Coca-Cola India

MEMORANDUM

TO: Senior Executive, Coca-Cola India

FROM: Marketing Staff, Coca-Cola India

DATE: April 28, 2013

RE: Ethical Issues Facing Coca-Cola India

This memorandum is to be used for the discussion purposes involving the safety and ethical issues of Coca-Cola India reported by the Center for Science and Environment resulting in banning of Coca-Cola products and a direct decline in sales.

I. FACTS SUMMARY

Based on bottled water having failed the purity tests in and around the New Delhi area, the Pollution Monitoring Laboratory (PML) of the Center for Science and Environment (CSE) analyzed the contents of 12 cold drink brands and the test results were alarming. Issued in a press release on August 5, 2003, the CSE announced its soft drink claims, which included Coca-Cola brands, to have unsafe levels of toxic pesticides and insecticides which considerably exceeded the maximum residue limits for pesticides set by the European Economic Commission (EEC). In response to the CSE’s findings, Coca-Cola and Pepsi products were banned by the Indian government resulting in a drop on the New York Stock Exchange and up to a 40% drop in sales.

Since 1998, the soft drink sales in India began at 5,670 million and rose to 10,000 million by 2003. This 43.3% increase illustrated the dramatic growth of people consuming Coca-Cola in India each year since 1998. Due to the presented dilemma, Coca-Cola was at risk at losing its place in the $1 billion dollar Indian soft drink market.

Both Pepsi and Coca-Cola claimed the allegations as being unjustifiable and doubted the test methods of the CSE. Pepsi filed a petition against the claims as their independent testing showed no detectable pesticides. Coca-Cola considered taking legal actions if the allegations and damage to the company brand continued within the country. Regardless of the denial to these claims, a greater part of the community believed the reports were correct and agreed with the...