Pepsi: Repairing a Poisoned Reputation in India

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I was quite passionate about it," says Sinha, now 36 and a vice-president at Bates David Enterprise, an advertising agency in Mumbai. And it was fairly cheap, costing 12 cents to 15 cents a bottle. But the CSE study spooked him. "At a subliminal level, I would rather be safe," says Sinha, who both filters his family's drinking water and boils it to kill pathogens. He has his own memories of past shortages, living off 25-liter containers of bottled water and watching others scrape together money to buy daily supplies from water tankers. He echoes Nooyi's claim that there's a tendency to pick on multinationals, but he thinks the soda makers aren't doing enough to alleviate India's water woes: "I no longer trust the cola companies."

The drama that unfolded after Narain's first soda report card in 2003 could hardly have appeased him. The Indian government flip-flopped between dismissing CSE's findings and supporting the group's call for more stringent standards for carbonated drinks. Pepsi executives joined Narain at sometimes contentious meetings over the next two years aimed at helping the Bureau of Indian Standards (BIS) arrive at guidelines on pesticides, caffeine, and even PH levels in soda. Just when standards were set to be ratified at a meeting in March of last year, Narain says, a cola company executive—she forgets which one—arrived bearing a letter from the Health & Family Welfare Minister to another government official. In it, the minister said the new standards should be deferred because further research was under way.

Narain was furious at what she publicly labeled a corporate power play. "It's clear the letter was written for the cola companies," she says. "They managed to get the standards killed by government." Pepsi executives dismiss the notion as ridiculous. Narain countered with her most effective ammunition: another explosive national study that was released in August, 2006. This time, Pepsi was 30 times as high as the unadopted Indian government standards; Coke was 27. The southern state of Kerala banned the manufacture and sale of all Coke and Pepsi products while other states cut soft-drink sales in schools, colleges, and hospitals. "Everyone carried the story, especially on TV," Seth says with a sigh. Protests revved up again, with some demonstrators pouring cola down the throats of donkeys to show that the drink was unfit for humans. Sales dipped as Narain's campaign again played to the conflicted attitude that Indian consumers have toward powerful foreign brands—especially those portrayed as profiting at their expense.

Even the beneficiaries of Pepsi's generosity seem ambivalent. In the tiny Kerala village of Chullimada, Pepsi recently funded the construction of a well, pipes, and taps that bring water to about 50 homes. The dusty hamlet, many of whose residents eke out a living as day laborers, is where organizers met to plan an anti-Pepsi march targeting a company plant in nearby Palakkad last October. As a result of Pepsi's improvements, the households have ready access to water where they once had to walk three hours a day to get it.

But good deeds can stimulate new demands. When Pepsi managers visited recently, about a dozen women presented the customary flowers of greeting and then got down to business. The local governing council won't pay for the added electricity to pump water, one woman complained. As a result, the pumps run only once a day, forcing residents to hoard. It would help, she suggested, if Pepsi covered the extra costs. Annie Kishen, PepsiCo's director of corporate communications for India and a native of Kerala, smiled and offered sympathetic words. After leaving, she confided that the company isn't eager to pick up villagers' utility bills.

In the neighboring palm-fringed village of Ganeshpuram, where Pepsi also installed a well late last year, different complaints surfaced. About a third of the 125 families don't have taps near their homes, an older villager said as Kishen leaned forward with a furrowed brow. All the women used to spend about two hours a day getting water. Now, there are haves and have-nots. What Pepsi needs to do, the local woman insisted, is bring water to every home in the village. Looking a touch embarrassed, Kishen explained later that in Kerala "the people always speak their minds."