Saturday, August 16, 2003
M A I N   F E A T U R E

Crippling colas
Gaurav Choudhury

THE month of August is usually a period of stocktaking for soft drink manufacturers. Boardroom discussions centre on sales figures, sponsorship deals and celebrity endorsements. There was nothing unusual this year except for the fact that good monsoons, especially in the semi-arid North India, had marginally affected the retail volumes.

Nothing extraordinary and all was quiet in the swanky corporate headquarters of Coca- Cola and Pepsi India in downtown Gurgaon. It was a typical monsoon afternoon on August 5. Little had the top honchos at the American beverage-manufacturing units imagined that an explosion of massive ramifications that could threaten their very existence in the country, might be camouflaged in the persistent drizzle.

It all began when Sunita Narain, Director of the Centre for Science and Environment (CSE), convened a Press conference to announce: "Twelve major cold drink brands manufactured by Coca-Cola and Pepsi and sold in and around Delhi contain a deadly cocktail of pesticide residues. These pesticides include potent chemicals which can cause cancers, damage the nervous and reproductive systems and reduce bone mineral density." The cola manufactures, with a history of corporate rivalry often bordering on the bizarre, were inexorably drawn into a controversy that has shown no signs of tapering off. The country heads of Pepsi and Coca-Cola, Rajiv Bakshi and Sanjiv Gupta respectively, who perhaps till a little while ago were discussing ways and means to run down the other, suddenly found themselves on the same side of the fence — breaking bread together and sharing information about how to tackle a situation with catastrophic corollary effects.


The charges were grave enough and were not easy to set aside as these concerned people’s health. The CSE, founded about two decades ago by the late Anil Aggarwal, was instrumental in converting Delhi’s entire fleet of public transport to the clean CNG mode. The centre claimed that it had tested 12 brands of cold drinks being sold in a Delhi market in its own pollution-monitoring laboratory. It said that it found residues of four extremely toxic pesticides and insecticides — Indane, DDT, malathion and chlorpyrifos — in Pepsi, Mountain Dew, Diet Pepsi, Mirinda Orange, Mirinda Lemon, Blue Pepsi, 7-UP, Coca-Cola, Fanta, Limca, Sprite and Thums Up. In fact, Narain claimed, in all the PepsiCo brands, the total pesticides on an average were 36 times higher than the EEC limits, while the Coca-Cola brands contained levels 30 times higher.


The announcements created panic among the US multinationals, and Bakshi and Gupta huddled together with their teams to thrash out ways and means to wriggle out of the unforeseen crisis. They lost no time in denouncing the claims. "Our products are tested by top-grade laboratories like the Wimta laboratory of Hyderabad and the T&O laboratory in the Netherlands. They are world class and the same as what we sell in Europe and the USA," they said in a joint declaration.

Officials in cold drink companies feel that they have been singled out for this orchestrated hate campaign against multinationals. "We have been targeted and picked up for grabbing headlines. Our shoulders have been used to fire guns and this is simply not fair," a Pepsi official said.

"Guilty even if innocent or until proved innocent is the credo of the new breed of NGOs, media and some politicians. You have an NGO quoting extensively from an internal study conducted in a non-accredited laboratory and leading with a press release headlined Colonisation of the Dirty Dozen."

Having grabbed the headlines, it is overnight trying to lift the issue to a loftier plane: the presence of pesticides in ground water. Two global corporations with US $ 2 billion investment in India have put their reputation at stake and declared data from accredited laboratories which meet even the most stringent EU norms. But who is listening? It doesn’t matter that the suspect CSE results for soft drinks have been benchmarked against the EU norms for pesticides in source water because specific standards for soft drinks don’t exist globally. It doesn’t matter that the average of the CSE’s suspect data on pesticide content is lower than the current WHO norms, Rajiv Bakshi of Pepsi said.

