Pepsi, Coke cut output by 30% on lower sales

Pepsi and Coca-Cola have cut production by 25-30 per cent in the last one week after the Centre for Science and Environment came out with a report saying pesticide content in soft drinks is several times higher than permissible limits.

The two companies have had to curtail production as soft drink sales have fallen more than 40 per cent during the last seven days. However, sales climbed 20-25 per cent on Tuesday due to Raksha Bandhan as well as the weather, company officials said.

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While a section of bottlers refused to comment on the production cuts, all of them said the losses had been less because the peak season was over. "Had it been the peak season, losses would have been huge," a bottler said. He said sales during one month of the peak season, generally June-July, was equal to sales between October to January.

Pepsi's spokesperson confirmed that sales had dropped 30-40 per cent. The spokesperson, however, added: "The worst is behind us." While Coca-Cola officials could not be contacted despite repeated attempts, an official said there had been a drop in sales. He, however, refused to quantify it saying it was too early to know.

A Pepsi official said it was the brand equity that had suffered the most and the report had tainted the soft drink industry without giving it a chance to prove itself innocent. Industry experts say both the companies have suffered huge losses on account of arsoning as well.

He, however, refused to quantify the losses.

Moreover, the cola brands had suffered more than brands like Seven Up, Mirinda, Limca and Sprite, the official said. Retailers and stockists agreed to this. "Though sales of brands like Mirinda and Fanta have gone down slightly, there has been a larger fall in the demand for colas," a retailer said.

He added that brands like Sprite, Limca, Mountain Dew and Seven Up were still selling. While 70 per cent of the market comprises colas, other brands account for only 30 per cent.

The industry is now waiting anxiously for a report on soft drinks by the Central Food Technological Research Institute, Mysore. Health Minister Sushma Swaraj had sent soft drink samples to the laboratory for testing after the CSE report came out.

Meanwhile, the companies have got their act together. Besides sending letters to retailers, stockists and customers, company officials are convincing consumers about the safety of their products by saying that one cannot blindly copy European standards in India.

One example is that only 30 per cent of the pesticides are used to kill pests and the rest gets absorbed by vegetables.

The conditions will normalise some time after the government makes a statement. "Even after the government makes a favorable statement, it will take some time before soft drink sales recover,' another expert said.

The soft drink market is estimated at Rs 6,500 crore (Rs 65 billion) and comprises exchange of 600 crore (6 billion) bottles every year.