Charges false, Coke tells SEC

Even as a Parliamentary committee was still looking into the allegations made by a New Delhi-based NGO that samples of Coca-Cola's soft drink brands in India were found to contain pesticides beyond permissible limits, the world's largest soft-drinks maker today told the US regulator, the Securities Exchange Commission (SEC), that the charges were false.

The Atlanta-headquartered company, which announced its third-quarter results today, however, admitted that the impact of the allegations adversely affected its soft drink sales and profits in the July-September period.

It dented sales in India, and coupled with poor demand in Japan, caused Asia sales to grow only one per cent as compared to 9 per cent registered in the corresponding quarter of last year.

"The company's unit case volume declined in India during the July-September quarter following several consecutive quarters of strong double digit-growth," the company reported to the SEC. It added that though unit case volume trends have stabilised in India over the past few weeks, the company continues to monitor the situation carefully.

Coca-Cola's admission of a drop in sales due to the pesticides controversy is significant as barely 10 days ago, rival cola major PepsiCo International had reported to the SEC that the Indian operations had contributed significantly to its growth in the third quarter of 2003.

The Delhi-based NGO Centre for Science and Environment (CSE) came out with its report in the beginning of the third quarter. The controversial report claimed that top 12 soft drinks brands of PepsiCo and Coca-Cola it got tested contained pesticides in excess of the limits set by the European Commission.

Coca-Cola's SEC filings said that unit case volume in Asia increased by only 1 per cent for the quarter compared with a 9 per cent growth in the same quarter last year because of weaker industry trends in both Japan and India.

It added that for the first nine months, the unit case volume increased by 4 per cent compared with 11 per cent growth during the same period last year.

Globally, Coca-Cola's unit case volumes were driven by 3 per cent growth in carbonated beverages and 9 per cent growth in non-carbonated beverages.

The company said that the company's results in the quarter benefitted from 5 per cent unit case growth in international operations led by strong performance throughout Europe and in many other countries including Mexico, China, Argentina and Thailand. This strong performance was partially offset by weak beverage industry trends in both Japan and India.

China, in comparison, has clocked a healthy 24 per cent growth in unit case volume during the third quarter compared to 13 per cent growth in the third quarter last year, it added.