CHENNAI: The boycott of cola drinks by traders in some districts of Tamil Nadu is having a chilling effect on sales of PepsiCo and Coca-Cola in the state as the tangential protest that began during the Jallikattu agitation gains momentum. Scores of small retailers, departmental stores and corporate-backed chains such as Reliance Retail have aligned with the traders’ association — Tamil Nadu Vanigar Sangangalin Peramaippu (The Tamil Nadu Federation of Traders) — which claims a membership of 1.5 million outlets and 6,000 affiliated associations.
In January, the trade body said it would campaign intensively to wean retailers away from selling the colas as they believed consumers in the state would do well without these brands, which they allege “contain harmful chemicals and strain water resources in the state”. It had set a deadline of March 1 to achieve total boycott in Tamil Nadu.
The Indian Beverage Association has expressed disappointment at the boycott. PepsiCo did not reply to emailed questions sent by and Coca-Cola said it had nothing more to add to IBA’s statements. While it was small retailers who first heeded the call of the trade body, now the large retail chains are following suit; Reliance Fresh, the grocery retailing chain of Reliance Industries, being one of them.
“Whatever (cola bottles) one would find on shelves are leftover stocks and those not taken back by distributing agencies,” said a company spokesperson. Some of the stores under Reliance Fresh, which runs 56 outlets in the state, doled out complimentary offers to clear out inventories.
Quick service restaurant chain Saravana Bhavan, according to company sources, is consulting its legal team to take a call on the boycott to examine if it would lead to any contract violations.
Kovai Pazhamudir Nilayam, running 47 outlets across seven cities, had stopped ordering fresh stock of Coca-Cola and Pepsi on February 1 and has been in “stock clearance” mode since then, said the company’s managing director Senthil Natarajan. “What I find absurd is that just two brands have been targeted in this campaign. Are there not other industries that use groundwater?” he asked.
Many small retailers the condition of anonymity that Coca-Cola and PepsiCo have consistently subsidised or even totally financed refrigeration equipment, interior designing and name boards for their stores, and in some cases, even power bills. This makes it a tough task for storeowners to refuse offtake of stocks.
Separately, a public interest litigation, which won an interim injunction last November to supply of water to PepsiCo and Coca-Cola factories in Tirunelveli district, was dismissed on Thursday by the high court, which allowed the two companies to use water from Tamirabarani river.
Dheeraj Nair, partner at J Sagar Associates, which represented PepsiCo in the case, told that the court had taken a “pragmatic view after assessing factual material”.
A top official in the state industries department told ET that the companies have sought the government’s intervention. “Coke and Pepsi have been approaching (us). But the government cannot mediate,” he said.
For the companies, it is what analysts call a brand’s nightmare.
“When something like this happens, the brand is caught between a rock and hard place. The brand cannot stand up and speak for itself because a very important constituent, the retailer, is up in arms,” said consultant Harish Bijoor. “The brands should look at every legal option and seek succour from fora like Ficci and Assocham.”