Soda market moving to India? Latest investment on soft drinks in Hyderabad

When we are being bombarded with the Prime Minister's pet theme of "Make in India", day in and day out, there was great hope that products identified for manufacture, both for domestic and export consumption would be highly relevant to the country's needs. Of course the relevance of a product is determined by factors like consumer demand, environmental hazard, health implications, employment generated, water exploitation, farmer linkages etc. By no stretch of imagination manufacture of soft drinks can fit into this bill but if current trend is any indication foreign investors will invest only if they have a market for their products, rightly so.  Is soft drink an item of consumption that must be encouraged in our country when world over these products are being condemned for their empty calories and vulnerability of consumers to a host of diseases including CVD, blood pressure, kidney ailments, obesity, diabetes etc ? Recent report coming from Andhra Pradesh claiming that an MNC is investing in that state on a piece of land measuring 85 acres of government land for setting up a mega bottling plant is indeed disturbing. Should India be rolling red carpet to such investors who have very little regard for the well being of the citizens in this country? It is difficult to justify or rationalize this industry as the highly automated plant is unlikely to provide much employment or earn any foreign exchange! Here is a take on this paradox that is happening in front of our eyes with all and sundry paying obeisance to the dollar lord!   

"For the past 25 years, PepsiCo has been investing in the Indian economy and its people. As we move forward into our next 25 years, that commitment is stronger than ever. This plant is an investment in India's bright future," said Nooyi. Spread across 86 acres, the first line of the plant started manufacturing on Friday. When it becomes fully operational, it would benefit nearly 33,000 farmers thanks to local sourcing of mangoes and other fruits, Nooyi said. Speaking on the occasion, Naidu said local sourcing of mangoes would immensely benefit the region economically. Complimenting the Sri City management for attracting dozens of companies to set up shop there, Naidu said it could become India's largest industrial park in 10 years. The PepsiCo plantwill manufacture fruit juice-based drinks, carbonated soft drinks, and sports drinks, among other beverages. PepsiCo has deployed state-of-the-art technologies with an emphasis on production efficiencies, environment protection and safety. The plant will be PepsiCo's most water-efficient beverage plant in India and the firm aims to procure LEED certification for this facility, company officials said. a LEED, or Leadership in Energy & Environmental Design, is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighborhoods. It is developed by the US Green Building Council. PepsiCo has a large manufacturing facility, with seven production lines in Telangana to cater to the markets of the undivided Andhra Pradesh and parts of Karnataka. The company, which has 22 brands in its product portfolio comprising food and beverages, has annual retail sales of about $1 billion. Sitting on a land bank of 8,000 acres, Sri City currently houses 106 companies employing 25,000 directly The GVK group plans to set up a hospital, medical college and a research centre at Sri City with an initial investment of Rs 100 crore, according to officials."

Andhra Pradesh government which is bending backwards to please the MNC seems to be forgetting what happened in Kerala years ago when the people of Plachimeda, a small hamlet in that state where a similar bottling plant was allowed to be set up led to one of the most virulent opposition campaigns India has ever seen against the corporate investor. Besides over exploiting water resources, the spent water polluted the area heavily causing many problems to the local population and thanks to people's power the bottling plant was forced to be shut down once for all. Interestingly the investors in A.P are using sugar coated words like employment generation, benefiting the farmer, high technology, research and innovation etc to mislead the government. It is difficult to imagine how farmers are going to benefited if the major product made is flavored sugary water, though there is a sprinkling of fruit based but sugar sweetened drinks containing traces of natural fruit solids! Unhealthy products like potato chips, fried and heavily salted extruded snacks etc are going to be the major part of the turn over expected from this factory. There is not even a single healthy product in the portfolio of products churned out by this company justifying conferring so much favors on it. If this is the forerunner of things to come under the "make in India" slogan, where is this country going to end up? God save the country!

V.H.POTTY
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"Small is beautiful"- For whom, industry or the consumer?

