India's Water Problem Caused By Coca-Cola?

suchandra · May 11, 2008

http://www.atimes.com/atimes/South_Asia/JE08Df04.html

South Asia

May 8, 2008

Public water, privately bottled profits

By Raja M

MUMBAI - India's fast-modernizing society, benefiting from economic growth of close to 9% a year, is caught up in a conflict over access to a basic resource - water - that is pitting Coca-Cola and rival bottlers of the stuff against villagers and others who want their activities more tightly regulated.

The country's bottled water industry, part of a US$100 billion global business, has been growing at triple the pace of the economy as a whole. As consumers take advantage of portable potables, residents in drought-prone areas feel their needs are being shunned and officials warn of over-exploitation of ground water resources.

On April 7, more than 1,500 villagers defied a police cordon and marched to Coca-Cola's bottling plant in Mehdiganj village, Varanasi, in Uttar Pradesh state, demanding that the company immediately shut down its bottling plant. In January, the New Delhi-based Energy and Resources Institute (TERI) advised Coca-Cola to shut a bottling plant in the drought-stricken state of Rajasthan.

India's Ministry of Water Resources has ranked 80% of ground water resources in Rajasthan as "over-exploited" and nearly 34% resources as "dark/ critical", the gravest ranking across the country.

Millions of people, both in rural and urban India, suffer from inadequate or no tap water supply. Even parts of the movie-stars' residential area of Juhu in Mumbai, the country's financial capital, get a mere two hours of daily water supply. The city's Virar suburb gets 45 minutes. So bottled water is much in demand by residents - even though the businesses profiting from the sales are thriving from access to public water sources.

Not just bottlers are involved. In south India, thousands of fuel trucks converted to be water carriers sell ground water to households and establishments at about $10 for 5,000 liters. More than 13,000 tankers carry water drawn from farmland surrounding Chennai, according a social activist R Srinivasan. He estimates a $148 million tanker industry is cashing in on Chennai's acute water scarcity. The story is replicated across India, including in New Delhi.

Rising demand for commercial water coincides with plummeting ground-water levels, which dropped by up to eight meters (26 feet) in the first seven years of Coca-Cola's operations in India, from 1999 to 2006, according to India Resource Center, an activist group, citing data from hydrograph monitors of the government's Central Ground Water Board.

Ironically, the 500-page TERI report that urged closure of the Rajasthan bottling plant was commissioned by Coca-Cola in 2006 to study allegations of pesticide residues in its products. TERI found no pesticides in water samples in six bottling plants it studied, but its findings on water stress vindicated water protesters and stunned Coca-Cola executives, who have not contradicted the findings. Of the six Coca-Cola plants surveyed in the study, three are in areas suffering increased stress on groundwater.

An undated statement on the Coca-Cola India website states that the TERI report confirms that the company meets Indian regulations, while acknowledging that the report identified some areas "where we can do better".

"As a result, we are strengthening our plant siting requirements, our monitoring capabilities for both rainwater harvesting and wastewater treatment and our guidelines for source protection and operating in water scarce areas," the statement said.

The site says Coca-Cola, which reported a 19% jump in global first-quarter net income to $1.5 billion, directly employs about 6,000 people in India and indirectly creates employment for more than 125,000 people. Its Indian operations comprise 25 wholly company-owned bottling operations and another 24 that are franchisee-owned.

Coca-Cola gets 70% of its net operating revenue from outside the US, with growth led by Eurasia, in which the company groups India with the rest of the landmass east of the European Union to the Pacific, excluding China and Southeast Asia. Eurasia's 16% growth last year in unit case volume of the company's products, including water, was the fastest pace of Coca-Cola's six geographical groupings, according to its web site. Net operating revenues in Eurasia grew 24% in 2007, a pace matched only by Latin America, and operating income growth of 38% was more than double the company's overall worldwide increase.

Coca-Cola is just one, if the most prominent given its international stature, of thousands of brands in India's $445 million packaged water industry.

"Whatever figures you come across in the bottled water business would be underestimated," says Chandra Bhushan, associate director of the New Delhi-based Center for Science and Environment that campaigns to protect ground water resources. Bhushan, writing in the fortnightly Frontline publication in 2006, said companies earn extraordinary profits by selling water at 10 rupees (24 US cents) or more per liter after a production cost of 25 paise, or 0.25 rupee per liter. The water is drawn mostly from public sources.

Following publication of his article, the Indian government formulated a draft policy to regulate commercial extraction of ground water, Bhushan told Asia Times Online. Two years later, the policy is yet to see daylight.

