IIPM PUBLICATIONImagine the following scenario: Your favourite soap brands are found to have chemicals that irretrievably,
albeit slowly, damage the skin of the user. Three years after the discovery, the top FMCG companies continue to insist that they follow the best safety practices and urge policy makers in India to set proper norms for them to follow. Later, when it is discovered that the most advertised brand of shampoos permanently damage your hair, the same FMCG giants mouth the same platitudes. Imagine ready to eat soups slowly poisoning you with pesticides and chemicals and a big multinational claims that the government is yet to fix the exact definition of what is acceptable poison. Imagine Indian butter and cheese riddled with traces of poisonous chemicals and some of India’s most admired consumer companies polemically pronounce that both the companies follow the best international practices.
Even worse: imagine these ‘world class’ companies peddling best selling brands whining that local brands and products are equally, if not more, harmful; and further squeaking on why a ‘vindictive’, publicity seeking’ organization and the media are singling out these companies. The whole brouhaha about unacceptable quantities of pesticides & other harmful chemicals being found in carbonated soft drinks, including the blockbuster brands Coke and Pepsi, really boils down to this: the incredible arrogance and sheer effrontery of the cola giants; smug in the belief that the Indian consumer is basically a moron and that policy makers can always be trusted to abdicate their responsibility towards public health and safety.
Suddenly, Indian consumers are waking up to what was considered to be a joke earlier. They now believe stories about how farmers in Punjab, Haryana and Andhra Pradesh have been using the colas as pesticide since they are cheaper! And the stinging words of religious preacher Swami Ramdev – “Thanda Matlab toilet cleaner” – appear less a publicity stunt and more a home truth to the Indian consumer. Suddenly, the March 2006 news about a Consumer Court fining Pepsi Rs.1 Lakh because a condom was found in the bottle is no longer a mere funny incident, but a deadly and poisonous reality that Indian consumers must confront. Forget the gory details of the chemical composition of pesticides found in colas; forget the nitpicking that lobbyists speaking on behalf of cola companies are indulging in; forget the shocking statement from Union Minister Sharad Pawar defending cola companies by saying that pesticides are found even in mother’s milk. Quite simply, the Indian consumer is asking one question: Have cola companies – who claim to be world class – been poisoning Indian consumers despite credible reports of the harmful contents prevalent in their products?
In 2003, the Center for Science & Environment (CSE) released a report that revealed that soft drinks sold in India contained unacceptable levels of pesticides and other harmful chemicals. The Director of CSE, Sunit Narain, recalls that she was able to observe three sets of reactions. The first set: The lobby led by Pepsi and Coke sought to completely discredit the report, some inspired leaks in the media even calling her a stooge of European lobbies out to damage the reputation of American multinationals! The second set of reactions: The then NDA government set up a Joint Parliamentary Committee (JPC) to investigate if the “recent findings of the Center for Science and Environment regarding pesticide residues in soft drinks are correct or not.” And the third set of reactions: The Indian consumer voted with her wallet and there were reports of a substantial drop in sales.
Of course, Narain recalls how the soft drink giants used Bollywood celebrities like Aamir Khan to reassure Indian consumers that their products were indeed safe. But much to the chagrin of companies like Coke and Pepsi, the JPC found that virtually all allegations made by the CSE report were correct and that Coke and Pepsi were indeed selling products laced with unacceptable levels of pesticides. The JPC strongly recommended that a law be enacted to set clear norms for health and safety of Indian consumers. Three years down the road, the proposed law is yet to be enacted, notified and enforced. (Do remember it took our Parliamentarians just one day to unanimously pass a law enabling criminals to contest elections!). And now, three years after the original report, another CSE investigation – this time even more widespread & scientifically rigorous – reveals shocking details:
- The average pesticide residues in all brands of PepsiCo were 25 times the norms set by the Bureau of Indian Standards (BIS).