Who does not remember the famous book "Small is beautiful: A collection of Essays As If People Mattered" by the reputed British economist E.F Schumacher. He championed the cause of small, appropriate technologies which are claimed to empower people more compared to the "bigger is better" catch phrase that is prevalent to day. Whether the beverage industry which has more and more youngsters in its vice like grip, churning out billions of bottles of sugar sweetened soda, has taken inspiration from Mr Schumacher or not, the current trend in manufacture of soda is to reduce the size of the soda bottle or can giving an impression that it will help the consumers in taking less and less of these drinks. But how can the industry do this considering that if it really works, its sale will plummet down dramatically? The ground reality shows that the beverage industry is booming after the introduction of small packs contrary to the impression that such down sizing will cut down soda consumption! Here is a take on this contradiction happening in the soda capital of the world viz USA. 

"Soda sales may be in a slump, but one sliver of the soft drink market—the segment that comes in smaller than usual sizes, including those adorably tiny 7.5-ounce cans—is booming.  What's especially curious about the trend is that sales have been taking off even though the smaller packages offer far worse value to consumers. This week, the Associated Press explored this odd scenario, in which consumers are clamoring to buy Coke, Pepsi, and other sodas in unconventionally smaller sized packaging, notably the 7.5-ounce mini can that's generally sold in eight-packs in stores. Previously, the Wall Street Journal reported that sales of smaller Coca-Cola packages—including the mini cans, as well as 8-ounce glass bottles and 1.25-liter plastic bottles—were up 9% through the first 10 months of 2014. During the same time period, sales of regular old 12-ounce cans and 2-liter bottles were as flat as a bottle of week-old Coke. Beyond their nontraditional size, what all of the smaller soda items have in common is that they're "premium-priced packages." Yes, the value proposition in the trendy category is that you not only get less product, but you get to pay more for the privilege. Coca-Cola estimates that consumers typically pay 31¢ for each traditional 12-ounce Coke purchased in a 12- or 24-pack at the supermarket. By contrast, the average price per 7.5-ounce mini can breaks down to 40¢ a pop."

We may recall that when measures were proposed to restrict the sale of jumbo sized soda bottles in New York, industry got the proposal squashed through judicial intervention under the pretext that such policies infringe on the fundamental rights of a citizen in deciding what to buy for himself! Look at the situation now when the very same industry is offering smaller sized versions after its market research provided a clue that people will buy more and more smaller packs compared to larger ones resulting in more frequent consumption! Interestingly consumers have to pay more for smaller sized versions though they may not be realizing it at the time of purchase. This trickery is very common in India where food industry as a whole indulges in this strategy, the intention being to expand the clientele base to include consumers in the lower income bracket who otherwise could not afford high priced larger packs..Consumers seem to be happy while he is being cheated, to hear the industry repeating ad libitum the worn out industry slogan "consumer is the king" where as he really turns out a sucker in the bargain!

V.H.POTTY

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From Soda to milk-What a climb down!

Backlash from the consumer community and sociological groups who have been berating the soda industry for the unhealthy beverages being produced, marketed and made popular among kids through over drive promotional activities. Some of the major players seem to be seeing the writing on the wall, viz there is no future for this industry and if they continue to indulge in this business, a day may not be too far way when they will face consumer wrath of Himalayans proportions and possibly face massive class action suits for economic reparation to the consumers for the health damage caused by these unhealthy drinks as in the case of cigarette industry two decades ago. Though global production of soft drinks is more than 20 billion (bn) cases valued at about $ 300 bn, USA alone accounting for about 50% of this, the ever declining trend of sales has been a cause of worry for many of the major players in this segment of industry. In USA alone the sales of soda are declining on an average 1-3% every year since 2004, an alarming signal indeed. This has probably been the reason for the new found love of this industry to nutritious and healthy products like value added milk based beverages. Here is a take on this important turning point in the fortunes of soda industry as is being reported.

