P R SANJAI y ARCHANA
CHAUDHARY
A potent blend of
pride, economic nationalism and mounting concern over water security have the
world’s two biggest cola brands in a bind in southern India.
Shopkeepers in
drought-hit Kerala state decided Wednesday to promote local brands over Coca-Cola Co. and PepsiCo Inc. beverages after counterparts in
neighboring Tamil Nadu boycotted
the multinational drinks. While retail groups claim the companies are siphoning
off groundwater and selling products tainted with pesticides, academics and
analysts say the soda giants have become scapegoats for a water crisis that’s
become mired in politics and patriotism.
India is one of the
most water-challenged nations, and fights over water have erupted between users
periodically for decades. Failed monsoon rains over as many as the past three
years in some states have parched rivers and dams, forcing farmers,
manufacturers and municipal water suppliers to rely more on wells to meet their
needs. Problem is, those too are drying up, and that’s hurting farmers, India’s
economic mainstay.
Dried up Manjara Dam in the Marathwada region in May
2016.
Photographer: Manish Swarup/AP Photo
“The root cause for
the boycott isn’t the multinational companies, but the enduring fight between
industrial users and farmers, especially in several drought-hit states,” said
P.L. Beena, an associate professor with the Centre for Development Studies in
Thiruvananthapuram, Kerala.
‘Make in India’
On top of that, Prime
Minister Narendra Modi’s call to companies to “make in India” has given rise to a pro-India push -- and,
in some cases, an anti-foreigner backlash -- that’s supporting local brands.
With growth slowing, about half of Indian households have just one employed member,
according to one government survey. Many families were left scrambling during
India’s demonetization cash ban late last year.
Protests against the
drinks from the two bottlers are a “misplaced expression of a dour state of
mind due to weak economic development,” said Chakri Lokapriya, the Mumbai-based
managing director of the Indian arm of the $3-billion TCG Group. “Hardly any
water reservoirs or economic development has materialized, or the jobs that
would have been created in building such an infrastructure.”
The latest action
means drinks from Coca-Cola and PepsiCo, which together have a 96 percent
hold on India’s $4.9 billion soda market, will be kept off the shelves of more
than 1 million shops.
Vendors would rather
lose business than sell the products, said A. M. Vikrama Raja, president of a
retailers’ association in Tamil Nadu with about 1.5 million members. The
boycott started March 1, a day before the Madras High Court dismissed a petition seeking a ban on the American soda-makers drawing
water from the local
Thamirabarani river.
“Instead of foreign
sodas, we will promote local beverages,” said T. Naseeruddin, president of a
retailers’ group that says it has more than 700,000 retailers in Kerala, which
is facing its worst
drought in 115 years.
Operation Sensitization
The group stopped
short of joining the boycott in Tamil Nadu after a meeting Wednesday with
Kerala Chief Minister Pinarayi Vijayan, a spokesman said. Instead, retailers
will pursue “sensitization against multinational products” via a
state-level conference, and seek a policy response from the state government.
India has at least
50 local drink brands, which are typically 20 percent cheaper than the global
cola brands, brokerage Kotak Securities Ltd. said in a Feb. 23 report.
Manpasand Beverages Ltd., based in Vadodara, Gujarat state’s cultural capital, is “aggressively expanding its
reach in Tamil Nadu to take advantage of the ongoing cola ban,” it said in a
statement Wednesday. The company, which sells carbonated fruit drinks and
juices, is setting up a 1.5 billion rupee ($23 million) plant in Sri City,
about 55 kilometers (34 miles) north of Chennai to cater to the demands of
southern markets, it said.
A boycott from
farmers could result in Coca-Cola and PepsiCo losing “a big part of their
consumer base in the rural areas,” said Oru Mohiuddin, a strategy analyst for
market researcher Euromonitor International in London. Still, India’s rural
population tends to prefer water, tea and fresh coconut water over sodas, and
sales of carbonated drinks are slowing as Indian consumers switch to bottled
water and other healthier options, Mohiuddin said.
Atlanta-based
Coca-Cola and PepsiCo, based in Purchase, New York, declined to comment on the
allegations of water exploitation and contamination, referring questions to
their Indian units. The local units also declined to comment, referring
questions to a statement from the Indian Beverage Association, which said that
Hindustan Coca-Cola and PepsiCo India are compliant with all applicable
regulations and that their products are safe.
