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042 cola drinks how safe are they


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042 cola drinks how safe are they

  1. 1. This caselet was written by Mylavarapu Vinaya Kumar, under the direction of D.G. Prasad, ICFAI Center for Management Research. Caselets are intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation  2005, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without permission. To order copies, call +91-40-2343-0462/63 or write to ICFAI Center for Management Research, Plot #49, Nagarjuna Hills, Hyderabad 500 082, India or email Website: CLIBE- 042 Cola Drinks – How Safe are they? In mid-2003, soft drinks manufactured by Coca-Cola and Pepsi in India, were found to contain high levels of pesticides. In May 2003, the Centre for Science and Environment (CSE), a non government organization announced that tests conducted by its Pollution Monitoring Laboratory showed up many cold drinks such as Pepsi, Coca Cola, Thums Up, etc. sold in and around Delhi as containing toxic pesticides and insecticides such as lindane, DDT, malathion and chlorpyrifos that crossed the maximum permissible amount. In fact, this is not an isolated case of contaminated food products being sold. Earlier, in February 2003, the CSE found pesticide residues in bottled water sold in Delhi and Mumbai. According to the European Economic Commission, the maximum permissible total pesticide limit in water used as food is 0.0005 mg per liter. However, total pesticides in all Pepsi brands on an average were 0.0180 mg per litre and 0.0150 mg a litre in Coca-Cola brands. The six-month long tests, conducted by the CSE, revealed that the amount of DDT in Pepsi and Coca-Cola was sixteen and nine times higher respectively than European Union (EU) norms. Analysts at CSE added that consumption of those samples could result in severe disruption to the immune system, cancer, damaged nervous and reproductive systems, etc. It was reported that many farmers in Karnataka, Andhra Pradesh, etc. were using these soft drinks as pesticides for their crops to great effect. The Indian Parliament banned the sale of all soft drinks produced by Coca-Cola and Pepsi at its staff canteen. DoNotCopy
  2. 2. Cola Drinks - How Safe are they? 2 Of course, the soft drinks sold by both the brands in the United States were found to contain pesticides within the permissible limits. The reason for the high pesticide content in the drinks sold in India was the usage of highly chemically contaminated underground water for manufacturing soft drinks. The underground water in Delhi was shown to contain high pesticide residues, fluoride nitrate, cadmium, etc. Pepsi and Coca-Cola, addressed a joint press conference and dismissed CSE reports as “baseless" and an attempt "to tarnish" the image of the two companies. They further asked the then BJP government to conduct an independent scientific investigation into the CSE findings. Accordingly, the government laboratories conducted tests on 24 samples of both the companies. On 21st August 2003, the government confirmed the presence of pesticides in 18 of the 24 samples of the soft drinks but said that the amount of residues found were lower than those detected by CSE. The then Health Minister, Ms. Sushma Swaraj accepted the fact that the government regulations for soft drinks were weak and virtually non-existent for pesticide residues. In India, even though we have legislations to regulate the quality of contents in beverages, like The Prevention of Food Adulteration (PFA) Act of 1954 and the Fruit Products Order (FPO) of 1955, they do not provide any scope for regulating pesticides in soft drinks. The FPO has standards only for the bottled water industry, and here it is confined to permissible amount of substances like lead and arsenic. Also, soft drink manufacturers do not come under the purview of the provisions of industrial licensing under the Industries (Development and Regulation) Act of 1951. Thus the soft drinks sector is exempted from any specific regulations. Further, a license once obtained from the ministry of food processing industries is enough for the soft drink manufacturers as it includes a no-objection certificate from the local government and the state pollution control board, and a water analysis report. Thus, there would not be any further investigations on the environmental effects and the quality of water used in manufacturing of the soft drinks. The journey since the pesticide controversy has not been smooth for the cola giants. Also, just before the end of the year 2004, the Supreme Court ordered Pepsi and Coca-Cola to carry a label warning consumers of the possibility of the product DoNotCopy
  3. 3. Cola Drinks - How Safe are they? 3 containing pesticide residues. The impact of the pesticide controversy continued throughout 2004, resulting in a drop in the sales of the products of both companies. This led to reduced margins for retailers, bottlers and for the two companies themselves. To make up for the drop in sales, the two companies increased the prices of their 300ml bottle soft drinks. The problems for both the companies did not end there. Many Non-Governmental Organizations protested against the depletion of ground water by the soft drink manufacturers. However, all these incidents did not deter both companies from launching their new products - Vanilla Coke by Coca-Cola and Gatorade by Pepsi – in the Indian market. In the light of all the events of the last two years, analysts expect 2005 to be a year of consolidation and slow growth for both the companies. Questions for Discussion: 1. Do you think the lack of a proper regulatory body for soft drinks sector has given rise to controversies such as the pesticide controversy? Comment. 2. “Soft drinks production without any government control is a direct assault on the health of the nation.” What are the measures that the government can take to prevent a recurrence of contamination in soft drinks and bottled water? Additional Readings / Reference Material: 1. Another reason why Cocacola is bad for you! MAYBE?,, August 7, 2003. 2. Mahaan Deepak, Cola Giants Fight Pesticide Claims in India,, August 7, 2003. 3. Hard Truths About Soft Drinks, Centre for science and environment,, August 19, 2003. 4. Coke, Pepsi India deny pesticides in soft drinks, Reuters,, August 05, 2003. DoNotCopy
  4. 4. Cola Drinks - How Safe are they? 4 5. Devraj Ranjit, Indian Coke, Pepsi Laced with Pesticides, Says NGO,, August 05, 2003. 6. Pepsi, Coke dismiss CSE charge, Business,, August 05, 2003. 7. Iype George, Regulate soft drink firms' operations, urge activists,, August 06, 2003. 8. Chatterjee Sivabrata, Tackling pesticides, the ozone way,, August 21, 2003. 9. Toxic Pesticides Found in India's Soft Drinks,, August 05, 2003. 10. Bhattacharya J.Sindhu, 2004 not a great year for cola majors,, January 01, 2005. DoNotCopy