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Coca-Cola to spend $20 million on water conservation

Source:  Copyright 2007, Bloomberg
Date:  June 6, 2007
Byline:  Dune Lawrence
Original URL: Status DEAD

Coca-Cola, the world's largest soft drink maker, said Tuesday that it would invest $20 million over five years to improve global water conservation. The plan is part of the company's effort to adapt to global warming and to address a crucial constraint to growth in emerging markets.

The company, which gave $80 million to charitable foundations last year, will set measurable targets for improving its efficiency of water use and to ensure that by 2010 all its wastewater is clean enough to support aquatic life.

"Our pledge is to replace every drop," said E. Neville Isdell, the company's chief executive. "Addressing water issues is one of the most urgent climate-adaptation priorities."

About 1.1 billion people lack access to safe drinking water, many in emerging markets that are the beverage maker's fastest growing outlets. By 2025, two-thirds of the world's population will face water shortages, according to World Wildlife Fund, Coca-Cola's partner in the program.

In China, where Coca-Cola's volume surged 17 percent in the first three months of the year, scientists predict that global warming may increase the extent of arid land, impel the spread of deserts and cause longer and more frequent droughts and other extreme weather conditions.

A current drought in the southwestern China province of Sichuan has left four million residents short of drinking water, the official Xinhua News Agency reported Tuesday.

Coca-Cola and its franchise bottlers used 290 billion liters, or 80 billion gallons, of water to make beverages last year. Of that amount, 114 billion liters was in its drinks, while 176 billion liters was used in manufacturing.

"There are savings involved," Isdell said, without giving an estimate. "Using less means it costs you less. In certain areas, there will be some competitive advantage" in using the water more efficiently.

Most of the $20 million will go to protecting seven of the world's biggest freshwater river basins, including the Yangtze in China, the Mekong in Southeast Asia and the Rio Grande, or Rio Bravo, in the United States and Mexico.

Coca-Cola has already cut the amount of water needed to produce a liter of its beverages from 3.14 liters to 2.54 liters over the past five years.

Coca-Cola is headed for its biggest increase in annual profit since 2003, buoyed by demand for its drinks in fast-growing markets like China. Worldwide volume increased 6 percent in the first three months of the year, compared with a 3.3 percent average annual gain since Isdell became chief executive in 2004. Coca-Cola has said it expects more than 80 percent of its future growth to come from non-U.S. markets.

Carter Roberts, president and chief executive of the World Wildlife Fund, said, "The leading companies see the basic math that as populations grow, as consumption grows even faster, it happens in the context of a finite planet."

"Those companies who want to grow have got to find more efficient models of growth," Roberts said.

Coca-Cola and its major rival, PepsiCo, have encountered controversy in India, which accounts for 1.3 percent of Coca-Cola's volume, over the quality of water used in beverages.

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