The association said
it’s “deeply disappointed” with Kerala retailers’ call to boycott the beverages
since it hampers consumer choice, and said both companies use less than 0.5
percent of the water used by all industries in India, according to an emailed
statement Wednesday.
Blacklisted Brands
The blacklisting of
the brands is, according to the association, against the spirit of Modi’s “Make
in India” program, which gives preferential treatment to foreign companies that
agree to have a portion of the manufacturing done domestically. Coca-Cola and
PepsiCo provide employment to 2,000 families in Tamil Nadu and help support
more than 200,000 retailers, the association said.
Pepsi’s beverage and
snack units in India used 6.98 billion liters of
water and added 19.7 billion liters through various water-saving programs in
2015, according to estimates the company said are verified by accounting firm
Deloitte LLP. Coca-Cola India has achieved “full
balance between total
water used in beverage production and that replenished to nature and
communities through community water projects,” it said in February 2016.
“There is a
political overtone to the boycott,” said Ramu Manivannan, a political analyst
and head of the politics department at University of Madras in the Tamil Nadu
capital, Chennai. “It’s not just politics, but pure economics, too. Shopkeepers
are making a politically correct stance by boycotting multinational
beverages.’’
Subduing Bulls
An anti-American
backlash was sparked in January after animal rights groups, including the
People for Ethical Treatment of Animals, or PETA, successfully petitioned the
Supreme Court of India to enforce a ban on a popular Tamil spectacle in
which people attempt to subdue bulls. The resultant ire of supporters of the
event was initially directed at U.S.-based
PETA, but then shifted to
more visible American targets: Coca-Cola and PepsiCo, which together operate 60
bottling plants in India.
Photographer: Arun Sankar/AFP via Getty Images
Neither are new to
water-related community complaints in India. Coca-Cola’s plant in Plachimada, Kerala, was shut down by the state government
in 2004 after protests that began in 2002, and the company scrapped a $24
million expansion in Uttar Pradesh state in August 2014, citing delays
obtaining permits to extract more water.
PepsiCo sought police protection for
water being brought to a plant in southern Tamil Nadu in 2015. The
beverage-manufacturing facility, located in a water-stressed area, had been the
target of a community-led campaign to shut it down, according to the India Resource
Center.
Most companies share
water with farms, which employ about half of India’s 1.3 billion people and
contribute 18 percent of the $2 trillion economy. Agriculture gets the lion’s
share, leaving industrial users to fight with municipal water suppliers for the
precious resource.
The federal
government in 2015 required companies to obtain permission to
use groundwater. Last April, the then junior environment minister Prakash
Javadekar said India would aim to reduce industrial water usage by half over
five years by using newer technology to reuse, recover and recycle water.
Relief for India’s
tiring aquifers can’t come fast enough. More than a quarter of groundwater
systems are too salty, becoming depleted or are over-exploited, according to a
2013 Planning Commission presentation. In
addition, at least 75 percent of the country’s rivers, lakes and other surface
water bodies are contaminated by human and agricultural waste and
industrial effluent.
Protest against a government dismissal of a proposal to
form a board on water sharing rights issues in Oct. 2016.
Photographer: Arun Sankar/AFP via Getty Images
Water Protection
“No noticeable
changes to the protection of freshwater sources is yet featuring on the Indian
government’s agenda,” said Jenny Gronwall, program manager for water governance
at Sweden’s Stockholm International Water Institute . “It seems as if the
situation must get worse and the general public unite in loud protests before a
reduce–reuse–recycle paradigm takes hold.’’
Targeting foreign
brands isn’t likely to solve India’s water crisis, said Damandeep Singh, a
director of CDP India, a non-profit that said it holds the world’s largest
database of corporate-related water information using disclosures from
companies such as Coca-Cola, Ford Motor Co. and Nestle SA.
“Beverage companies
are at clear risk due to worsening water security,” said Singh, adding that
companies and other users must work together to safeguard the river basins in
which they operate. “Actions in water-scarce regions, like Tamil Nadu, have to
be mapped out and planned much in advance and with extreme care.”
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De BLOOMBERG,
15/03/2017
Imagen de encabezado: Wall Street Daily
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