Coca-Cola in India
Over the past couples decades coca-cola has been having trouble establishing
business in India. The first problem started when coke was forced out of the country in
the late 1970s. Coke was eventually allowed back into the country in the mid 1990s but
within there first ten years they faced accusations of polluting local community’s with
there factory waste. On top of the pollution issue, coke was facing huge marketing
problems with there Indian cola’s.
In 1977 Coca-Cola was forced out of India because of the Foreign Exchange
Regulatory Act. This act makes all international companies Iniandize there company’s.
This means that Indian investors had to control 40% of Coca-colas shares in India. Coca-
cola did not agree with these terms so they left the country. In 1994 they made there
return under the name of Hindustan Coca-Cola holdings. The foreign exchange
regulatory act is still enforced so Coca-cola is still forced to divest there shares. Coca-
cola was given a five year waiver which allowed them to wait 5 years before they had to
divest there shares.
The main reason Coke came back to India was because they wanted to directly
compete with Pepsi. When Coke returned to India, they acquired a variety of Indian
based cola’s. Some of the brands they acquired are Limca, Maaza, Kinley, Georgia and
Thums Up. Thums Up is the leading sparkling oft drink in India. Thums up is the most
trusted brand of cola in India. Such Thums Up is such a branded product; coke tried a
unique marketing strategy to try to have Coca-Cola take over its position in the market.
This unique strategy consisted of highly marketing Thums up and then slowly phasing it
out so coke could come in and take of the market share. There plan failed terribly and
Coke took a hit financially because of it. At this point in time Coke was questioning
there choice of returning to India. Coke would find out later that this was just a hiccup in
there quest of establishing Coca-Cola in India.
In 2000 Coke built a plant in Plachimada, India (Kerala Plant). This plant was
located in an undeveloped area of India. By building the plant here it gave the
community allot of Jobs and security. After a few years of the plant being in operation,
people started to complain about pollution caused by the plant. Once these complaints
started to come in, the protestors were shortly to follow. Women from the community
would sit outside the factory day in and day out protesting against the plant. Eventually
all the protesting was heard and investigation about the pollution started.
The protestors were saying that coke was dumping there plant waste into fields
and local body’s of water. The protestors were upset with coke because not only was
coke depleting the local ground water. Coke was polluting the water that was left with
there waste. Coke was also supplying local farmers with waste from the factory; they
told the local farmers it was a great fertilizer.
The investigation became a very controversial issue quickly. It became this way
when coke was accused of bribing Mr. Indulal who was the leader of a local pollution
control board. He reported the pollution was in tolerable limits and was no harm to the
community. The local people of the community did not believe this finding so they
brought in two other pollution control boards to test the area. These two boards reported
that there were high levels of cadmium and various pesticides in the water. Just like the
protestors Coca-Cola brought in outside pollution boards, which found no cadmium.
Just like any controversial issue there were people supporting both sides of this
argument. Because of the rumors of pollution and possibility’s of pesticides being in the
cola’s, Coke showed a loss of 14% in India that year. Coke was also threatened by Joint
Parliamentary Committee. The Committee told coke if they did not suspended sales and
recall all there products they would sued for 10 billion Dollars.
With Coca-Cola’s back against the wall they have some alternative strategies to
put this problem behind them. Because it such a controversial issue, even if all these
accusations are false Coke will still be looked at in the wrong way by some people. Coke
has very options to fix this problem and increase there brand image. Unfortunately for
Coke every strategy they choose to fix this problem is going to cost them money.
One way coke could fix this problem is by upgrading there water treatment
equipment. Another option coke has is develop a new pr strategy. A down flaw to this
option is that it could also cause a bad company image. Some other options include
bringing in water from outside sources, hire a waste disposal company, choose a new
factory location and the final option would be go green.
These accusations against Coca-Cola did hurt them in some form but they are
such a large company and they will rally and make a huge return. There marketing and
PR team will find the proper way to spin to this problem. Once this problem is spun
people will forget about this accusation 5 years from now.
Coca-Cola India. Web. 05 Oct. 2009. <http://www.coca-
Ghosh, Jayanta. "Coca-Cola kicks off repositioning drive." The Times of India. 3 July
2002. Web. 4 Oct. 2009. <http://timesofindia.indiatimes.com/>.
"IRC- Coca-Cola -- Campaign to Hold Coca-Cola Accountable." India Resource Center.
Web. 05 Oct. 2009. <http://www.indiaresource.org/campaigns/coke/>.
"Pesticides Taint India's Colas, Parliamentary Panel Confirms." Environmental News
Service. Ed. Sunny Lewis. 4 Feb. 2004. Web. 4 Oct. 2009. <http://www.ens-
Singh, Kavaljit. "Coca-Cola Bends Rules in India." India Resource Center. 13 May 2002.
Web. 05 Oct. 2009.