, Nooyi is 28th on this yearÕs Forbes list of the worldÕs most powerful women in industry. She has maintained close ties over the years with Indian government officials and visited the country frequently to grow PepsiÕs market share.

WhatÕs more, she is regarded as a "people person," a plainspoken executive who isnÕt above singing pop tunes and who has merged her Hindu faith with the lifestyle of a busy CEO.

The Indian public no doubt would have been fascinated and maybe won over by visuals of her chatting with farmers, hip urban shoppers, Bollywood starlets, and leading bureaucrats. Pepsi could have flown its CEO to India for photo ops of her in flowing sari drinking Pepsi with farmers or, better yet, children.

In the search for great visuals, corporations neednÕt counter-attack NGOs and should, in fact, resist that temptation. If the pictures are good enough, the high ground is the best place to be. Banal photos, the kind corporations often use in their day-to-day marketing, sometimes work, but usually do not.

In crisis, the goal is pictures that communicate both compassion and urgency. In other words, capture the collective imagination.

Perception Always Trumps Reality

Truth is in the eyes of the perceiver even when the "facts" have no basis in reality. Truth is determined by who tells the story and how soon they tell it. Perceived truth may actually be inversely proportionate to the volume of detail presented by one or the other side.

As weÕve seen, CSE came out with the reputed facts first: pesticide residues in Coke and Pepsi are up to 24 times the acceptable standards found in the West. Perception is always guided by the first message we hear. The defense can win, but not by simply battling the facts.

Adverse and inaccurate messages must be boxed out, which is done by introducing new messages into as many news sources as possible, thereby isolating the residual negative reports. Hostile reporters must be identified and contacted on a one-on-one basis to ferret out their individual concerns. Opinion leaders must begin to articulate your position. New messages must be substituted in place of the original reports.

CSEÕs lab tests were called into question in tests commissioned by Coke and Pepsi and even by the Minister of Health. But the damage had already been done. Coke and Pepsi were forced to react - to be in the near-impossible situation of having to disprove a negative.

When YouÕre Explaining, YouÕre Losing

Coke and Pepsi executives in India knew consumers would be easily confused, because the subject of pesticides in groundwater and soil is technical and difficult to explain. But explain they did, or tried, for the handfuls of people who cared.

By its very nature, the act of explaining is reactive and reaction is always an uphill battle. Human nature determines that an accepted fact cannot be supplanted by argument; only by another, equally prepossessing fact. Indeed, the best practices of crisis management are interlinked. Indra Nooyi talking to children and drinking cola does not explain or argue. It generates a wholly separate fact in the mindÕs eye, and itÕs only that fact, or equally simple ones like it, that could have won the day in India before the tipping point - the moment when the momentum of evolving news stories take on a life of its own - occurred.

CSE has a staff of 100; Coke and Pepsi employ 12,500 people in India directly and support more than 200,000 indirectly by virtue of purchases of India-made sugar, packaging material, and shipping services.

In the end, however, IndiaÕs new cola war has little to do with cola itself. The story here is the rise of NGOs, especially in developing markets like India. Many activists feel this is the most direct and economical way they can take a shot at a global marketplace that they believe threatens and overwhelms them, and to which they are instinctively hostile. Take a shot at the leading brands in that marketplace and they will rise to the national and potentially global stage.

One billion consumers in India are still at play. Even more important, the Coke and Pepsi crisis is a template for NGOs everywhere to do battle and win -- or at least temporarily wound -- given corporate vulnerabilities that need only be alleged, not proven.

Richard S. Levick, Esq., President and CEO of Levick Strategic Communications, protects brands and reputations during the highest-stakes global crises and litigation. Find a comprehensive arsenal of vital communications tools at www.levick.com, including books, newsletters, and helpful articles.

Editor's Note: Thank you to reader Karen Henen-Davis of Dow Corning in the UK for calling this item to our attention

UK Businesses More Proactive About Apologies

A report by the communications agency Weber Shandwick shows that businesses in the UK are more likely to offer a public apology in times of crisis and are less likely to 'run for cover' than those in other parts of the world. The survey of 950 global companies in 11 countries found that almost 65% of UK CEOs and chairmen, said they would 'usually or always' consider a public apology to help their firm recover its reputation compared with 57% in other parts of Europe and North America.