Soft-drink giant the Coca-Cola Company will soon be launching a new version of milk branded as Fairlife.  The launch is planned for later this month, with sales to begin nationwide next year. "Purely nutritious milk" states the slogan under Fairlife's name on the containers. The company's optimism is riding high for this new lactose-free product, which boasts of containing 50-percent more natural protein, 30-percent more natural calcium, and 50-percent less sugar than ordinary milk. During a global consumer conference last month, Sandy Douglas, president of Coca-Cola North America, predicted that "it will rain money" once Fairlife gets established in the marketplace. Even so, he acknowledged that it will take considerable investments in the milk business and several years before that happens. "We'll charge twice as much for it as the milk we're used to buying in a jug," he said during the conference. Conventional prices for milk in a gallon jug vary but typically hover around $3. According to Fairlife's website, the new product will be sold at a similar price to value-added milks such as organic and lactose-free. It will offer skim and 2-percent milk varieties, plus a sweetened chocolate milk. The calorie count in a glass of 2 percent is 120; in a glass of skim, 80. "The premiumization of milk" is how Douglas described this new approach to marketing— a challenge to anyone looking at the declining sales of fluid milk in the United States. Back in 1975, when everyone was encouraged to drink three or four glasses a milk a day "for the sake of your health," per-capita consumption of beverage milk and cream was 262 pounds, according to figures from USDA. But with increasing concerns about obesity and the adverse health effects of sugar in their diets — along with other beverage options such as flavored water and non-dairy almond and soy milk — Americans are drinking less milk. By 2012, per-capita consumption of beverage milk and cream had fallen to 195 pounds. And, according to some industry gurus, milk sales will continue to drop, which is certainly not a rosy picture for the industry.

If consumers think that this is a genuine realization on the part of the soda industry, they better listen to the logic for opting for milk based products as made clear by them. They are simply following the trend of higher and higher awareness about health and nutrition among the consumers who want more healthy products than soda for which they are prepared to pay a higher price. This willingness to pay extra for health boosting milk products is the key to the new thinking on the part of the soda makers. As milk is one of the top most nutritive products available to man and since plain fluid milk is invariably shunned by kids, the soda makers see in this emerging situation a golden opportunity to make a fast buck. In the words of some market pundits "there will be raining of money" for the industry if right products with health value are positioned before the consumer. Who can resist buying a milk product with higher protein, higher calcium, significantly less sugar compared to "run of the mill" colored and flavored milks now in the market! While this development may be encouraging, one has to be watchful to see what ingredients these super technology companies will use while designing their new products to make them extremely appealing to their target users, viz kids.

V.H.POTTY
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COFFEE VS SODA-THE EMERGING TREND

Modern America is considered the consumption capital of soda (say cola drink), the much hated sugary drink with caffeine, phosphoric acid and caramel color. Compared to any other nation in this planet Americans can boast that their per capita consumption of soda is the highest in the world and some time one wonders whether soda consumption and power go hand in hand! It took quiet some time for these super rich nation to realize that soda consumption can be dangerous to the health of their citizens and what New York did recently to ban large sized soft drinks through retailers is a right step in the right direction to curb consumption of sugary drinks. Now comes the news that there is a distinct trend emerging where brewed coffee is being increasingly being favored in preference to soft drinks. Here is a commentary on this new development that may have some implications on the health of the population in that country.

"And that makes sense. New survey data from the NPD group, which tracks trends in what Americans eat and drink, finds that 18- to 24-year-olds are turning to coffee, rather than caffeinated sodas, as their pick-me-up of choice. In 2002, about 25 percent of 18- to 24-year-olds reported drinking coffee sometime within a two-week period. But by 2012, the percentage of young adults drinking coffee in that same time frame hit 39 percent. For evidence of this trend, I hit a coffee shop near the campus of George Washington University, which is just a Metro-ride away from NPR headquarters here in D.C. In mid afternoon, I found a packed house. "This is nothing for two o'clock in the afternoon," senior Arturo Lichaucho tells me. Often times, the line is out the door and around the block, he explained, and lots of students hit the coffee shop before hitting the books in the late afternoon. The students I chatted with gave lots of reasons for a steady coffee habit, including increasing demands on their time that lead to less sleep, and the 24/7 culture of overstimulation. And why not drink more coffee? Recent studies link coffee consumption to a range of good health effects, including decreased risk of dementia and decreased risk of depression among women.
But experts say there is one downside that's often overlooked: Coffee consumption can get in the way of a good night's sleep. "Our data has shown that a brewed coffee contains much more caffeine than a cold cola beverage" says Bruce Goldberger, a toxicologist at the University of Florida. The Center for Science in the Public Interest took a look at several popular items and analyzed their caffeine content. It found that a 12-ounce cup of coffee from Starbucks contains about 260 milligrams of caffeine, which is about five times more than a 12-ounce can of Diet Coke".

