Eighteen village councils in Northern India are demanding the closure of a local Coca-Cola bottling plant and being banned from extracting water from the ground, claiming its overuse has led to scarcity in the area. It was reported that eighteen village council heads who represent the voice of the people have made it clear that the bottling plant for the cola giant are not welcome in the area. The news is a huge negative for Coca-Cola. Many environmentalists believe that Coca-Cola which paints a pretty picture of itself internationally as a responsible user of water but the reality in India is that the company is exploiting groundwater resources at the expense of the poor for profit.
It is imperative to state that India is a huge market for the cola giant. Coca-Cola in the past has pointed towards the fact that India is one of the biggest markets for the company and would continue to remain one of the biggest growth drivers along with other emerging markets like China. The company at the current moment has denied any wrong doing and said that it was not responsible for the water shortages in the region. Many analysts believe that if the company is found guilty it could lead to scrutiny at all other bottling plants around the country and could impact the volumes in the near term which would be a huge negative.
When looking at the charts for Coca Cola, the stock has been in a strong uptrend over the last couple of months which is a huge positive. Analysts on the street believe that even though the company has been facing a sharp slowdown in the domestic markets, its growth trajectory in emerging markets in Asia and Africa continues to remain strong. The stock currently trades above all important daily moving averages.