In the UK, 14% of the respondents considered it important to keep the CEO out of the media compared with an average of 20% in the ten other countries surveyed.

Editor's note: An organization called ICOR has a very interesting big-picture approach to the field of crisis management, all captured in their concept of "resilience." Here's a short piece about it, and I encourage you to visit their website for more information.

Building Resilient Communities

Communities are comprised of many types of organizations - each supporting or contributing to the health and resiliency of that community.

In order for the community as a whole to be resilient, each one of the organizations within that community needs to be able to provide their particular goods and / or services - no matter what challenges the world puts before them.

It is important to take a systems view of organizations, recognizing there are multiple interdependencies within and between different organizations that influence their ability to respond and recover. Effective resilience management for any one organization must look beyond that single organization and consider the resilience of other organizations that it depends on.

Resilience is not something that can be achieved by any one organization or infrastructure system acting in isolation. Organizations are required to work together toward system resilience in order to build resilient communities.

To learn more about making your organization more resilient and for the latest in resiliency research, go to www.theICOR.org or www.build-resilience.org.

ISCRAM2007

The 4th International Conference on Information Systems for Crisis Response and Management (ISCRAM 2007) will be held May 13-16, 2007 in Delft, The Netherlands. The ISCRAM community includes researchers and practitioners active in the field of crisis management.

This year's theme is Intelligent Human Computer Systems for Crisis Response and Management and will offer 27 special sessions grouped in the following themes:

Theme 1: Disaster Management & Internationalization

Theme 2: Real World Research Methods

Theme 3: Human computer interaction

Theme 4: Geographic Information Systems

Theme 5: System & Software Development

Theme 6: Systems & Organization

Theme 7: Training & Simulation

Both scholars and practitioners are invited to submit papers and demonstrations. Submission deadline is January 15, 2007. Complete information is available at www.iscram.org.

The Big Story Will Still Appear Mid-December

For those who have been reading my promises of a major news story that I was going to break in this ezine, my client and I have had good fortune beyond our wildest expectations. I was able to get a very prominent national news organization interested in this matter even before it is published, and that organization has the exclusive first right to break the story. You will be alerted of the air date as soon as it is absolutely confirmed -- i.e., they start running some promos. Then, I will publish a special edition of this ezine and launch a related website. As promised, all readers will have the opportunity to help resolve this crisis situation, should you choose to do so!

CRISIS MANAGER BUSINESS ANNOUNCEMENTS

Keeping The Wolves At Bay

Keeping the Wolves at Bay (available in print and PDF formats) remains, to my knowledge, the only commercially published media training manual in the world. It can be purchased at www.thecrisismanager.com, and its pages can be modified to make it YOUR "name brand" media training manual if you are an agency or organization that frequently conducts training. If the latter subject is of interest to you, write to: jonathan@bernsteincrisismanagement.com.

Have Webcam And Videoconferencing, Will Consult
An Offer from Jonathan Bernstein

Would you like to bring me to your next staff or board meeting, virtually, to conduct some training on crisis preparedness, crisis response, or "just" to give a good solid orientation on the subject of crisis management? There's a great value to "face time," but sometimes the cost and time required for travel make it impossible. If you or your IT department can allow a webcam stream into your computer (and better yet if you can send one back), we don't need no stinkin' high-tech, we can do this lower tech. I am constantly trying to bring more affordable services to clients who may not have the budget for other options, so this is an experiment. I have a webcam and am happy to bill by the hour for short-term consulting if this option is of interest. There is also a videoconferencing facility very close to my office if you would like to use that instead. Call 626-825-3838 or write to jonathan@bernsteincrisismanagement.com.

What Does That Slogan Mean?

By popular demand, I have re-opened an online store at which I sell clothing and mugs featuring the famous "Crisis Manager University" emblem and its infamous slogan, "Quoniam Stercus Accidit". That translates to "Because Stuff Happens." Except the real word isn't "stuff." There's only a 10% markup at the store to cover my costs -- it's a turnkey operation hosted by Cafe Press. I have found the items there to be a major hit with my clients and associates and great gift for any crisis manager. My purpose is to share my sense of humor with like (sick) minds as well as to prompt some folks to ask, "Who came up with this idea?" You can visit the store at www.cafepress.com/crisismanager.

