Earlier this decade, beverage bottlers Coca-Cola Co. and PepsiCo were hit with harsh criticism from locals in India who claimed the companies were using up all the groundwater–leaving locals high and dry. This not only damaged both companies’ reputations, but it also forced them to review how water, or the lack of it, would affect their businesses. Both companies have made dramatic advances, and Pepsi recently announced that it has achieved positive water balance in India. In other words, Pepsi would recycle and conserve water to ensure there was more water available than it took from the fresh water system.
If you ask an Indian citizen about the country’s water problems, you may be in for a lengthy conversation. Most people in India are acutely aware of how little water is available. Current Pepsi CEO Indra Nooyi recalls growing up in an Indian city where life was planned around water scarcity. She told Bloomberg BusinessWeek in 2007 that her middle class family had to wake up each morning as early as 3AM to get water for the day. That was the only time local officials turned on the water valves. Nooyi’s family would get up, fill all the buckets in the house with water, and then carefully manage its use. Two buckets were set aside for cooking, and two more were reserved for each of the children.
“You had to think about whether to take a bath,” Nooyi told the magazine. “You learned to live your life off those two buckets.”
Though water is scarce in India, it holds special significance for many of the country’s citizens. Some consider bathing a sacred act; others believe death is not properly marked until the person’s ashes are scattered in the Ganges River. However, despite water’s importance in Indian culture, the country suffers from some of the dirtiest, most-polluted water in the world. Pesticides, industrial pollution, and poor sewage treatment are just some of the reasons for the poor water quality.
Inadequate water management and over-pumping severely limit the availability of the precious resource. With much of the water heavily polluted and good water either scarce or inaccessible, citizens have accused high-profile companies such as Pepsi of excessive water use. It doesn’t matter that (according to Nooyi) bottled water and soft drinks account for only 0.04 percent of industrial water use in India–making Pepsi a small part of the problem.
Broad-based boycotts of Pepsi products in India caused the company’s sales to drop by double digits. The company responded by focusing on conserving water, and helping to bring water to villages in need. Now, the Indian arm of Pepsi says it has achieved positive water balance. The company says it used 5.17 billion liters of water in 2009, but “recharged” or replaced in some manner 6 billion liters, a positive contribution of 836 million liters.
Pepsi achieved its positive water balance via conservation efforts, community programs, rain harvesting, and the building of check-dams (small dams that can be used to control the flow and level of water).
At a bottling facility in Palakkad, India, Pepsi was able to make significant reductions in its water use. A company spokesman told the Economic Times that the Palakkad facility is one of the company’s most efficient, saving an estimated 200 million liters of water–a 60 percent reduction in the last four years.
Sanjeev Chadha, the chairman and CEO of PepsiCo India, wrote in a blog post that Pepsi building check-dams for villages would be the best way to “rejuvenate the water supply.” While the company has built 13 check-dams, helped educate villagers on better water management techniques, and erected rain-harvesting units, some believe the company could do more.
Sunita Narain of the Centre for Science and Environment told the Economic Times, “It would be ideal if PepsiCo was replenishing all the water it consumes in areas where its plants are located. The scarcity and problem lies in those areas.”
Pepsi’s positive water balance in India is an accomplishment. Cutting water use at bottling facilities and assisting villagers with water resources are good steps toward repairing Pepsi’s reputation and tackling water scarcity. To be fair, there is only so much that Pepsi can do. The company’s soda business relies on water, and Pepsi sells bottled water as well.
Without water, however, Pepsi, Coca-Cola, and other bottling companies have no business. At its current consumption rates, some believe India will exhaust its water resources by 2050. And public outcry, as seen in India, can sway governments to support citizens over corporations and contracts.
The larger point here is not that Pepsi is doing the right thing for some villagers in India, or that it’s reducing water use at bottling facilities–though those are commendable steps. The point is that the company HAS to take those steps. The realities of the world’s water resources demand it. Companies are no longer free to take resources without thinking through the ramifications. In today’s water-scarce reality, Pepsi has to build check-dams for villagers in order to sell cola: that’s the point.