- The average pesticide in all brands of Coca Cola India was 22 times the norms set by BIS.
- The concentration of Lindane, a confirmed cancer-causing chemical, was 54 times the standards set by BIS.
No wonder, the latest findings have created another storm of controversy. Says Atul Kumar Anjan, CPI Secretary and Rajya Sabha MP, “What happened to the JPC report that was constituted under Sharad Pawar? The entire report was hushed up. How were cola companies allowed to sell their produce for three years without verification? Why didn’t government conduct random checks? Does it require an NGO to point out loopholes in government’s own procedures every time? Will it take action against the lax officials?” It is of course quite natural for politicians to raise these issues. But what can be felt across India is a kind of seething rage amongst consumers at the cavalier and disdainful manner in which cola giants have been treating them.
Says Bangalore based working wife and mother of two children Geeta Ranjan, “I feel betrayed. I always thought that all this talk of Big Business subverting the government and the law to cheat the consumer was propaganda of the Leftists. I used to vociferously support American multinationals. I don’t think I can do that now.” Delhi based housewife Sudha Sadanagi is even more scathing, “My daughter adores Aamir Khan & is now throwing a tantrum because I have stopped her daily bottle of Coke. She insists what Aamir Khan drinks has to be good. He made such a noise about Narmada Dam. Now will he also raise his voice against Coca Cola for poisoning my daughter?”
Politicians have an unerring knack for figuring out the pulse of public opinion. So you have the state governments of Punjab, Uttar Pradesh, Gujarat and Madhya Pradesh banning the sale of colas in schools and colleges. Many other states are scheduled to follow suit. Colas had been banned from the Indian Parliament in 2003 itself when the first CSE report revealing the presence of pesticides was released. But more action might be taken if politicians raise the bar of protests and demand more action. Says Tom Vadakkan, Secretary, All India Congress Committee, “The findings are shocking. If Coke & Pepsi are maintaining the FDA (or any other standard) in US, the same parameters should be applicable here as well. Government must come forward in this matter.”
Secretary of CPI, D. Raja, is even more persistent, “The immediate action should be a ban on Pepsi and Coca Cola as it is a heinous crime against the Indian consumers. There should be an immediate ban on Coca Cola and Pepsi in schools right up to 12th standard, at railway stations, bus stands, & at those places where mass consumption is possible. It should be sold at select sites for those who are (still) willing to take it.”
Even as politicians find yet another cause to chase and score some brownie points, Coke and Pepsi need to be more worried about how the average Indian consumer is reacting to this latest controversy. Bangalore based Ranjan & Delhi based Sadangi quoted above have already revealed the depth and intensity of anger against the cola giants amongst Indian consumers. This seems to be having a clear effect in the place where it matters the most – the market place. While it is impossible to get any accurate sales figures, since both Pepsi & Coke think it is privileged corporate information, there are clear indications that the adverse publicity is hurting the cola giants. Says Amandeep, Marketing Head, Papa John, a global giant that recently launched a pizza chain in India: “Virtually every parent who has booked our place for a birthday party for their child has specifically instructed us not to serve any cola.”
Of course, both Pepsi and Coke have already unleashed an expensive damage control campaign with huge advertisements in newspapers that have banner headlines screaming how safe and world class their colas are. In fact, Coke has blithely asked “esteemed customers” to send a mail to an e-mail address so that the company can take them on a tour of how world class Coca Cola’s facilities are. (Hilariously, even technology seems to be conveniently deserting these giants. E-mails sent to the mail id bounce back with a message, “Mail box not available!”) Yet, many activists in India seem outraged that companies like Coke and Pepsi repeatedly get away by behaving in a manner that would not go unpunished in a country like the United States. In the land of capitalism and free markets, corporate entities are imposed huge penalties and fines if they take investors or consumers for a ride (See table). Yet, something like that can be a distant dream in a country like India where even rapists and murderers get off the hook by using ‘connections’. And Narain of CSE clearly hints that the two cola giants used their clout to thwart effective legislation that would “officially” expose their duplicity, hypocrisy and strong arm tactics. In fact, CSE claims that their offices were visited by Intelligence Bureau officials and pressurized by the government to reveal sources of funding, audited account details and employee details for 20 years!
