Govt Studying Bottlers' Plea Against Coke

The industry ministry has sought the opinion of the food processing ministry before any decision is taken on the representation forwarded by certain Coca-Cola India bottlers, who have alleged that the multinational was trying to put the domestic bottlers out of their business.

The representation, which had been originally forwarded to commerce minister R K Hedge, was subsequently passed on to the industry ministry since the former did not have any jurisdiction over the matter. Also, all proposals involving foreign investment in the food processing sector, which includes soft drinks, have to be scrutinised first by the food processing ministry before they are forwarded to the industry ministry.

 

The disgruntled franchisee bottlers have said that by imposing stringent conditions on quality control among certain other terms, Coca-Cola was allegedly trying to put them out of business. They charged the company for threatening them for either cancelling or not renewing its contract with them if they did not meet the prescribed standards.

Official sources, however, sat that the representation forwarded by the Coke bottlers was not substantial enough to damage the latter's operations in the country. This was because the multinational had not violated any of the FIPB conditions.

Coca-Cola India has already announced its intention to directly take over bottling operations through its own subsidiaries.

In order to have a hold on manufacturing and distribution of the soft drinks in India.

As part of its overall strategy, the multinational company is planning to acquire most of the bottling operations in the country which are presently with private companies under franchisee agreement with Coke. The multinational company has already obtained government approval to invest $700 million in its operations in India.

As part of its plan, the company has already acquired important bottling plants, including those of Orient Beverages, Jai Hind Bottlers, Annapurna Industries and Prabha Beverages.

Besides the acquisition of these companies, Coke is also negotiating with Ramesh Chauhan to buy out his bottling company which has the manufacturing and distribution rights for the soft drinks in the region of Delhi. It is also believed to have approached other bottlers, offering to buy out part equity in their companies and forming joint venture partnership with these bottlers.

Coke had entered into a joint venture agreement with two bottling companies_Spectra and Hyderabad Bottling_ in April last year. Both these bottlers were for the territory of Hyderabad and they have already been merged into a Coca-Cola bottling subsidiary.