Islamabad, 5 September 2024 (TDI): For decades, PepsiCo and Coca-Cola competed to increase demand for their soft drinks in countries with a majority of Muslims, such as Egypt and Pakistan, by investing hundreds of millions of dollars.
Due to consumer boycotts that target the globally recognized brands as representations of America and, consequently, Israel during the Gaza War, both are currently facing competition from regional soda companies in those nations.
This year, Coca-Cola sales in Egypt have plummeted, while local company V7 has exported three times as many bottles of its own cola throughout the Middle East and beyond than it did the year before.
Coca-Cola had to halt an anti-boycott campaign in Bangladesh due to public uproar.
And after the Gaza war broke out in October, Pepsi’s explosive growth across the Middle East came to an end.
At her April wedding in Karachi, Pakistani businesswoman Sunbal Hassan refused to provide Coke or Pepsi. According to her, she didn’t want to think that her money had made its way into the US Treasury, Israel’s closest backer.
Not contributing to such money is one way to participate in the boycott, according to Sunbal Hassan. She offered Pakistani brand Cola Next to her wedding guests instead.
It’s not just her. Market research firm NielsenIQ reports that Western beverage brands saw a 7% drop in sales throughout the Middle East in the first half of the year.
Despite, market analysts noting that it is difficult to place a monetary value on lost sales and PepsiCo and Coca-Cola continuing to expand their operations in that region.
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According to founder Kassim Shroff, Reuters last month, local cola rivals like Cola Next and Pakola have soared in popularity in Pakistan, where Krave Mart, a prominent delivery app, now accounts for around 12 percent of the soft drink market. The percentage was closer to 2.5 percent before to the boycott.
Before the boycott, according to Shroff, the majority of the purchases were Pakola, a flavored ice cream soda. He refused to give sales numbers for PepsiCo and Coca-Cola.
Consumer boycotts have at least as long a history as the British anti-slavery sugar protests of the 18th century.
The Boycott, Divestment, and Sanctions campaign has frequently employed the tactic against Israel, a tactic that was first employed in the 20th century to combat apartheid in South Africa.
Consumer Behaviour: Consumer is A Slave
Customers who refuse to drink Coca-Cola and PepsiCo. products frequently point to the US’s decades-long support of Israel, particularly in the country’s conflict with Hamas.
Ramon Laguarta, the CEO of PepsiCo, told Reuters in an interview on July 11 that “some consumers are deciding to make different options in their purchases because of the political perception” and that boycotts are “impacting those particular geographies” including Egypt, Pakistan, and Lebanon.
He remarked, “Over time, we shall overcome it. At this point, it has no bearing on our top line or bottom line.”
The Africa, Middle East, and South Asia segment of PepsiCo generated $6 billion in revenue overall in 2023, according to company earnings releases. Europe, the Middle East, and Africa accounted for $8 billion of Coca-Cola’s revenue in the same year, according to company documents.
PepsiCo’s beverage volumes in the Africa, Middle East, and South Asia division hardly increased in the six months after the Hamas attacks on October 7, which set off the invasion of Gaza.
Billions of Dollars in Revenue for Coca-Cola and Pepsi from Middle East
This was in contrast to the division’s 8 percent and 15 percent growth in the corresponding quarters of 2022–2023, according to the company.
Coca-Cola HBC, which bottles Coke in Egypt, released data showing a double-digit percentage point drop in sales volumes over the six months ending June 28. Volumes increased by high single digits during the same time frame the previous year.
According to Coca-Cola, it does not support military actions in Israel or any other nation. PepsiCo stated that neither the business nor any of its products “are affiliated with any government or military in the conflict” in answer to a Reuters request.
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National Beverage Company, a Coca-Cola bottler situated in Ramallah that distributes the beverage throughout the West Bank, was created by Palestinian-American businessman Zahi Khouri.
He claimed that the fighting had destroyed the $25 million plant of the company, which had opened in Gaza in 2016. He maintained that no harm came to the workers.
Boycotts, according to Khouri, are a question of personal preference but do little to assist the Palestinian people. He stated that their influence on sales was not very great within the West Bank.
When contacted for comment, the Israeli government remained silent.
In April, Coke upgraded its technology in Pakistan with an additional $22 million in investment, despite the boycotts, the company announced in a news statement.
By supporting musicians, cricket teams, charities, and other local entities, the businesses continue to weave the Coke and Pepsi brands into the fabric of their communities.
Even if Coke and Pepsi are currently experiencing losses, these actions are crucial to their long-term survival in the countries, according to Georgetown’s Musgrave.
