"Clean is a relative word", says Indian Pepsi chief

CLEAN IS A RELATIVE WORD

By: Anil Thakraney
August 17, 2003

It’s one war they aren’t fighting with each other. PepsiCo and Coca-Cola – who between them enjoy a whopping $1.2 billion market in India, selling about 6.5 billion bottles annually – have been hit with a frightening report that questions the purity of their contents.

On one side are allegations, counter allegations, lawsuits, blinding scientific data and a plethora of confusing norms. And on the other, the enormously worried mom, whose son loads his water bottle with Pepsi.

To gauge what’s going on in this unusual cola war, let’s get up-close with Rajeev Bakshi, PepsiCo’s chairman, South Asia. Bakshi passed out from St Stephen’s in 1976, followed by IIM-B in 1979. His previous assignments have been GM – sales and marketing with Lakme, and MD, Cadbury India.

I meet the much-admired suit at his lush farmhouse in Delhi. It’s August 15. But Bakshi is seeking another form of freedom: liberation from the damning charges.

In this interview, are you representing Pepsi, or both, Coke and Pepsi?

As of now, I am speaking from the category’s point of view, but more specifically, Pepsi.

What’s the next step? Defamation case against the CSE?

We are going ahead with the process of clearing our name in a step-by-step manner. When we went to court, we made an above-board and well-intentioned plea to the judge. The plea was based on scientific grounds. We said we have been wronged… there has been a report that has been put up in the public domain, and that report has a problem. That, we are meeting the WHO standards, we are meeting the Indian law by a far margin. That, this report is alleging we are not meeting the EU standards, which is a new benchmark, and which is never measured across the world for soft drinks. Still, we said we’d contest that as well. Because we believe their testing methodology itself is faulty. That methodology is actually used for testing water, not soft drinks. And two, there are discrepancies in their report.

Except that the High Court dismissed your plea. So you must be disappointed.

No. Our first strategy was that given that there is a discrepancy, we asked the judge if this report can be suppressed. While arguing this with the judge, we withdrew that particular plea, because it was already in the public domain… the judge said it was not a key issue.

If you had to withdraw, why did you enter the plea in the first instance?

It is the way of putting the entire case in a court. Basically, our lawyers said we had to do it in three steps. One, ask to withdraw the complaint, because it’s wrong. Two, request the judge to get an independent scientific body to enquire into the issue, and then, come to a conclusion as to what this is all about. And the third step: let an independent report come out, and at that point of time, we reserve the right to press charges, or whatever else, depending on the outcome. We felt it was unwise for us to press charges upfront. Because that would have meant prejudging the entire issue.

Don’t you think asking the courts for suppression of the report is unethical? It is a public interest report, after all. Isn’t this a case of SLAPPing? (In the US, this controversial practice is termed, ‘Strategic Lawsuits Against Public Participation’.)

What the SLAPP says is, if anybody makes an allegation like this in America, ‘withdraw it from the public domain, have a private conversation, and then arrive at a judgement’. Since there is no law to that effect out here, we are saying, ‘the report is wrong, so can they withdraw the report itself’.

Except that the plea got dismissed. What is your next step?

As far as we are concerned, the health ministry is looking into the matter. The judge has ordered an independent evaluation. It’s not clear to me what the modus operandi of that is. So we have to wait for that to happen.

Do you believe the CSE has a hidden agenda against Coke and Pepsi?

As far as I am concerned, I am taking everything at face value. So, in public, I am not going into what their motivations could be.

Do you think if you were a desi company, this may not have happened?

My only problem as far as the CSE is concerned, is the process.

I am talking of the intent.

I cannot comment on that.

But can you rule out evil intent?

(Pause.) At this stage, I don’t know. It could be either way, but I don’t know. Once the results come out, I guess all will get cleared.

Talking of technique… during the same tests, they did also check the American samples… and they emerged fine.

Look, I am well within the law, even as per the results declared by them. I am also well within WHO standards.

The study indicates you have contamination that, for Pepsi, is as high as 35 times the EU norms.

That’s comparison with the water norms of EU. There are no standards for pesticides in soft drinks anywhere in the world. It is assumed that the water you use will have this sort of pesticides. Even if I assume that figure to be correct, though that figure has been blown out of proportion, if I tell you the number for juices, you will jump! But if you look at the norms we have been following till January 2003, which are the US standards, the WHO standards, and the BIS standards, we are well within that. Suddenly if you change the goalpost, and the reference of comparison, then you have to respond to that. I am saying, I am absolutely safe, and within the norms, even as per their report, which I am contesting.

So why aren’t you following the EU norms?

