- Title: REFILE: Local sodas receive boost as Middle East boycotts Coke, Pepsi over Gaza
- Date: 4th September 2024
- Summary: (SOUNDBITE) (Arabic) SHOPPER, WALEED AL-SEOUDI, SAYING: "The boycott played a major role in making me think again about local and Arab products. We are able to develop these (local products) through our purchases and support. We are capable of making better products than the boycotted products.” VARIOUS OF BILLBOARD ADVERTISEMENT OF JORDANIAN-MADE SODA, 'MATRIX' WRITING ON
- Embargoed: 18th September 2024 11:15
- Keywords: Boycott Coca Cola Doha Egypt Gaza Israel Jordan Palestinians Pepsi Soft Drinks West Bank
- Location: HEBRON AND NEAR RAMALLAH, WEST BANK CAIRO, MENOUFIYA AND GIZA, EGYPT AMMAN, JORDAN AL WUKAIR & DOHA, QATAR
- City: HEBRON AND NEAR RAMALLAH, WEST BANK CAIRO, MENOUFIYA AND GIZA, EGYPT AMMAN, JORDAN AL WUKAIR & DOHA, QATAR
- Country: Various
- Topics: Economic Events
- Reuters ID: LVA007141304092024RP1
- Aspect Ratio: 16:9
- Story Text: Consumer in the Middle East are boycotting Coca-Cola and Pepsi, fueling a surge in demand for local sodas as the global brands face backlash amid the Gaza conflict.
Coca-Cola and rival PepsiCo spent hundreds of millions of dollars over decades building demand for their soft drinks in Muslim-majority countries.
In Egypt, sales of Coke have cratered this year, while local brand V7 exported three times as many bottles of its own cola in the Middle East and the wider region than last year.
And across the Middle East, Pepsi's rapid growth evaporated after the Gaza war started in October.
While market analysts say it is hard to put a dollar figure on lost sales and PepsiCo and Coca-Cola still have growing businesses in several countries in the Middle East, western beverage brands suffered a 7% sales decline in the first half of the year across the region, market researcher NielsenIQ says.
Many consumers shunning Coca-Cola and PepsiCo cite U.S. support of Israel over decades, including in the current, ongoing war with Hamas.
"Some consumers are deciding to make different options in their purchases because of the political perception," PepsiCo CEO Ramon Laguarta told Reuters in a July 11 interview, adding that boycotts are "impacting those particular geographies" such as Lebanon, Pakistan and Egypt.
"We will manage through it over time," he said. "It's not meaningful to our top line and bottom line at this point."
PepsiCo's total revenue from its Africa, Middle East and South Asia region was $6 billion in 2023. The same year, Coca-Cola's revenue from its Europe, Middle East and Africa region was $8 billion.
In the six months following the Oct. 7 Hamas attacks on Israel that triggered the invasion of Gaza, PepsiCo beverage volumes in its Africa, Middle East and South Asia division barely grew, after notching up 8% and 15% growth in the same quarters of 2022/23, the company said.
Volumes of Coke sold in Egypt declined by double-digit percentage points in the six months ended June 28, according to data from Coca-Cola HBC, which bottles Coke there. In the same time period last year, volumes were up in the high single digits.
Coca-Cola has said it does not fund military operations in Israel or any country. In response to a Reuters request for comment, PepsiCo said neither the company "nor any of our brands are affiliated with any government or military in the conflict."
Palestinian-American businessman Zahi Khouri founded Ramallah-based Coca-Cola bottler National Beverage Company, which sells Coke products in the West Bank. The company's $25 million plant in Gaza, opened in 2016, has been destroyed in the war, he said. His employees were unharmed, he said.
Khouri said boycotts were a matter of personal choice but in the end they didn't really help Palestinians. In the West Bank itself, he said, they had limited impact on sales.
"Only ending the occupation would help the situation," said Khouri, who supports the creation of a Palestinian state alongside Israel.
Israel's government did not respond to a request for comment.
HISTORICAL TARGETS
The big soda companies are no stranger to pressure among the Muslim world's hundreds of millions of consumers. After Coke opened a factory in Israel in the 1960s, it was hit by an Arab League boycott that lasted until the early 1990s and benefited Pepsi for years in the Middle East.
Coke still lags Pepsi's market share in Egypt and Pakistan, according to GlobalData.
PepsiCo, which entered Israel in the early 1990s, itself faced boycotts when it purchased Israel's SodaStream for $3.2 billion in 2018.
Now, both are losing ground to local brands.
Exports of Egyptian cola V7 have tripled this year compared to 2023, founder Mohamed Nour said in an interview. Nour, a former Coca-Cola executive who left the company after 28 years in 2020, said V7 was now sold in 21 countries.
Sales in Egypt, where the product has only been available since July 2023, were up 40%, Nour said.
Paul Musgrave, an associate professor of government at Georgetown University in Qatar, warned of long-term damage to consumer loyalty due to boycotts.
"If you break habits, it’s going to be harder to win you back in the long run," he said, without giving an estimate of the financial cost to the companies.
Other American brands seen as symbols of western culture, such as McDonalds and Starbucks, also face anti-Israel boycotts.
Market share for global brands fell 4% in the first half of 2024 in the Middle East, according to NielsenIQ. But the protests have been more visible against the widely-available sodas.
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