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Coke, Pepsi in hot water over India health scare
New Delhi/Atlanta, Aug 17: Abul Faiz, who runs a tiny shop in central New Delhi, used to sell four crates of Coke and Pepsi a day. These days, he`s lucky to average three.
New Delhi/Atlanta, Aug 17: Abul Faiz, who runs a tiny shop in central New Delhi, used to sell four crates of Coke and Pepsi a day. These days, he's lucky to average three.
Faiz, who also sells Indian chewing tobacco, snacks and personal care products, is not worried, but Coca-Cola and PepsiCo are. In fact, the soft drink companies are so concerned that they've gone to court to challenge the cause of the sales drop: allegations that their flagship fizzy drinks in India are contaminated by pesticides.
"A large number of my customers are taxi drivers and uneducated workers. They don't care too much, they just come and ask for a cold drink," Faiz said. "But there are times when people come here in a group and someone says: 'Haven't you heard about the controversy?' And then some of them switch to drinking flavored milk or fruit juices."
The "controversy" was sparked by an August 5 report by an environmental lobby group that alleges India-made soft drinks contain concentrations of pesticides up to 40 times EU standards. The U. S. companies have vehemently denied the report, have filed lawsuits and are petitioning India's courts to order the government to test their products.
Coca-Cola and PepsiCo worry the spat could hurt their global brands even though India accounts for just a sliver of their worldwide sales and public health controversies tend to blow over quickly in the country of more than one billion people.
"An impact on the brand in India could affect the brand in neighboring countries and even in the U. S.," said P M Sinha, a former chairman of Pepsi India.
Faiz, who also sells Indian chewing tobacco, snacks and personal care products, is not worried, but Coca-Cola and PepsiCo are. In fact, the soft drink companies are so concerned that they've gone to court to challenge the cause of the sales drop: allegations that their flagship fizzy drinks in India are contaminated by pesticides.
"A large number of my customers are taxi drivers and uneducated workers. They don't care too much, they just come and ask for a cold drink," Faiz said. "But there are times when people come here in a group and someone says: 'Haven't you heard about the controversy?' And then some of them switch to drinking flavored milk or fruit juices."
The "controversy" was sparked by an August 5 report by an environmental lobby group that alleges India-made soft drinks contain concentrations of pesticides up to 40 times EU standards. The U. S. companies have vehemently denied the report, have filed lawsuits and are petitioning India's courts to order the government to test their products.
Coca-Cola and PepsiCo worry the spat could hurt their global brands even though India accounts for just a sliver of their worldwide sales and public health controversies tend to blow over quickly in the country of more than one billion people.
"An impact on the brand in India could affect the brand in neighboring countries and even in the U. S.," said P M Sinha, a former chairman of Pepsi India.
Brands are crucial for both firms. BusinessWeek this month ranked Coca-Cola as the world's top brand with an estimated value of $70.5 billion. The magazine put an $11.8-billion price tag on PepsiCo's brand, putting it 23rd on the list.
Securities analysts tracking both companies are not yet worried, although a 1999 health scare in Belgium led to a recall of millions of Coca-Cola products.
"Will it haunt them elsewhere? No. Not very much, strangely enough," said David Kerans, a beverage analyst with Argus Research in New York. "India does not always translate into other countries very easily."
Bureau Report