Coke as a Scapegoat

Thamirabarani river, India. Image from wikipedia

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 on March 15, 2017 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.

“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.
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….

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, 2017 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.

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,”….

Excerpts from PepsiCo, Coca-Cola Fight Patriotism in Parched Indian State, Bloomberg Business Week, Mar. 15, 2017

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