Soft Drinks
problematic. For example, PepsiCo might not have a core competency in food sales or a strong position in the industry. Because it might not be able to effectively transfer skills or share activities with its fast food businesses, the mergers might not be successful in the long run. Stuckey and White also point out that “high-surplus stages must, by definition, be protected by barriers to entry.” So it could be difficult for Coke to enter the fast food business. It could be prohibitively expensive to purchase McDonalds or Burger King, and developing a chain of its own against such formidable competition would be extremely risky. So integration into this phase of the value chain would be difficult or impossible for Coke.
As Stuckey and White say, “don’t vertically integrate unless it is absolutely necessary to create or protect value.” We shall address each of these individually to formally refute the plausibility of vertical integration of CPs into bottling. (1) “The market is too risky and unreliable.” On the contrary, the concentrate
Market is highly stable and will be for a long time to come. “Companies in adjacent stages of the induct chain have more market power than companies in your stage.” The opposite is true, CPs already have more market power than bottlers, so they should not vertically integrate. “Integration would create or exploit market power by raising barriers to entry or allowing price discrimination across customer segments.” In fact, CPs already have market power through efficient barriers to entry, and effectively price discriminate through various retail channels. (4) “The market is young and the company must forward integrate to develop a market, or the market is declining and independents are pulling out of adjacent stages.” The market is neither young nor declining. Having determined that a vertical integration strategy fails all four of Stuckey and White’s tests, CPs should not pursue vertical integration into bottling.
NEW DELHI — One of India’s leading voluntary agencies, the center for Science and Environment (CSE) said Tuesday that soft drinks manufactured in India, including those carrying the Pepsi and Coca-Cola brand names, contain unacceptably high levels of pesticide residues.
The CSE analyzed samples from 12 major soft drink manufacturers that are sold in and around the capital at its laboratories and found that all of them contained residues of four extremely toxic pesticides and insecticides–lindane, DDT, malathion and chlorpyrifos.
”In all the samples tested, the levels of pesticide residue far exceeded the maximum permissible total pesticide limit of 0.0005 mg per liter in water used as food, set down by the European Economic Commission (EEC),” said Sunita Narain, director of the CSE at a press conference convened to announce the findings.
The level of chlorpyrifos was 42 times higher than EEC norms, their study showed. Malathion residues were 87 times higher and lindane–recently banned in the United States–21 times higher, CSE scientists said. They added that each sample was toxic enough to cause long-term cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system.
Samples from brand leaders Coca-Cola and Pepsi had almost similar concentrations of pesticide residues in the CSE findings. Contaminants in Pepsi samples were 37 times higher than the EEC limit while its rival Coca-Cola exceeded the norms by 45 times, the same findings showed.
The chiefs of the Indian subsidiaries of Coca-Cola and Pepsi were quick to refute the charges made at the press conference. Sanjeev Gupta, president of Coca-Cola India, called the revelations made by CSE ”unfair” and said his company was being subjected to a ”trial by media”.
”All Coca -Cola products are repeatedly tested for safety norms. This is unacceptable,” he said over the telephone. Gupta and the chief of the Pepsi India, Rajiv Baksh, have called for an independent inquiry led by India’s top scientists to settle the issue.
Coca-Cola, the world’s ”most valuable brand” at billion, is already defending charges made by British Broadcasting Corp Radio 4 last month that waste sludge distributed to farmers from its plant at Plachimada in southern Kerala state has high concentrations of the toxic metal cadmium. In a joint press conference by Pepsi and Coke here Tuesday evening, Bakshi and Gupta said they were contemplating legal action against the CSE because the revelations had harmed the industry.
”We expect a temporary setback for about a week or so and then we are sure the consumers will have the same confidence in us they have always shown,” said Bakshi. But Narain said the CSE stood by its findings.
Six months ago, CSE announced findings that nearly all bottled mineral water manufactured in India, including brands owned by Pepsi and Coca-Cola had