Coca-Cola India is one of the largest beverage companies that offer a wide portfolio of refreshing beverages in India. The portfolio includes sparkling drinks, juice drinks, packaged water, energy drinks, tea, and coffee. India is marked as the second most populous country in the world. This implies that it has a wide range of customers who consume Coca-Cola products. Similarly, Coke India boasts as a significant contributor in catalyzing economic growth. In India, the company has 25,000 direct employees and an estimated 150,000 indirect employees (Burnett & Welford, 2007). It has 56 bottling plants that are owned by the company and its franchises. This means it aids in creating employment and contributing to the country’s economic growth. However, the company has been faced with a number of challenges that affects its profitability and reputation in India. The company has been accused of water exploitation that leads to precipitous fall in the water table. This comes after Coca-Cola announced its $5billion expansion plan in India from 2012 to 2020 (Lambooy, 2011). Therefore, this paper highlights the water shortage challenges in relation to Coca-Cola Company expansion plans in India.
Both the Millennium Development Goals and the recently launched Global Goals are concerned with the issue of climate change. The business implications of climate change have become an area of interest among companies and the society at large. According to the National Center for Atmospheric Research (NCAR) report, climate change is likely to decrease natural water storage capacity affecting the population that lives in glacier-fed river basins; the mainly affected areas including China, India, and Pakistan (National Center for Atmospheric Research, 2005). In the same vein, Coca-Cola has been accused of creating severe water shortages due to the huge water extraction in India. In light of this, the Coca-Cola Company does not have the capacity to meet its $5 billion expansion plan in India set to increase its profitability by at least 10% in a year.The plan was to build new bottling companies in the country to meet the increasing demand predicted due to the increasing population growth and the scorching sun that is increasing hot temperatures in the country.
The expansion plan is unrealistic based on the numerous challenges that the company is facing in India. To begin with, in 2004 Coca-Cola Company was forced to close a bottling plant in Kerala after accusations of depleting the groundwater table and pollution (Marc, 2008). A decade later, the company received another setback when the authorities ordered a closure of the Hindustan Coca-Cola Beverages Private Limited (HCCBPL) in the state of Uttar Pradesh. This particular bottling company produced an estimated 26,500 kiloliters of beverage a year (Archana, 2014). Hindustan Company closed just after it had requested to be granted permission to expand the facility. As if that was not enough, the Ground Water Authority declined a bid to build an $81million bottling plant at Perendurai and another one in the state of Tamil Nadu worth $24 million.The company had signed a lease for the 71 acres state-owned estate at Perendurai in 2014 that was meant for Hindustan company expansion. All theseexpansion plans became futile due to the protests from the local farmers.
However, Coca-Cola has released a sustainability report that indicates its plans to ensure that it uses water effectively (Lambooy, 2011). For example, it has initiated partnership plans with the local communities in order to set up rainwater harvesting projects. The company also aims at recharging around 79,141 cubic meters of water back to the water table every year (Sharma &Kiran, 2012). These plans are initiated amid heated debate over its expansion plans. The bottom line remains that these projects will require huge investment and they will hinder the expansion plan. Therefore, Coca-Cola Company will not manage to meet its $5 billion expansion plan by 2020. Among the steps to address water shortages was a plan to connect and join 30 rivers to increase the water supply. The next step includes building rainwater harvesting and groundwater recharge structures (Sharma &Kiran, 2012). The third step that affects the Coca-Cola Company was a passing a law that prohibits mass water misuse by production company. At least 36 states had passed this law by the year 2014 affecting companies in the beverage industries. Some of them have been forced to trim down their water usage while others had to close down. This means that the Coca-Cola Company’s endeavors to expand have met a rock bed. The company has been experiencing financial losses due to the abandoned expansion plans. Similarly, it has faced numerous legal challenges which mean it has used a number of its resources on compensation and court cases.
The first recommendation would include creation of a habitable relationship with the locals. Coca-Cola India faces numerous challenges in form of resistance from the locals. This damages their reputation which creates a loss in their sales. It is important to create a rapport between the company and the community in order to revive their brand image and increase sales. Secondly, it should initiate projects that align with the global sustainability goals to ensure that the water table is managed. There is also a need for a relationship with the government and legal agencies that ensure rules and regulations are followed entirely.
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