PLAIN ENGLISH DISCLOSURE

Bernstein Crisis Management, Inc. has formal or informal co-promotional and mutually beneficial business associations with a number of the services we mention periodically in this newsletter. No, we can't go into details because that's confidential, proprietary, etc. But our relationship is NOT "arm's distance" and you should know that, since we regularly write about these services as we use them for crisis and issues management or other purposes. That said, you should also know that Bernstein Crisis Management sought the relationships because its staff is convinced that these services are the best of their kind for Bernstein Crisis Management's needs and those of its clients. If you have any questions about these relationships, please contact Jonathan Bernstein, (626) 825-3838.

ABOUT THE EDITOR & PUBLISHER

Jonathan Bernstein is president of Bernstein Crisis Management, Inc., www.bernsteincrisismanagement.com, a national crisis management public relations agency providing 24/7 access to crisis response professionals. The agency engages in the full spectrum of crisis management services: crisis prevention, response, planning & training. He has been in the public relations field since 1982, following five-year stints in both military intelligence and investigative reporting. Write to jonathan@bernsteincrisismanagement.com.

GUEST AUTHORS

GUEST AUTHORS are very welcome to submit material for "Crisis Manager." There is no fee paid, but most guest authors have reported receiving business inquiries as a result of appearing in this publication. Case histories, experience-based lessons, commentary on current news events and editorial opinion are all eligible for consideration. Submission is not a guarantee of acceptance.

LINKS

When I find a site that I think will be useful to my readers or site visitors, I put it on our Links page. If you have a site that would be of specific use to crisis managers and want to discuss a link exchange or other cooperative effort, please write to me, jonathan@bernsteincrisismanagement.com.

LEGAL DISCLAIMER

All information contained herein is obtained by Jonathan Bernstein from sources believed by Jonathan Bernstein to be accurate and reliable.

Because of the possibility of human and mechanical error as well as other factors, neither Jonathan Bernstein nor Bernstein Crisis Management is responsible for any errors or omissions. All information is provided "as is" without warranty of any kind. Bernstein Crisis Management and Jonathan Bernstein make no representations and disclaim all express, implied, and statutory warranties of any kind to the user and/or any third party including, without limitation, warranties as to accuracy, timeliness, completeness, merchantability, or fitness for any particular purpose.

Unless due to willful tortuous misconduct or gross negligence, Jonathan Bernstein and Bernstein Crisis Management shall have no liability in tort, contract, or otherwise (and as permitted by law, product liability), to the user and/or any third party.

Under no circumstance shall Bernstein Crisis Management or Jonathan Bernstein be liable to the user and/or any third party for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever, even if Bernstein Crisis Management or Jonathan Bernstein has been advised of the possibility of such damages.

A service of this newsletter is to provide news summaries and/or snippets to readers. In such instances articles and/or snippets will be reprinted as they are received from the originating party or as they are displayed on the originating website or in the original article. As we do not write the news, we merely point readers to it, under no circumstance shall Bernstein Crisis Management or Jonathan Bernstein be liable to the user and/or any third party for any lost profits or lost opportunity, indirect, special, consequential, incidental, or punitive damages whatsoever due to the distribution of said news articles or snippets that lead readers to a full article on a news service's website, even if Bernstein Crisis Management or Jonathan Bernstein has been advised of the possibility of such damages. Authors of the original news story and their publications shall be exclusively held liable. Any corrections to news stories are not mandatory and shall be printed at the discretion of the list moderator after evaluation on a case-by-case basis.

OTHER IMPORTANT STUFF

Do you know people who are Crisis Managers, whether they want to be or not? Please pass this newsletter on to them!

Subscribe to the free, twice-monthly email newsletter below. After entering your email address, you will receive a message asking you to confirm your subscription in order to prevent someone else from adding you to the list without permission. YOU MUST CONFIRM YOUR SUBSCRIPTION OR YOU WILL NOT RECEIVE THE NEWSLETTER.

Articles in "Crisis Manager" were, unless otherwise noted, written and copyrighted by Jonathan Bernstein. Permission to reprint will often be granted for no charge. Write to jonathan@bernsteincrisismanagement.com.

In a number of districts of India, Coca Cola and its subsidiaries are accused of creating severe water shortages for the community by extracting large quantities of water for their factories, affecting both the quantity and quality of water. Coca Cola has the largest soft drink bottling facilities in India. Water is the primary component of the products manufactured by the company.

