Above photo: A Starbucks retail store in New York City. Cristina Matuozzi/Sipa USA.
The Boycott, Divestment, and Sanctions (BDS) movement is having a significant effect on the profits of companies viewed as supporting Israel.
These include McDonalds, Coca-Cola, Pepsi, KFC, and Starbucks.
Companies operating western food and drinks brands in Muslim countries are suffering significant losses due to an ongoing boycott of firms doing business with Israel amid its genocide of Palestinians in Gaza, the Financial Times reported on 5 August.
Consumers in majority Muslim nations, such as Egypt, Indonesia, Saudi Arabia, and Pakistan, are boycotting companies such as McDonalds, Coca-Cola, Pepsi, KFC, Starbucks, Mondelez, and Pizza Hut to protest their support for Israel in the war in Gaza.
“This event is unprecedented. The length of this conflict is unprecedented. The intensity is unprecedented,” Amarpal Sandhu, chief executive of Americana Restaurants, stated on a conference call to report the company’s recent performance.
American Restaurants operates brands such as KFC, Pizza Hut, and Krispy Kreme across West Asia and Kazakhstan.
The boycott has been promoted by the Boycott, Divestment, and Sanctions (BDS) movement, a Palestine solidarity group. Founded in 2005, the group seeks to put financial pressure on Israel to end its occupation of the West Bank and Gaza.
Last month, McDonald’s and Starbucks both reported declines in sales and profits while blaming boycotts over the Gaza war.
McDonald’s reported that its global sales declined for the first time since 2020, with its net profit declining 12 percent compared to the same period last year. Starbucks announced that sales in North American stores dipped 2 percent, and sales in the rest of the world dipped 7 percent. Total international profits dropped by 23 percent.
The Financial Times notes that during second-quarter earnings updates, other multinationals were hesitant to credit the boycott movement for negatively affecting profits. Instead, they referred only vaguely to geopolitical tensions.
“The overarching strategy that many of these companies have undertaken is to suppress the noise around the boycotts,” said Danilo Gargiulo, an analyst at Bernstein. “The last thing you want to do is reveal the impact and potentially bring further action against their brands.”
Americana Restaurants, which is owned by the Saudi sovereign wealth fund, reported that its second-quarter profits were down 40 percent compared with the same period last year.
Coca-Cola İcecek, the bottler of Coca-Cola in Pakistan, reported sales volumes in the country fell almost 25 percent in the first three months of 2024 compared to the same period last year.
The company blamed the decline on “macroeconomic headwinds” without mentioning the boycott due to the Gaza war.
In Malaysia, Starbucks’s local operator, Berjaya Food, reported that its quarterly revenue fell 48 percent.
In Egypt, meanwhile, PepsiCo faced widespread criticism on social media in May when it launched an ad campaign with giant billboards and the slogan “Stay thirsty,” as Palestinians in Gaza suffered from famine-like shortages of food and clean drinking water.
In Cairo, Hazem Tamimi, who runs a supermarket in the upscale Zamalek neighborhood, said his sales of Coca-Cola, Pepsi, Ariel, Persil, Cadbury, and Nestle products had fallen by 50 percent.
He added that even the area’s well-off residents “might call to ask for mineral water, but specify they want an Egyptian brand instead of Nestle or [Coca-Cola-owned] Dasani.”
The boycott is also hurting Israel broadly due to its association with committing genocide. in Gaza.
“I think there is definitely reason for concern for Israel,” Shamir-Borer of the Israel Democracy Institute told the Wall Street Journal last month. “Becoming a pariah state means that even if things don’t happen formally, less companies feel that they want to invest in Israel in the first place, less universities want to collaborate with Israeli institutions. Things just happen when you get this symbolic status.”