Bhushan estimates total annual bottled water consumption in India had tripled to 5 billion liters in 2004 from 1.5 billion liters in 1999. Global consumption of bottled water was nearing 200 billion liters in 2006, he says.

The anti-bottling protests in India echo increased concern in Europe and the United States over the proliferation of bottled water, including the creation of billions of soon unwanted plastic containers. As in India, protests in North America focus on the source of the packaged water and how bottling companies are grabbing what is seen as publicly owned water then selling it back to the self-same public.

Up to 40% of bottled water comes from the same source as tap water, but is sold back to consumers at hundreds of times the cost, says the website of the North American "Think Outside the Bottle" campaign.

"PepsiCo responded directly to our key demands by agreeing to print 'Public Water Source' on its Aquafina label. Coke has refused to follow suit," said Sara Joseph of the Boston-based Corporate Accountability International that runs the "Think Outside the Bottle" campaign. Aquafina is the top-selling bottled water brand in the United States).

Joseph said the campaign had "numerous Asian allies, particularly in India where many communities are directly affected by Coke's practice of siting bottling plants in drought-prone areas".

Think Outside the Bottle seems to have created a template for similar anti-packaging water movements globally, with its campaign mobilizing students, religious groups, restaurants and municipal leaders to cancel bottled-water contracts and support better municipal water supply.

"The campaign appears to be taking a toll on bottled-water sales," Joseph said. Denting the $11.7 billion water-bottling industry in the US, the world's largest, mayors in cities such as San Francisco and Seattle have banned the purchase of bottled water for government offices and public functions.

A similar mindset change seems to be dawning in Europe. The London Evening Standard newspaper ran a "Water on Tap" campaign in April to have tap water available for drinking in city restaurants and bars. The tabloid reported getting support for its anti-packaged water campaign from the London Chamber of Commerce and Industry, the mayor's office, leading restaurants and chains such as Starbucks, Costa Coffee and McDonald's. Following growing pro-tap water consciousness, bottled water sales in Britain dipped 9% in the year to March 08, estimates London-based retail analysts TNS.

Economists at the California-based Pacific Institute that estimated the $100 billion value of the global industry, ask why consumers are readily paying for bottled water typically costing a thousand times more per liter than high-quality municipal tap water.

"Are consumers willing to pay this price because they believe that bottled water is safer than tap water?" Pacific Institute experts ask. "Do they have a real taste preference for bottled water? Or is the convenience of the portable plastic bottle the major factor? Are they taken in by the images portrayed in commercials and on the bottles?"

Bottled water fills a void created by government failure to address basic services, Peter Gleick of the Pacific Institute writes in its World Water report.

"In many parts of the world, tap water is not available or safe to drink," writes . "In these regions, the failure of governments to provide basic water services has opened the door to private companies and vendors filling a critical need, albeit at a very high cost to consumers." The institute reasons that governments should tap into spending on commercial water by consumers to secure funds to provide safe water at fraction of the cost.

Gigi Kellett, US national director of the Think Outside the Bottle campaign, argues that demand for bottled water is due to industry creating "a market by casting doubt on the quality of tap water, when in fact bottled water is subject to far less scrutiny and often comes from the same source".

Acceptance of the supposed purity of bottled water is being undermined in India by the government Health Department's warning of pesticides and contaminating organisms being present in some bottled products.

The notion that commercial products taste better has also taken a knock from Decanter, a British magazine, which last December featured top wine tasters testing unmarked samples of water from 22 brands, along with tap water from utility company Thames Water and water from the Decanter office water cooler.

The Decanter panel ranked serviced tap water third in the list, above the world's leading brand, Evian (15th), and the world's most expensive bottled water 420 Volcanic (18th) and Bling H20 (22nd out of 24 brands tasted). 420 Volcanic sells at $99 a liter, and Bling H20 (in Swarovski crystal-studded bottles) at $79 a liter. Decanter editor Guy Woodward said the tasting test exposed the "outrageous" prices of mineral water.

Whatever the price of bottled water, people in India appear willing to pay for the commercial product while turning their backs on the country's ancient methods of cooling and purifying water. Stored in earthen pots, for instance, it is not only refreshingly cool and tasty but is said to become bacteria-free. Yet the common summer sight of water matkas (earthen pots) in public offices and spaces is giving way to upturned plastic drums dispensing packaged water.

But not even a severe water shortage in the national capital has moved the central government to regulate excessive ground water extraction by business corporations.

To the contrary, the state government of Uttar Pradesh arrested 2,000 farmers in the drought-stricken Bundelkhand region in April 6 for "stealing" water from a public canal.

Raja M regularly drinks water from taps in various cities and towns across India, and as yet reports no lethal side effects.)