There have been numerous public protests of The Coca-Cola Company’s operations throughout India, involving thousands of Indian citizens and several non-governmental organizations. Protests against the Coco Cola factories have taken place in a number of districts including: Mehdiganj near the holy city of Varanasi; Kala Dera, near Jaipur, Rajistan; Thane district in Maharashtra; and Sivaganga in Tamil Nadu.

The protests by villagers from Plachimada, in the southern state of Kerala have shown the strength of community-led activities, even against this global multi-national company. Through round-the-clock vigils outside the factory gates, they have managed to ‘temporarily’ shut down Coca-Cola’s local bottling plant. As of early 2007, the factory had remained closed for a number of years and a combination of community action and legal redress was aimed at permanent closure.

Background to Coca Cola ground water exploitation case in Kerala

In 1999, the Hindustan Coca-Cola Beverages Private Limited, a subsidiary of the Atlanta based Coca-Cola company, established a plant in Plachimada, in the Palakkad district of Kerala, southern India. The Perumatty Village Council gave a licence to the company to commence production in 2000. Coca Cola drew around 510,000 litres of water each day from boreholes and open wells. For every 3.75 litres of water used by the plant, it produced one litre of product and a large amount of waste water.

Two years after production began protest by local residents became common place. Local communities complained that water pollution and extreme water shortages were endangering their lives.

In 2003, women from the Vijayanagaram Colony in the village of Plachimada, protested that their wells had dried up because of the over exploitation of groundwater resources by the Coca-cola plant. They complained that they now had to walk nearly five kilometres twice a day to fetch water. They also argued that the little which was left was undrinkable and when used for bathing the water burned their eyes and lead to skin complaints. Aside form these health issues, the depletion of groundwater resources also affected the ability of local residents to raise their crops of rice and coconuts.

In April 2003, the Perumatty Grama Panchayat (Village Council) refused renewal of Coca-Cola’s licence to operate on the grounds that it was not in the public interest to renew the licence stating:
“…the excessive exploitation of ground water by the Coca-Cola Company in Plachimada is causing acute drinking water scarcity in Perumatty Panchayat and nearby places…”

The Village Council considered revocation of the licence to be necessary in order to protect the interests of local people.

Permatty Grama Panchayat v state of Kerala

In December 2003, the Village Council’s decision was challenged in the High Court of Kerala State. The Court considered two issues: the question of the over exploitation of ground water, and the justification for the Village Council’s decision to revoke the licence.

The Court recognised that the State as a trustee is under a legal duty to protect natural resources. It considered that these resources, meant for public use, cannot be converted into private ownership. The residing judge, Justice K Balakrishnan Nair, asserted that the government had a duty to act to “protect against excessive groundwater exploitation and the inaction of the State in this regard was tantamount to infringement of the right to life of the people guaranteed under Article 21 of the Constitution of India.”

The High Court ordered the plant to stop drawing the groundwater within a month, ruling that the amount of water extracted by the plant was illegal. But at the same time, it ordered the Village Council to renew the licence and not interfere with the functioning of the Company as long as it was not extracting the prohibited ground water. Coca-Cola refuted the accusations of excessive exploitation and pollution and lodged an appeal.

The next few years saw a confusing array of legal battle between the Village Council and the company.

In 2005, the divisional bench of the High Court granted permission for the company to extract 500,000 litres from the common ground water per day in the year 2005-2006. The Court also affirmed that the Village Council was not justified in cancelling Coca Cola’s licence to operate until a full scientific assessment had been made of the facts.

The Plachimada storyMarch 2000 – Factory established

April 2002 – Agitation by the villagers commences

March 2003 – Village Council refuses to renew licence

May 2003 – State government stays the Village Council decision

Dec 2003 – Single judge bench of the Kerala High court upholds the Village Council’s decision

21 Feb 2004 – The Government ordered the company to stop drawing ground water from the plant

12 March 2004 – Coca Cola company suspended production saying it was “left with no option but to close the factory down in the long run”

29 March 2004 – Village Council refused to renew licences again saying company had failed to meet conditions to: stop using ground water; demonstrate that its products were safe, and prove the non-toxicity of its solid waste