Consumers being taken for a ride has become a regular habit for companies (see box on right). There is virtually no food product in India that is not contaminated by pesticides and other harmful chemicals. The real solution is to enact effective laws & ensure they’re implemented in letter & in spirit. For the last three years, Indian policy makers have been working at their own elephantine pace to enact such a law. In the first week of August, the Rajya Sabha did pass the Food Safety & Standards Bill, 2005. Yet, even this might not prove sufficient to deter a company with deep pockets from running rings around the Indian consumer. Hailing the new law as a land mark, the Food Processing Minister, Subodh Kant Sahay, remarks, “The new Food Bill has a provision for consumers to lodge complaints... Action will be taken against manufacturers if the complaints are found valid.” The penalty: A fine ranging from Rs.1 lakh to Rs.7 lakh. But then, how much of hurt would a Rs.7 lakh fine cause to a company that can pay millions of rupees to celebrities like Aamir Khan to endorse its products & then spend hundreds of millions more in advertising?
Many senior level managers who spoke to B&E pointed out that the problem in India has never been a shortage of laws, but the right mechanism to enforce those laws. And all agreed that the only possible way for making companies like Coke and Pepsi listen to the wake up call is when the Indian consumers decide to vote with their wallets.
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company that is a ‘market leader’ for the past two decades is no mean feat. The job is even more difficult as you have the burden of consistently excelling your own achievements! Pawan Munjal, CEO of Hero Honda Motors has successfully charted out the growth for his company with a vision for sustaining Hero Honda’s number one position. Here’s how he manages it: “At Hero Honda we constantly strive to provide the best quality and value for money products to our customers. Since the inception we adopted a customer-driven approach for all our initiatives.” Armed with a graduate degree in Mechanical engineering, Pawan is credited with bringing about technological and managerial excellence in the company’s day to day operations. His dedication toward product improvement has helped Hero Honda in launching products that are not only ahead of competition, but always way ahead of time. Remember the just4her Pleasure, an effervescent 102cc scooter, which has already become quite a rage in the market? Watch out for more from this keen business tycoon, who’s also an avid golf enthusiast.
company that is a ‘market leader’ for the past two decades is no mean feat. The job is even more difficult as you have the burden of consistently excelling your own achievements! Pawan Munjal, CEO of Hero Honda Motors has successfully charted out the growth for his company with a vision for sustaining Hero Honda’s number one position. Here’s how he manages it: “At Hero Honda we constantly strive to provide the best quality and value for money products to our customers. Since the inception we adopted a customer-driven approach for all our initiatives.” Armed with a graduate degree in Mechanical engineering, Pawan is credited with bringing about technological and managerial excellence in the company’s day to day operations. His dedication toward product improvement has helped Hero Honda in launching products that are not only ahead of competition, but always way ahead of time. Remember the just4her Pleasure, an effervescent 102cc scooter, which has already become quite a rage in the market? Watch out for more from this keen business tycoon, who’s also an avid golf enthusiast.
political & leadership skills couldn’t do much. The last couple of years did not prove to be too pleasant for him. Investors relentlessly condemned McKinnell for his petulant nature and the huge compensations that he continued to draw during the worst of times for Pfizer – when it was struggling to somehow apply the brakes to its plummeting stock prices (which have dropped by almost 40% since 2001). Realising the need of the hour, the Pfizer board was compelled to replace McKinnell. Publicly, McKinnell did applaud Kindler when he said, “It is time to transition to new leadership to accelerate the company’s transformation. And Kindler inspires confidence and offers vision and a fresh perspective.”
