In what is surely going to be a major jolt for the two largest beverage businesses, traders in the south Indian state of Tamil Nadu have banned the sale of Pepsi (NYSE:PEP) and Coca-Cola (NYSE:KO), opting to push local brands. The ban was proposed by two of the largest trade associations and came into effect on Wednesday. Most shopkeepers in the state are likely to comply with this ban and stop selling the beverages.
The complaint against Coca-Cola and Pepsi is, the businesses draw a lot of water from the rivers, running them dry. As a result, farmers don’t have enough water left to irrigate their lands. The state is passing through a severe drought at this time. Tamil Nadu also has a dispute with the neighboring state of Karnataka over sharing water of the Cauvery River. Both these states and many other regions of India have a serious water crisis, particularly during the summer months.
Ban Called to Save a Vital Natural Resource
The two largest trade bodies, TNTAF or the Tamil Nadu Traders Associations Forum, and FTNTA or the Federation of Tamil Nadu Traders Associations said the ban has been proposed to save the state’s water, which is a key natural resource that cannot be allowed to go to waste like this. TNVSP alone has more than 1.5 million members, all of whom are expected to stop selling these drinks.
Members of these trade bodies finally called for this ban after the huge response from young people against the ban on the local festival, jallikattu. This encouraged them. They say a ban on Coca-Cola and Pepsi might work in the state.
These associations are further saying that drinks such as Coca-Cola and Pepsi are anyway not good for health. They contain high chemical and sugar content. “We will be promoting fruit juices, which are healthier, instead”.
Indian Beverage Association Criticize the Ban
IBA or the Indian Beverage Association that represents many soft drinks makers has criticized the ban, saying they are disappointed with the trade association. IBA issued a statement saying, “it was against the proven fundamentals of robust economic growth”.
Pepsi (NYSE:PEP) and Coca Cola (NYSE:KO) are both big employers in the state. Together, these businesses employ more than 2000 families in Tamil Nadu directly, and 5000 families indirectly. There has been no comment from either of the businesses yet.