3 April 2004 – Irate villagers blocked tanker lorry taking water to the plant and police arrested 44 villagers

April 2005 – A High Court Division Bench allows appeal by Coca Cola and permits the company to draw 500,000 litres of water per day. Orders the Village Council to renew licence

May 2005 – Village Council files special leave petition in the Supreme Court

1 June 2005 – Company approaches the High Court again as the Village Council did not renew the licence. The court orders Village Council to renew the licence within 7 days, or it would be deemed that the licence stands renewed for two years from 10 June 2004

6 June 2005 – Village Council informs the company that licence will be renewed for three months; asks them to remit the fee and collect licence

17 August 2005 – A group of about 100 activists from Yuvajana Vedi youth organisation march to factory gates. Heavy police force severely injured 4 protestors who were hospitalised and arrested 43 activists

19 August 2005 – The Kerala State Pollution Control Board ordered the stoppage of production at the Plachimada factory for failure to comply with pollution control norms

15 September 2005 – Kerala State Government lends its support for the people against the company

November 2005 – High Court rejects the company’s petition that since Village Council did not keep up the stipulated time frame, it should be deemed that the licence stands renewed for two years. The company ought to have accepted the opportunity to function for three months. But the court again orders the Village Council to renew the licence

November 2005 – Village Council files against the latest High Court order in the Supreme Court

4 Jan 2006 – Village Council reissued a licence to the company for three months but laid out thirteen conditions, the first of which is that the company shall not use groundwater from Perumatty Panchayat for industrial purposes, or for producing soft drinks, aerated carbonate beverages or fruit juice

June 2006 – Meeting with community leaders ends in major commitment from Kerala state officials for pro-active action against Coca Cola

10 August and 11 August 2006, the Government of Kerala and the State Food (Health) Authority, respectively, banned the manufacture and sale of Coca-Cola in the State on the grounds that it was unsafe

September 2006 – High Court of Kerala set aside the orders of the Government of Kerala and the State Food (Health) Authority

SOURCES: Based on article by P.N. Venugopal, 27 Jan 2006, Quest Features and Footage, Kerala, cited on Together India website, with additional information from Asian News International 20 August 2005; the Hindu Newspaper 20 August 2005; the Indian Resource Centre, 17 August, 2005; The Hindu newspaper, 25 October, 2005; Coca Cola Company Website, Press releases.

In August 2005, the plant was closed once again, this time by the Kerala State Pollution Control Board. The Board had sought clarification from Coca Cola of the excessive amount of Cadmium in the effluent. G Raja Mohan, the President of Kerala State Pollution Control Board stated:
“In the waste water treatment sludges we have found contents of Cadmium abnormally high. It goes up to 600 percent above the permissible limit. In the ground water the content of Cadmium is not that much. So, there is something which they are using in the raw materials.”

In October 2005, the State Government of Kerala announced it would support the Village Council local activists by challenging Coca Cola’s right to extract water from common groundwater resources in the Supreme Court of India. In an official press release, Health Minister K. K Ramachandran said:
“the Government will stand by the people in whichever court the company goes. The right over water and air is the right to live. The Government will not allow stopping of these two lifelines of the people.”

On 4 January 2006, following decisions of the Kerala High Court, the Village Council renewed the Coca Cola company’s licence for three months but laid out thirteen conditions. The first of these was that the company shall not use groundwater from Perumatty Panchayat for industrial purposes, or for producing soft drinks, aerated carbonate beverages or fruit juice. The Village Council cited the 2004 Supreme Court decision of M C Mehta v Union of India and the notification by the Kerala State Groundwater Department that village is ‘over exploited’ with regard to groundwater.

Supreme Court Judgement recognises the right of citizens to use waterIn M C Mehta versus Union of India 2004(12) SCC118, the Supreme Court of India recognised that:

Groundwater is a social asset

Citizens have the right to the use of air, water and earth as protected under Article 21 of the Constitution (the protection of life and personal liberty)

It further states that the environmental balance is to be maintained and wherever groundwater is required for domestic and agricultural needs, priority is to be given to these.

Source: PN Venugopal, 27 Jan 2006, Quest Features & Footage, Kerala, cited on Together India website

In June 2006, the newly elected State Government of Kerala assured community leaders that it will take proactive measures against the Coca-Cola bottling plant in south India. On June 15th 2006, Chief Minister Mr. V. S. Achutanandan and other cabinet members submitted a memorandum outlining their demands. These demands included the permanent closure of the bottling plant in Kerala, compensation for the affected community members and prosecution of the Coca-Cola Company for criminal offences.

