Cocal Cola

CASE 5-1

1. What should Coca-Cola do to appease the Indian government and ensure its survival in the market?
2. What effect will this case have on Coca-Cola’s operations in India?
3. What lesson does this case have for other multinationals that want to enter the Indian market?

Coca-Cola is in Kerala, India. Kerala, a naturally well watered region, was hailed as a success story for India. However, in 1992 Coca-Cola set-up a bottling plant in the state, which locals claim led to disastrous environmental impacts and water shortages. Coca-Cola began to draw 1.5 million liters a day from the local groundwater and within six months changes were noticed in the quality and quantity of well water. Water from a well in Plachimada supplying 100 families was unfit for any purpose turning brackish and white. The water was classified as ‘very hard’ and also contained very high levels of calcium and magnesium making it unable to be used for washing and drinking. It is claimed that this has been caused by over-exploitation of ground-water by Coca-Cola. Coca-Cola’s operations in Kerala have had huge impacts on local water resources with the lands of 2000 people within 1.2 miles of the factory drying up and over 100 people reporting severe stomach aches which they claim are caused by drinking unsafe water. The lack of water has also affected agriculture with yields declining. This has wider social, economic and cultural effects with farmers having to borrow money to dig bore holes and women having to walk for miles to fetch clean water (Jayaraman, 2002, [www]).  

Coca-Cola has caused stress on local water resources in other Indian states too such as Andhra Pradesh where wells providing 25,000 people with water have dried up due to the company drawing 225,000 litres of water a day. Also north of Chennai Coca-Cola is releasing highly saline effluent into local water systems, which could turn the water brackish. There are other examples of...