Madras HC lifts ban on water supply to Coke, Pepsi

The boycott of foreign colas remained mixed in Tamil Nadu on the second day of the retail stir called by two trade associations in the state. 

Beverage industry sources said some retailers in key markets such as Chennai continued to sell the cola drinks in an attempt to exhaust their stocks. The picture was no different in other parts of the state, they said.

While it is unclear whether these retailers will continue to stock the products once the present consignment is over, PepsiCo and Coca-Cola had some relief coming from the Madras High Court on Thursday.

The Madurai bench of the high court on Thursday dismissed public interest litigation filed against the supply of water from the Thamirabarani river to co-packers of PepsiCo and Coca-Cola in Tirunelveli.

Stating that there was no ban on water supply to PepsiCo and Coca-Cola, the court also lifted a stay order imposed earlier on the two companies.

The judgment acquires significance because PepsiCo and Coca-Cola depend on water from this river for their production requirements in the state.

Tamil Nadu is counted among the top 10 soft-drink markets in India with an estimated size of around Rs 1,400 crore. Pepsi is the leader in the state with an estimated share of 60 per cent. Coca-Cola follows with a share of around 30 per cent. Local brands such as Bovonto, Kali’s and Kalimark are estimated to have a 10 per cent share of the market.

While the Indian Beverage Association (IBA), apex body of domestic beverage makers, has come down hard on the boycott, Coca-Cola and PepsiCo are tracking developments closely in the state given its significance.

“Coca-Cola and PepsiCo India play a critical role in improving the livelihood of over 200,000 retailers, who earn more than Rs 400 crore by selling products manufactured by the two companies. The companies also sustain the interests of thousands of Tamil Nadu farmers by procuring agri-produce,” IBA said.

The retail boycott gathered steam after the stir around the ban on Tamil Nadu’s bull-fighting sport Jallikattu in January. 

Led by A M Vikramaraja, president of the Federation of Tamil Nadu Traders Association (FTNTA), it was soon joined by another prominent trade body, the Tamil Nadu Traders Association Forum (TNTAF). Almost 6,000 small and medium enterprises and 1.5 million members are part of the two trade bodies.

Pepsi and Coke continue to be sold at malls, supermarkets and hypermarkets in the state.

Colas in Tamil Nadu

• With a size of Rs 1,400 cr, Tamil Nadu is counted among the top 10 soft-drink markets in India
• Ruling with a 60% share, Pepsi is the market leader in the state
• With 30%, Coca-Cola follows Pepsi in the state’s market 
• An estimated  10% is the market share of the local brands such as Bovonto, Kali’s and Kalimark