What worries some health pundits is the possibility of increased levels of caffeine consumption as coffee contains significantly higher levels of this intoxicant. Caffeine is a natural component of beverage crops like coffee, tea and cocoa and beverages based on these crops have been consumed for ages without any adverse consequences. However an issue that needs consideration is whether at the moderate levels of coffee consumed during yesteryear it has any ill effects at all whereas to day there is a tendency to over consume that can result in undesirable impact on health. Advent of decaffeinated coffee was thought to lessen the impact of caffeine on human health through high consumption of this stimulant beverage but it appears there are not many takers for this version except for medically impaired conditions. Is it not time ripe for the WHO to come up with a universal safe upper limit for caffeine for the sake of millions of people who are addicted to coffee? If appropriate guidelines are forthcoming from competent sources, coffee consumers may yet moderate their coffee drinking habit to stay below the danger mark vis-a-vis caffeine.  

V.H.POTTY
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SODA CONTROVERSY-SUPREME COURT INTERVENES

It is most unfortunate that in India decisions which can be taken by the executive authorities often end up in judicial courts for orders and directives. Latest case to knock on the doors of the Court pertains to the safety of soda. When there are hundreds of food products, some of which are not even edible, are sold in the market with no proper overseeing, time of the Courts and the government is wasted on silly issues like safety of soda made by the industry as per the standards laid down by the concerned authorities. The observation of the court that consumer must be educated regarding the undesirability of consuming synthetic drinks touches the very core of the problem. Assuming that such education process is a long drawn affair, why should any one suspect that all soda products are dangerous? If so world over these products would have been banned by now. Here is a take on this issue as reported recently. 

"Justice KS Radhakrishnan and Justice Dipak Misra called for the records of the FSSAI's technical committee after counsel Prashant Bhushan said the authority's Sep 12 order was given by its committee on advertisement and labelling, not by the scientific panel on food additives. As Bhushan focused on the health hazards of carbonated beverages, Justice Radhakrishnan observed that the "best course is to educate people not to consume beverages." "All cricketers are promoting soft drinks on television," he said. Assailing the order which was submitted to the court, Bhushan said the order, issued Sep 12 by FSSAI assistant director Kamal Kumar, was like affixing the authority's stamp on a report by soft drink manufacturers. Bhushan, appearing for petitioner Centre for Public Interest Litigation, told the court that the order said benzene residue in carbonated beverages was formed only under certain conditions when agents like benzoates and ascorbic acid were present together with heat, ultraviolet light and metallic ion mixture."However, in the absence of benzoic acid and ascorbic acid together, benezene residues are not generated (in carbonated beverages)," the order said. It said that according to studies by Indian Council for Medical Research, the consumption pattern of the beverages was only 500 ml per day in a "worst case scenario which do not appear to pose any health hazard." The order said Indian Beverage Association had confirmed to the FSSAI that in India, benzoic and ascorbic acids were not present together in the beverages. Seeking the minutes of the technical committee which had a hearing for eight days, Bhushan asked if the FSSAI had itself done any test to determine the presence of benzoic acid in carbonated beverages. Bhushan told the court that the FSSAI was not accepting the findings of its own lab in Ghaziabad."

One may recall the pending proposal in New York, to limit the size of soda products sold in the market to 16 oz or less, is still mired in controversy while in India the very safety of the product is being questioned. If some body is using non-permitted chemical preservatives in a beverage product there is adequate reddressal mechanism in the statute books and those breaking the law can be hauled up for punishment. Regarding the issue of Benzene the traces of this chemical coming from thousands of Petrol Bunks located all over the country and being inhaled by those residing near these outlets and those using fossil fuel based transport must be more dangerous than a sip of soda! Probably not many are concerned about this danger while industry as a whole is being made a whipping boy! Consumer activists do serve a purpose but there should be some balance in accusing the industry day in and day out for things they cannot be blamed.