The cola majors dismiss the claims of Narain of .0005 mg norms as mandated by the EU as misleading. "The 0.0005 mg norm is actually for source and treated water. It has been supplanted for soft drinks in this particular case by the CSE and this is misleading. Moreover the EU norms are actually trade barriers and not benchmarks for health standards as has been made out to be the case. The WHO norms are standard benchmarks and we conform to that," a Pepsi official said.

But the damage seems to have been done, at least in the immediate aftermath of the revelation. The High Court order instructing the government to test cola samples in their own laboratories notwithstanding, retailers have reported a significant drop in sales. "Yes our sales have been affected and there is unnecessary panic," an official of one of the companies said. The fact that the government did not lose any time in announcing a blanket ban in Parliament did not help matters for the cola companies. Rajiv Bakshi says this "knee-jerk, misguided reaction to ban soft drinks in Parliament is like damning the accused without any hearing."

Beyond the rhetoric and MNC bashing, however, is a larger legislative issue involved? The incident raises the question: Do the food standards prescribed by the Indian legal system conform to global standards?

"Generally it can be said that Indian regulatory standards lag behind those of the developed countries, especially in storage, packaging, sanitation, etc. And the fact that there is a multiplicity of laws governing the food sector only compounds the matter," says Anand Prasad of Trilegal, a Delhi-based corporate law firm.

The list of legislations for the food sector in the country is indeed long enough:Prevention of Food Adulteration Act, 1954 (PFA), and Prevention of Food Adulteration Rules, 1955; Standards of Weights and Measures Act, 1976 and Packaged Commodity Rules; Essential Commodities Act and Orders passed under this Act: Fruit Products Order, 1955; Milk and Milk Products Order, 1992; Meat Products Order, 1973; Cold Storage Order, 1980; Solvent Extracted Oil, De-oiled Meal, Edible Flower (Control) Order, 1967; Indian Seeds Act, 1966; Agricultural Produce (Grading & Marketing) Act,1937; Export (Quality Control & Inspection) Act, 1963; Insecticides Act, 1968; Environment Protection Act, 1986; and Other Central/State/Local Bodies rules and regulations made under these Acts which impact the food processing industry.

"Although legal loopholes may be many, one such ambiguity currently surfacing in the cola controversy is that the Fruit Processing Order, 1955, which regulates the soft drinks industry provides that for manufacturing aerated drinks, ‘potable water’ must be used. The term potable water has not been defined and hence there is no duty to obtain water of a certain standard," Prasad points out.

Prasad, agreeing with Narain’s views, who had remarked that a similar incident in the USA would have attracted severe penalties, says: "In the USA, the Food and Drugs Administration (FDA), at the federal level, deals with violations through periodic inspections of facilities and products, analyses of samples, educational activities, and legal proceedings. Adulterated or misbranded products are voluntarily destroyed or recalled from the market, or seized by US Marshals on orders obtained by the FDA from Federal district courts."

Perhaps the biggest ban on adulterated food products has been the case of beef treated with growth hormones. On January 1, 1989, the European Union (EU) implemented a ban on import of red meat from animals treated with six growth promotants, natural and synthetic, cutting off US beef exports to the EU. The US had tested these three natural hormones and three synthetic products and declared them to be safe. The EU, however, continued to publicly rule out an end to the ban, stating that the economic, environment and consumer concerns must be considered in addition to scientific evidence.

A regulatory framework on the lines of the TRAI may help the cause of public health and improve enforcement. There is an attempt to consolidate and harmonise these laws and develop a national food safety code. The Ministry of Food has even proposed setting up of a regulatory authority and a "council of food standards". The Bill is aimed at integrating all laws related to the food and food processing industries under a single statute to be called the Food Act.

With the High Court giving three weeks to submit the results of the government-conducted tests, the cola majors may have to rework their image-management strategies. For one, both companies, who among them command a Rs-7,000-crore market, could be forced to look beyond celebrity endorsements and spoofs and counter spoofs, for their very credibility is now under public scrutiny. And the people seem to be saying "Yeh dil maange no more".