In August 2006, this brought a new twist to the ongoing saga. The Kerala State Pollution Control Board ordered a ban on the manufacture and sale of Coca Cola in the State questioning the safety of the product itself, based on allegations that it contained pesticides and harmful chemicals in a report by an NGO, the Centre for Science and Environment, New Delhi.

Coca Cola put out a press release stating:

We are completely confident in the safety of our soft drinks in India because they are produced to the same level of purity, regarding pesticides, as the stringent EU criteria for bottled water.

We support the adoption of stringent, science-based rules by the Indian government regarding levels of pesticides in soft drinks. The rules should be based on sound and validated testing methodologies. We continue to work with relevant government bodies, industry associations, non government organizations (NGOs) and the scientific community to develop and finalize criteria and associated testing methods for pesticides in soft drinks.

We have the same uncompromising commitment to product safety and quality in India and everywhere we offer our beverages around the world, and independent third parties regularly audit all plants for compliance. The Coca-Cola Company has stringent criteria for all of the ingredients used in our beverages. These criteria are backed by internationally accepted analytical testing protocols for these ingredients.

Our soft drinks in India have been regularly tested and evaluated by the world renowned and independent Central Science Laboratories (CSL) and all tests show no detectable level of pesticides.” – Coca Cola Media Statement Regarding the Safety of Coca Cola Soft Drinks in India, 9 August 2006.

However, in September 2006, the High Court of Kerala set aside the orders of the Government of Kerala and the State Food (Health) Authority banning the manufacture and sale of Coca-Cola in the State. The High Court observed that the ban could not be justified since it was based solely on a report by an NGO.

The State Government of Kerala has now challenged the extraction of water by Coca Cola in proceedings before the Supreme Court. The State Government argues that the company is taking water from poor communities, but according to a press article in October 2006, the Village Council was not pressing for the case in the Supreme Court to be listed for hearing. It appears to believe that as long as the conditions imposed by the Village Council are not fulfilled, the plant cannot reopen.

Nevertheless, water remains a problem for the villagers. With its groundwater still polluted, Plachimada now gets its drinking water through pipes, that provide water for only a few hours once in two days, and through tanker lorries which also arrive once in two days. Fifteen tanker-lorries of water are supplied by the government, and 15 more by the company.

Villagers remain particularly concerned at the pollution of the scarce remaining groundwater and land which they blame on the discharge by the Coca-Cola company of its waste into the surrounding fields.

Although the Coca Cola factory in Plachimada has remained closed since 2004, locals are not satisfied with simply closing the plant; they want justice for the damage caused to health and the environment. As the protestors complain:

“It’s true that the company is not functioning, but that is not enough. We must get compensation for all the crimes committed by the company.”

Whether or not the ban finally stays, the agitation in front of the factory gate is continuing. As Kaliamma, one of the several tribal women squatting in the temporary ‘agitation tent’ says: “Our problems have not been solved.”

Global protests against Coca Cola

Protests about over-extraction of ground water in India and Sri Lanka by Coca Cola’s subsidiary companies are impacting on the parent company. Strong concerns dominated the company’s annual general meeting on 19 April, 2006, in Delaware, USA. A group of protesters shouted outside the meeting, waving banners with messages such as: “Coca-Cola: Stop De-Hydrating the World” and “Coca-Cola: Destroying Lives, Livelihoods and Communities.”

Inside the meeting, nearly 20 shareholders spoke on behalf of campaigns from India and Colombia. A proposal tabled by a shareholder called on the company to “prepare a report on the potential environmental and public health damage of each of its plants, affiliates and proposed ventures extracting water from areas of water scarcity in India”, but failed to receive any positive response from the company.

In its statement against the proposal, Coca Cola stated that it “recognizes that water is a precious natural resource under growing stress around the world.” It set out the actions that the company has taken to address the risks associated with water extraction and dealt with the complaints in Kerala.

