Indian soft drink ban spreads

17-08-2006

More Indian states have restricted sales of both Coca-Cola and Pepsi following fears that the soft drinks are responsible for the spread of pesticides into rural areas of the sub-continent.

As a result of the decision by Andhra Pradesh and Karnataka yesterday, the beverages produced by rival US drinks giants Coca-Cola and PepsiCo will not be sold in those states near public hospitals, schools and colleges.

The same state of affairs now exists in a quarter of India's states, following the initial move from five states, Gujarat, Madhya Pradesh, Rajasthan, Chhattisgarh and Kerala in the last two days. The latter has introduced a complete ban on the products.

Indian sales of products made by Coca-Cola and PepsiCo dropped by approximately ten per cent, an unverified source told the Reuters news agency earlier today.

But industry commentators have suggested that the impact will be checked by the relatively limited scope of the Indian market. Although one billion populate the country the market for soft drinks is relatively small, with sales largely maintained in the large cities such as Mumbai and Delhi.

Operations in India were not even mentioned by Coca-Cola as it announced its half-year results, recording an 11 per cent overall increase in underlying operating profit.

Coca-Cola's shares were up by 0.34 per cent in yesterday's trading on the New York Stock Exchange while PepsiCo's grew by 0.57 per cent.


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