The Hindu Business Line : Cola sales may lose less fizz this time round

Despite Kerala's ban on the sale and production of both Coca-Cola and Pepsi, and another four States disallowing their sale in educational and government institutions, analysts this time round say that the impact on sales could be marginally lower. Three years ago when the controversy over pesticides in soft drinks came to the fore, both companies witnessed a 25-30 per cent drop in sales and the impact lasted a good six months.

In comparison, the industry expects only about 10 per cent drop in sales this time. However, within days of a fresh controversy on the issue, both companies have unleashed a media communication campaign, with Coca-Cola even inviting the public to inspect its plants. Industry sources say that the two companies are also seeking legal advice on the ban on sales in Kerala.

Smaller cola markets hit

The reason for the relatively lower impact this time could be, analysts say, a combination of several reasons. For one, Kerala is their smallest market and the other four states also do not constitute a very significant market share. Besides, with August being a lean season, the overall impact on annual sales would be lesser.

The major markets for the aerated beverage giants are Delhi, Mumbai, Bangalore, Hyderabad, Chennai and Punjab, which together constitute around 60 per cent of sales; Madhya Pradesh, Rajasthan and Chattisgarh — which have banned institutional sales — are small markets with lower per capita consumption. Gujarat, however, comes in the significant sale category.

Meanwhile, Coca-Cola's advertisement on Wednesday apart from claiming that the World Health Organisation endorsed its water purification process, which complied with the stringent specifications of the Bureau of Indian Standards (BIS), also listed various independent, national and international laboratories like VIMTA (Hyderabad) and MWH (California), where its samples were tested for pesticide residue.

The advertisement also stated that the sugar syrup used in the aerated beverages was "put through a specifically developed Hot Carbon Treatment process which ensures that the sugar syrup is safe in all aspects".

Reacting to the advertisement, Ms Sunita Narain, Director, Centre for Science and Environment, said that even if she were to accept that there was no pesticide residue found in the sample tests conducted by the laboratories, why was the data not being shared and why was the final product that they tested showing high levels of pesticide residue?

Ms Narain said that after studying the results of the sugar sample tests, which declared the ingredient pesticide free, she suspected the water used in the aerated beverages to be the culprit.

More Stories on : Beverages | Standards & Benchmarks | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page