Toby Lam 4C (14)
Newspaper article:
No more cola for Indian MPs
By Ayanjit Sen
BBC correspondent in Delhi
Date: 06/08/2003
The Indian Parliament is to stop selling Pepsi and Coca-Cola products in the
canteen following reports that the drinks contain too much toxic pesticide and
insecticide.
The government has also asked the Food Processing Ministry to provide a
detailed report into the allegations made by a non-governmental organisation (NGO).
Both cola giants deny the allegations, and say that the products they make and sell in
India match European and American standards.
But many people in Delhi say they have not drunk Coca Cola or Pepsi since hearing
the reports.
Substitutes
Shambhu, a driver by profession, says he will not touch a drop of Pepsi or Coca
Cola after hearing the reports. "Since it is being claimed that these drinks are harmful
for health, I have asked my family members and friends not to drink them," he said.
He said lemon juice and plain cold water would make ideal replacements for the soft
drinks.
Some people say the government should ban the drinks following the report
issued by the Indian NGO - the Centre for Science and Environment.
Sharmila, a Delhi housewife, is one of them. "The respite provided by cola in this
sweltering heat can be compensated by even plain water but the lives of people cannot
be put to risk," she said.
Geeta, who works in an advertising agency in Delhi, said she had French fries
but no cola at the McDonald's in the busy Connaught Place area of central Delhi on
Wednesday.
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"Dil maange no more (the heart demands no more)," she said, referring to a
popular Pepsi advertisement on television.
Echoing a similar view, a school student, Ekta, says her parents have not allowed
her to drink cola.
Falling sales
But Atul, a college student, said he would have cola drinks despite these reports.
"Let these reports be first cross-checked. I cannot stay without having my glass of
Pepsi," he said.
Restaurants and shops selling these drinks say there was a drop in the sale of cola
on Wednesday.
"Normally, I used to sell 25 bottles by the afternoon, but today, I have sold only
five so far," said Pradeep Kumar Jain, a shop owner.
Rajat, a restaurant owner, said he had not taken delivery of any cola bottles for his
restaurant after hearing the reports.
"Since people are also not asking for these drinks, we are offering lassi (butter
milk)," he said.
But a local supplier of Pepsi bottles in the capital denied that demand has fallen.
Coca Cola and Pepsi account for more than 90% of the carbonated drinks market in
India.
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A brief description of the issue:
At the beginning of August, a non-government organization (NGO) in India has
made an allegation that cola contains a lot of toxic pesticide and insecticide, which
will affect humans’ health, so the India Parliament has stopped the selling of Pepsi
and Coca-Cola products in the canteen and asked the Food Processing Ministry to
make a detailed report about the allegation of NGO.
Although the Pepsi and Coca-Cola Company has announced that their products
sold in India match the European and American Standard, most of the residents in
Delhi, the capital in India said that they wouldn’t have any Coca-Cola or Pepsi after
hearing the news because they will get sick or disease after drinking these drinks will
get sickness or any disease. As a result, the demand for cola decreases and there was a
drop in the sale of cola.
An explanation of the issue:
Before the allegation of NGO, cola was a scarce good, more of it was preferred
to less, people had to pay money to get it, it was insufficient to satisfy all our wants
and it has a cost of production. However, after the news about cola contains too much
toxic pesticide, for some people, cola become a bad, for the reason that it gives
disutility to some people.
Since Cola Company is a firm while the residents in India belong to household.
The Cola company is responsible for making production decisions and it sells good
(cola) to the residents in India, while the residents in India are responsible for making
consumption decisions and it buys good (cola) from the cola company. After the news
about the cola has spread out, the India resident’s demand for cola decreases, so they
buy less cola from the cola company and thus spend less on the cola, as a result, the
revenue of the cola company falls.
From the news, Shambhu and Sharmila who are the driver and housewife in Delhi
said that they would not drink cola and replaced by lemon juice and plain water.
Therefore, in the diagram A, the graph which stands for the soft drink, the demand
curve shifts to the left (D1
D2) as the demand for Cola decrease, it leads to a
decrease in both the equilibrium price (P1
P2) and quantity transacted (Q1 Q2).
Since Cola and lemon juice and plain water are substitutes, the decrease in demand
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for cola will cause the increase in demand for lemon juice and plain water.
Therefore, in the diagram B, the demand curves of the lemon juice and plain water
shift to the right ((D1
D2) because of the increase of demand, and it leads to an
increase in both equilibrium price (P1 P2) and quantity transacted (Q1
Q2).
In view of the fact that Pepsi bottle is the input of Pepsi cola, they are derived
demand, when the demand for Pepsi decreases, it will cause a decrease in demand for
Pepsi bottle. Therefore, in the diagram of Pepsi bottle (diagram C), the demand curve
shifts to the left (D1 D2), and it leads to the decrease in both equilibrium price
(P1
P2) and quantity transacted (Q1
Q2).
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Price
S1
P1
P2
D2
0
Q2
D1
Q1
Quantity
 Diagram A: Soft drinks
Price
S1
P2
P1
D2
D1
0
Q1
Q2
Quantity
 Diagram B: Lemon juice and plain water
Price
S1
P1
P2
D2
0

Q2
D1
Q1
Quantity
Diagram C: Pepsi bottles
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