“As to groundwater issues in southern India specifically, the Kerala High Court ruling released in April 2005 (the result of a year-long independent study) stated that our facility was not the cause of water shortages in that community. The study showed that a cycle of three years of short monsoon seasons in the Kerala area was the main contributor to the local water shortages. Through our rainwater harvesting efforts in several communities and plant operations in India, we currently are returning a significant portion of the water we remove from aquifers for production purposes.

“Additionally, the Company has initiated partnerships to set up local rainwater harvesting projects in communities around the country and to mobilize local residents behind these water conservation efforts. These projects combine modern technology with the reinstatement of traditional methods of water management that had fallen into disrepair in some local communities.

“The Board understands the need and desire for transparency in all matters including environmental safety and health issues related to our operations in India and elsewhere. However, we feel that this proposal is unnecessary at this time because our above-described existing environmental, health and safety policies, practices, and reporting methods provide a wide range of information regarding the impacts of our operations throughout India and the world. Furthermore, the Board believes that producing the report called for in this proposal would create a redundant use of Company human and financial resources.”

The campaign against Coca Cola has spread, particularly on college and university campuses, as well as among trade unionists and religious organisations. The India Resource Centre published a press release the day following the Shareholder meeting stating: “Even as Coca-Cola officials were trying to deal with the scores of protesters at its meeting, the campaign to hold Coca-Cola accountable was producing damning results for the company. The Union Theological Seminary in Manhattan, New York, a graduate school of theology which trains students to be ministers in the Christian faith, just announced on Tuesday that it was banning the sale of Coca-Cola products on its campus.

In India, a new campaign was announced in Gangaikondan, in the southern state of Tamil Nadu, against a Coca-Cola bottling plant under construction. And a massive rally is planned in Plachimada, Kerala on April 22, where Coca-Cola’s bottling plant has remained shut down for over a year because the village council has refused to renew Coca-Cola’s license to operate.”

In November, 2006, the Chairman and CEO, The Coca-Cola Company, E. Neville Isdell, spoke about the challenges to Coca Cola in India at the Nature Conservancy in Atlanta, Georgia, USA. He remarked:

“In India, we have been challenged to demonstrate our commitment to water stewardship. While we are not even close to being one of the largest users of water, we are certainly one of the most visible, and have been subject to criticism that we are depleting groundwater aquifers in the State of Kerala. Let me be very clear: Coca-Cola has a shared interest with the communities where we operate in healthy watersheds — because they sustain life and our business. And the last thing we would ever do is spend millions of dollars to build a plant that would run itself dry.

“Accordingly, we are working with many partners across India to improve watershed management, and with the Central Ground Water Authority, local governments and communities to expand the use of simple and effective rainwater harvesting technology. To date, we have installed rainwater harvesting systems in 200 locations, including schools and farms, that are helping recharge aquifers when the rains come.”

Sources: This section is based on a wide variety of sources including court judgements, press releases and official statements from Coca Cola. These include: Permatty Grama Panchayat vs state of Kerala, High Court of Kerala 2003; Coca-Cola: Continuing Battle in Kerala, Coca-cola plant must stop straining water Indian Resource Centre July 10, 2003; Coca-cola plant must stop straining water, The Guardian 19 December 2003; W.A.N0.2125 of 2003 and W.A.N0215 of 2004 Judgment 7th day of April 2005, M. Ramachandran and K.P Balachandran, JJ High court of Kerala 2005; Coca-Cola Protestors Attacked by police: four hospitalized, R. Ajayan, Plachimada Solidarity Committee (India) Amit Srivastava, India Resource Center, August 2005; Kerala Pollution Board orders Coke plant to close, Asian News International 8/20/2005; State defends village council decision to revokes Indian licence, Indian Resource Centre, September 2005; Health Minister: Coke plant will not be allowed to function The Hindu, 25 October2005; Kerala Government Assures Proactive Action Against Coca-Cola Meeting with Community Leaders Ends in Major Commitments from State Officials, Indian Resource Centre : 19 June, 2006; Kerala assures proactive action against Coca-Cola one world. South Asian; Article by M Suchitra and O.N. Venugopal, 03 Oct 2006, The Quest Features & Footage, Kochi, cited on the India Together website; Shareowner Proposal Regarding Environmental Impacts of Operations in India (Item 7)by William C. Wardlaw, III, Annual Meeting of Coca Cola Shareholders, 2006; press releases, Coca Cola Company; articles from the India Resource Centre website.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *