Indian State Takes Coca-Cola to Court; Sales Drop 14% in Summer
For Immediate Release
July 22, 2005
R. Ajayan, Plachimada Solidarity Committee (India) Tel: +91 9847142513
Amit Srivastava, India Resource Center (India) Tel: +91 9810346161 info(AT)IndiaResource.org
New Delhi: The state government of Kerala, in southern India, is taking the Coca-Cola company to court over its abuse of groundwater.
The state government has decided to move the Supreme Court of India challenging Coca-Cola's right to extract groundwater.
The announcement, made yesterday by Local Self-Government Minister Kutty Ahmed Kutty, specifically challenges an earlier, April 7 Kerala High Court ruling that allowed the company to extract up to half million liters of water per day for its Plachimada bottling plant. The High Court had also instructed the local village council (panchayat) to renew Coca-Cola's license.
In a major victory for the campaign to hold the Coca-Cola company accountable, the state also announced that it will issue a series of directives aimed at curbing the abuse of groundwater and pollution by the Coca-Cola company. In his statement, the minister clarified that the company had not complied with the state's directives to check the cadmium content in its effluents and take steps to check water pollution in the area.
The Coca-Cola company is in disarray in India, with many communities holding it singularly responsible for creating severe water shortages and polluting water and soil around its bottling plants. The bottling plant in Plachimada remains shut down for over sixteen months now because the local village council refused to renew Coca-Cola's license to operate.
"We welcome the move by the state to safeguard the interests of the people", said Mr. A. Krishnan, president of the Perumatty panchayat who have also appealed the April 7 High court ruling to the Supreme Court of India.
The state's announcement is a major setback for the Coca-Cola company because the state government has finally met the demands of the village council and the massive anti-Coca-Cola movement - that the state fulfill its duty to protect natural resources by initiating a legal challenge to the multinational company's practices.
The campaign to hold Coca-Cola accountable for its abuses in India has taken a major toll on the company, including its profits.
The company reported on Thursday that its sales in India had dropped 14% in the April-June quarter, traditionally the biggest selling season for the company because of summer. The reversal of fortune comes only three years after Coca-Cola was voted the company's best performing subsidiary globally in 2002.
"We welcome Coca-Cola's significant drop in sales in India, and the company is put on notice that sales will drop further until and unless the company genuinely meets the demands being made by the communities affected by its operations in India", said Amit Srivastava of the India Resource Center, an international campaigning organization.
The company also faced a major international public relations fiasco last week when it threatened one of India's top photographers with a lawsuit if he didn't immediately remove a billboard in Chennai bringing attention to water scarcity. Coca-Cola's attempts to thwart creative expression created a major international storm, and the photographer refused to remove the billboard. It still stands in one of the busiest areas in one of India's biggest cities.
Unable to contend with the rising opposition to its operations in India, the Atlanta based company is significantly restructuring its management in India. An American, John Ustas, has been brought in to head their bottling operations. The fate of Sanjeev Gupta, an Indian who oversaw both bottling and marketing operations, remains unclear, as he has been on "medical leave" for about a month now. There are speculations in the media that he has been demoted.
The community led campaigns in India against Coca-Cola also enjoy widespread international support. College and university students, particularly in the US and UK, are leading a campaign to revoke Coca-Cola's contracts on campuses. Rutgers University in the US recently removed Coca-Cola from its premises entirely, and the prestigious University of Michigan has placed the Coca-Cola company on probation for one year until it cleans up its act in India.
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