For Coke, Indian Water Woes Ripple around the World

PLACHIMADA, India — The gate of the Coca-Cola bottling plant in this remote Indian village is locked. Weeds grow around warehouses that have been idle since 2004, when the local government ordered Coke to halt operations.

The factory in Plachimada, a tiny farm village in southern India's Kerala state, is at the heart of a dispute about how Coke uses water. The controversy has cost the Atlanta-based company — the world's top producer of nonalcoholic beverages — in lost sales, legal fees and damage to its brand image, analysts say.

On one side of the argument are some villagers, Indian officials and international activists who argue that the bottling plant made local wells go dry and polluted water supplies.

Coca-Cola officials dispute those claims. The company followed "high environmental standards," among the best in the world, said Atul Singh, president of Coke's India division.

The facts of the case are mired in an array of scientific reports, anecdotal claims and legal action before the Indian Supreme Court. Coke operates 60 bottling plants in India and the company has faced protests in other communities over its use of water.

Some villagers in Plachimada say that after Coke began drawing water from a local aquifer to make soft drinks in 2000, wells dried out and groundwater began to smell and sickened people who drank it. State environmental officials accuse Coke of giving factory waste laced with cadmium, a highly toxic chemical element, to locals as fertilizer.

Gangdharan Rajamohan, chairman of the state environmental office, said he plans to file criminal charges against the factory.

"Cadmium will not be in the environment unless they brought it in," he said. "We firmly believe that groundwater pollution has occurred based on their activities."

Coke says that waste the bottling plant gave farmers was harmless and disputes that its use of water in Plachimada was more than peripherally responsible for a drop in the local water table. The company cites a September 2003 report by the Kerala State Pollution Control Board that concluded the waste was not hazardous.

Other studies by state and federal agencies — which Coke disputes as being flawed by deficient sampling techniques — found toxic levels of cadmium in a well and in factory waste. The Kerala State Pollution Control Board sent a letter to Coke's India head office in September accusing the company of polluting.

The allegations against the company have been amplified by a handful of activists who have raised the issue locally and at North American and European colleges, protests and shareholder meetings. Activists have portrayed what happened as a story of a rich multinational corporation abusing a poor community.

"This is far less about the science than it is about the politics. We have been the target of unfair criticism by people who are using us to push a political agenda," said Kari Bjorhus, a Coca-Cola spokesperson based in Atlanta.

But as the world's population swells and water becomes increasingly scarce, such conflicts are likely to grow.

Because Coca-Cola is one of the world's best-known brands and water is the main ingredient in their beverages, "consumers and activists will look at them to see if they're doing the right things when using water," said Lauren Torres, a beverage industry analyst at investment bank HSBC.

When the $16 million bottling plant was built in 1999, Plachimada's 1,200 residents welcomed the 350 full-time jobs it created.

But after the plant began operating, some villagers started to blame it for a drop in local wells and for what they saw as deteriorating water quality.

Other villagers and a government study, however, say lower well levels in 2002 and 2003 could have been caused by a drought.

A study by the state government found that the aquifer the Coca-Cola bottling plant was drawing from fell almost 5 feet between May 2003 and May 2004, shortly after the plant closed. But the report concluded that besides Coke's use of up to 500,000 liters of water per day, drought and agriculture uses also caused the drop, said a government scientist who asked to remain anonymous because a case about the factory is pending before the Indian Supreme Court.

Because officials did not monitor groundwater levels before Coke began operating in Plachimada, "we can't say how much they are responsible" for the reduced groundwater level, he said.

Despite the confusion, activists have highlighted the conflict to call for boycotts of Coke products.

The most vocal activist, Amit Srivastava, a 42-year-old Indian-American who started a nonprofit group called India Resource Center in 2003 and is its only full-time employee, has traveled to "about 40" colleges and universities in the United States, Europe and Canada to pressure administrations to cancel beverage contracts with Coca-Cola.

When he talks with students, he uses the Plachimada community as an example of "how the Coca-Cola Company uses water in an unsustainable way," he said.

In May, Smith College notified Coke that it would be barred from bidding to supply beverages to the school partly because of "Coca-Cola's business practices" in India, according to a letter to college sent to the company.

In 2005, the University of Michigan requested that Coca-Cola sponsor a third-party assessment of issues including Coke's use of groundwater in India.

Other groups have focused on Plachimada to push campaigns urging consumers to boycott bottled water produced by Coca-Cola.

Corporate Accountability International, a Boston-based nonprofit group best known for organizing a boycott of Nestle in the 1970s, has highlighted the Plachimada conflict partly to show how beverage companies "are increasingly moving us towards a mindset where water becomes a commodity and not a basic human right," said Patti Lynn, the group's campaigns director.

Coca-Cola officials accuse activists of exploiting the India claims.

Coke has been targeted "because our operations are highly visible, and because our brand name increases the likelihood of media attention for their issue and their organization," Bjorhus said.

While the "issue of water scarcity in India is real ... our critics have seriously overestimated the impact our operations have on local water supply," she said.

A Web page Coke set up to explain its side of the Plachimada dispute cites the September 2003 study by the Kerala State Pollution Control Board that found waste the bottling plant produced was not hazardous.

But the company doesn't mention other studies by state and federal environmental agencies that found toxic levels of cadmium in a well and in factory waste.

Nor does the Web site mention that the Kerala State Pollution Control Board sent a letter to Coke's India head office in September accusing the company of polluting with cadmium and asking executives to explain why they should not face criminal prosecution.

Bjorhus said the company did not mention the studies because they were flawed by "incorrect sampling techniques" and used "far fewer samples" than the September study.

But S.D. Jeyaprasad, the chief secretary of the Kerala State Pollution Control Board, said the studies were accurate and remain valid. One study by federal officials found that waste at the factory contained more than 6 times nationally permitted levels of cadmium.

Regardless of the outcome of the case, Coca-Cola officials say the problems in India have prompted new efforts to conserve water. In June, Coke pledged to set "specific water efficiency targets for global operations by 2008 to be the most efficient user of water within peer companies."

To enhance its water stewardship, executives plan to reduce the amount of water needed to make its beverages — a ratio that company officials say has improved by 19 percent over the last five years — and to expand water treatment so that "all water" used in the manufacturing process will be returned to the environment "at a level that supports aquatic life and agriculture" by 2010, said Neville Isdell, the company's chief executive officer.

In India and elsewhere, Coke has built "rainwater harvesting" stations around its factories that trap runoff and replenish local aquifers, and the company is planning new guidelines for bottling plants in drought-hit areas, said Harry Ott, Coke's director of strategic global water initiatives.

The dispute about how Coke uses water is likely to intensify if the Kerala State Pollution Control Board files criminal charges against Coke's Plachimada facility and the Indian Supreme Court hears the case, which could happen early next year, a lawyer involved with the case said.

Meanwhile, in Plachimada, some locals hope the factory will reopen.

"People who worked in the factory lost their jobs and if they reopen, certainly we can all get jobs," said Mehnunnisa, a 22-year-old woman who lives beside the bottling plant. Like many Indians, she uses only one name.

Others, however, want Coke to stay away. Sitting in a tent set up by protesters across from the bottling plant, 23-year-old Sorrya, a local farm laborer, worried that local water remained unsafe to drink. He said that during dry spells wells remained lower than in 2000.

"After all the problems, how can we trust Coca-Cola now?" he asked.