V.H.POTTY
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SUPER SIZED SODA AND POLITICS-WHAT IS THE REALITY?

Many ideas are emerging for the policy makers to attack the problem of food related health disorders such as over weight, obesity, CVD, diabetes etc. Unfortunately none of them seems to be working with many logistical and social problems cropping up during the translation of these policies into reality. Latest to arrive on the scene is a "ban" being attempted in New York by its well meaning Mayor to prevent the retailers from offering large volume beverage packs for sale. According to the framers of such a policy, consumers buy large sized bottles of high sugar beverages like soda, may be unconsciously, as a part of their mindset buying the most economic size disregarding the risks involved in consuming them regularly on their health. It makes sense because even the limited 16 ounce bottle, permitted under the proposed law, will provide more than 60 gm of sugar, much above the recommended level of 44 gm per day per adult by some health professionals. Naturally the question that begs for an answer is why such a size is selected knowing fully well the sugar load caused by consumption of a 16 oz bottle of soda. More shockingly the hostile reaction by many consumers to the above ban defies logic. It is interesting to listen to the comments by different groups to the ban proposal.  

"Reaction to the proposal came from many fronts on Thursday, falling along two general tracks. The idea was either sound health policy rooted in research, or a perfect illustration of a supersize government gone too far. Some health experts said there might be some correlation between restrictions on soft drinks — many locales, including New York, already ban or limit them from schools — and a leveling off, or in some places even a decline, in childhood obesity. But one researcher whose work was cited by City Hall in defense of the policy said in an interview Thursday that he did not think it would work. At least two candidates for next year's mayoral race also came out against the proposal Thursday, to varying degrees. Christine C. Quinn, the City Council speaker, said that by limiting personal choice, rather than promoting knowledge, "It seems to me to be more on the punitive side of things." And William C. Thompson Jr., the former city comptroller who lost to Mr. Bloomberg in 2009, released a statement saying, "This move does nothing to teach people about positive nutritional values and sounds more like parlor talk than real solutions for the obesity epidemic." The proposed ban — the first in the nation — would prohibit the sale of any cup or bottle of sweetened drink larger than 16 fluid ounces, though consumers would not be prohibited from getting refills or multiple servings.  It would apply to virtually an entire gamut of drinks including energy drinks and iced teas, but not to diet sodas, fruit juices, dairy drinks and alcoholic beverages, or to beverages sold in groceries or convenience stores. It would take effect in March 2013, after public hearings".
The attitude of the beverage industry is totally negative and instead of cooperating with the law makers who framed this policy in the interests of the citizens, industry has gone on a blitzkrieg attacking the government for this socially benevolent policy. In what way it is adversely affected by this new restrictions is not clear though there may be apprehensions about possible downturn in business which is misplaced. After all any one wanting to binge on high sugar beverages always has the option of buying more than one bottle of 16 oz till his hearts content! One is remained of the tactics of a reputed coffee chain which offers its products under the "small" category which itself has 12 oz while other versions have larger volumes of the drink! Though it has an 8 oz version also, 99% of the consumers never know about it as this is not offered unless one insists on it. Obviously industry does not want to do any thing related to consumer well being voluntarily and only such forceful measures can bring in results.

V.H.POTTY
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ALCOHOL IN SODAS?-NEW REVELATIONS!

Alcoholic drinks are taboos for many people on grounds of religious and other considerations and therefore foods containing alcohol also receive critical attention from safety authorities. But under the testing protocols traces of alcohol are invariably ignored because many natural foods are known to contain small levels of alcohol formed as a part of the metabolic reactions in the fresh produce materials. Alcohol is also a part of many flavoring substances and when externally flavored products are made, alcohol gets into the products also. Whether it is semantics or genuine apprehension, presence of alcohol in foods and beverages evoke strong reactions and recently there was a furor about its presence, albeit at extremely small levels in many soft drinks marketed by almost all major players in this sector. How this report is going to affect the soft drinks market is still not clear. Here is a gist of the above report.   