Very honestly, till January this year, we have been following the BIS norms, and the US norms, for water. Suddenly, in January, came a report from the same organisation, which said ‘these people are 1.5 times out of EU norms’. So we said, “Oh, what’s this benchmark now?” That process had not been mandated yet. Then when we tested internally, we found we anyway follow the EU norms, by default.

How can you not be aware of the EU norms… you are a global company operating across the world?

But internationally the specification is American norms, which we thought was good enough, and more than safe.

So then how come the American samples tested clean?

Clean is a relative word.

Relative? We have been given the exact degree of contamination and the names of contaminants.

Point is, you will find pesticides in 100 per cent of the products that you eat or drink. The question is, what is the safe amount?

And yours is 35 times higher!

You are saying that figure is a big deal? Let me give you other figures. In the EU, on milk, the overall pesticides standard is 7,000 times over what it is for water! And they consider this safe! So this 35 times is a marketing figure… it won’t impact your health at all. Even if you take their report to be correct, it’s one-sixth of the Indian legal norm.

Do you think it’s the fault of our water in India…. that it sucks?

I think we need to lay this water thing to rest. I have checked the raw water, across all my plants, and except for four plants, it’s within the EU standards even when it emerges from the earth. The reason could also be that we locate our plants quite carefully. Speaking in general, there is no generic data on pesticides in ground water.

Next. What percentage of Pepsi’s consumers are minors?

About 30 per cent.

Why should worried parents believe you, not CSE? What would you like to say to them?

First, the emotional reason. We have been around for many years, we operate in many countries, we have been offering quality products, so it is very difficult to imagine we’d offer substandard products. Two, even if you think that these people have done their work rightly, with honesty, and we take their figures at face value, I can tell your readers that this level of pesticides is perfectly safe. It is still not harmful. Because, if you take the EU standard for water, and compare it with the Indian standard for milk, the DDT in milk is twelve-and-a-half thousand times over the EU standard.

So if it’s okay to drink the colas, despite the CSE findings, why are you contesting their report?

Because there is a public perception that has been created, through damaging press reports, which has made us look very irresponsible. A public perception has been created that this ’35 times’ is bad, and I am saying, even if it’s correct, it’s okay. You won’t get cancer. Still, we are contesting the report, and saying we are much safer than that.

Nothing will happen to the kids over a period of time?

No way!

The big question. Suppose the study ordered by the health ministry, using the technique that you believe in, vindicates the CSE’s findings, what will you do?

(Long pause) It’s a hypothetical question. So we’ll take it as it comes. However, as far as tightening of processes goes, it’s an inward process. So if that happens, we’ll tighten our standards even more.

Next. A number of people were disappointed at yours and Sanjeev Gupta’s [boss of Coca Cola] reaction to the study. There was no show of concern at all. Rather, you were busy threatening legal action.

I didn’t talk of legal action.

Of course you did… we saw it on TV.

Sanjeev Gupta said it on his own volition, I didn’t.

Yeah, but that evening, both of you were on the same side of the fence.

We were on the same dais. And giving out own points of view.

Why didn’t you even attempt to reassure nervous parents? Promise them that you will get to the bottom of this issue.

When the water controversy broke out earlier this year, our response was precisely what you are saying. We came out with a very defensive response at that time. We said, ‘we are meeting the norms, still, let’s study this and get back to you’. We went back to the media after 15 days, and they refused to publish it. Because the story was dead by then. Now, after we’ve been had once, when our part of the story never came across, and because we were confident about our data, we went to the public with it.

People out there don’t understand tests and techniques… they are worried parents, looking for assurance.

Yeah, but 24 hours later, I would have had to come back to the same point: the data. The stance would have still been aggressive. Because the decibel level of the attack was very high. It was almost a personal attack.

Have you registered a drop in sales since August 5?

Yes, sales have been affected.

How much?

I cannot reveal the figures. (See this report.)

How did your kids react when they heard the CSE story?

(Slight pause.) They asked me if this was correct, and I said ‘no’. They believed it.

They still drink Pepsi?

The elder one drinks Diet Pepsi, the younger one is slightly more fussy.

She drinks Coke?

(Laughs.)

Rajeev has every reason to laugh. Later, at a papdi-chaat joint in Dilli’s Bengali Market, I spot a Hindu Undivided Family devouring gallons of Pepsi. I ask the patriarch if he isn’t worried. Ratan Lal Khurana says he sure is, but he can’t help it. “Ki karen. Bachiano gussa chadega.” [What to do? The kids will get angry.]

Tests show Pepsi, Coke to be contamined with poisons

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