Boycotts Hit Profits of Western Brands in Muslim Countries

TEMPO.CO, Jakarta - Western food and beverage giants are grappling with significant challenges in Muslim-majority countries due to widespread consumer boycotts. Companies such as Coca-Cola, KFC, Starbucks, Mondelez, and Pizza Hut have faced severe financial repercussions amid accusations of supporting Israel.

The boycotts, fueled by social media and BDS (Boycott, Divestment, Sanctions) activism, have had a devastating impact on these companies' Middle Eastern operations. Mondelez and L'Oréal have publicly acknowledged the negative impact on their sales figures.

Coca-Cola Içecek, the Pakistani bottler of Coca-Cola, experienced around 25% year-on-year sales drop in the first quarter of 2024, attributing the drop to "macroeconomic headwinds" while indirectly acknowledging the boycott. PepsiCo has also faced backlash in Egypt for featuring local singer Amr Diabin and Liverpool player Mo Salah in its advertising campaigns.

The broader economic climate, including inflation and slowing consumer spending, has exacerbated the situation for these Western brands. Additionally, the rise of local alternatives and shifting consumer preferences towards domestic products have further eroded their market share.

McDonald's, another global giant, has not been immune to the challenges. The company reported sales declines in several Middle Eastern countries, as well as in Indonesia, Malaysia, China, and France. In an attempt to mitigate risks, McDonald's planned to acquire all restaurants franchised by the Alonyal group in Israel.

Americana Restaurants, a major fast-food operator in the Middle East, has seen profits plummet by 40% in the second quarter of 2024 despite expanding its store network.  The company attributed the decline to various factors, including the boycott.

Pakistan has taken a more direct approach, forming a committee to identify and boycott companies supporting Israel. This heightened political pressure further complicates the operating environment for Western brands in the region.

IDA ROSDALINA | AL MAYADEEN

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