"According to tests carried out by the Paris-based National Institute of Consumption, more than half of leading colas contain traces of alcohol, Daily Mail reported Wednesday. These include the brand leaders Coca-Cola and Pepsi Cola, while it is mainly only cheap supermarket versions of the drink which are alcohol-free. "60 Million Consumers", the French magazine, published the results of the tests in its latest issue. The tests suggest that the alcohol levels are as low as 10 mg in every litre, and this works out at around 0.001 per cent alcohol. But the figures will still be enough to upset the thousands of Muslims who regularly drink Cola because their religion forbids them from drinking alcohol, the daily said". 

If the target of the report is consumers belonging to Islam religion, there is going to be some debate regarding the question whether such beverages containing minuscule amount of alcohol, are Halal or Haram. According to some religious pundits alcohol in manufactured products, added during the processing, make the final products Haram where as products containing alcohol naturally formed as an artifact of metabolism or natural fermentation can pass the Halal test. How far the food and beverage industry can avoid alcohol is some what difficult to predict as of now but the fact still remains that alcohol is one of the most affordable and safest solvents available to the industry and the alternative options of organic solvents may not be as safe as alcohol. It is time that those involved in Halal certification consider these facts before coming to any conclusion regarding the advisability of declaring beverages like Colas as Haram.

V.H.POTTY
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WILL TAXATION REDUCE SODA CONSUMPTION?-YES AND NO!

After the New York initiative to ban selling of sugar sweetened drinks with serving size beyond 16 ounces being taxed, many more cities are considering similar approach in tackling obesity among children who are the primary targets of the soda industry. The angst among the parents and policy makers is understandable when the stark statistics of soda consumption reveal a reality that cannot be brushed under the carpet any more. Is it not a horror when a city declares that more than half of its kid population are obese measured by the established yardsticks and on an average a kid gobbles up 1.8 units of soda each and every day? In the face of such a reality, can the community sit quiet and watch the emerging catastrophe without doing any thing? Probably such fiscal measures as being proposed or contemplated in many parts of USA should be viewed in this context. Whether such a policy will succeed in reversing the trend is another matter. At least these policy orchestrations must be given a chance to buck the trend. Here is a peep into the efforts of a community in California to stem the rot that was ushered in by the beverage industry. 

"As in other places, soda consumption is highest among teenagers, with more than two-thirds downing 1.8 sugar-sweetened beverages a day. Based on 242 calories a serving for a 20-ounce bottle of Coke, that equals roughly 150,000 extra calories and can lead to more than 20 pounds of weight gain a year, Dr. Brunner said. A recent study found an average of five retail food outlets within a quarter mile of every Richmond school. Alongside the announcement last week by Mayor Michael R. Bloomberg of New York supporting an outright ban on the sale of sweetened drinks larger than 16 ounces, the coming vote in Richmond may be a sign that soda and similar beverages are becoming the new tobacco in terms of public perception of health risks. "Both are pretty bold moves that wouldn't have been imaginable even five years ago," said Kelly M. Brownell, the director of the Rudd Center for Food Policy and Obesity at Yale University, which conducted much of the research supporting the efficacy of a one-cent beverage tax. "It shows that government is beginning to stand up to the food industry and there is more public support for doing so." If the Richmond ordinance passes, it will be the first of its kind in the country intended specifically to combat obesity. But soda taxes have failed elsewhere — most notably in Philadelphia, where Mayor Michael A. Nutter's attempts to impose a 2-cents-per-ounce charge on sugary drinks have sputtered twice. Nevertheless, Mr. Nutter is scheduled to be the keynote speaker this week at the nation's first Sugary Drinks Summit in Washington, sponsored by the Center for Science in the Public Interest".

Many skeptics may feel that such measures will not work, given the past history when similar attempts in alcoholic beverages and tobacco did not bring much relief in curbing their consumption. With economic recession causing immense misery, especially among the low income group, probably such attempts to make soda costlier may succeed, at least to some extent. Some diversion of purchasing power from soda sector to other more pressing daily needs may have the effect of over all reduction of soda consumption but how far this change will impact on the health front is some what uncertain. One can only wish success to these types of earnest efforts at addressing the problem of obesity.

V.H.POTTY
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http://foodtechupdates.blogspot.com