Coke and Pepsi Boycott over Gaza Lifts Muslim Countries' Local Sodas

Coca-Cola and rival PepsiCo spent hundreds of millions of dollars over decades building demand for their soft drinks in Muslim-majority countries including Egypt to Pakistan. Now, both face a challenge from local sodas in those countries due to consumer boycotts that target the globe-straddling brands as symbols of America, and by extension Israel, at a time of war in Gaza, Reuters reported.
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. In Bangladesh, an outcry forced Coca-Cola to cancel an ad campaign against the boycott. And across the Middle East, Pepsi's rapid growth evaporated after the Gaza war started in October.
Pakistani corporate executive Sunbal Hassan kept Coke and Pepsi off her wedding menu in Karachi in April. She said she didn't want to feel her money had reached the tax coffers of the United States, Israel's staunchest ally.
"With the boycott, one can play a part by not contributing to those funds," Hassan said. Instead, she served her wedding guests Pakistani brand Cola Next.
She is not alone. 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.
In Pakistan, Krave Mart, a leading delivery app, has seen local cola rivals like Cola Next and Pakola soar in popularity to become about 12% of the soft drinks category, founder Kassim Shroff told Reuters this month. Before the boycott, the figure was closer to 2.5%.
Shroff said Pakola, which is ice-cream soda flavored, made up most of the purchases before the boycott. He declined to provide figures for Coca-Cola and PepsiCo sales.
Consumer boycotts date back at least as far as an 18th century anti-slavery sugar protest in Britain. The strategy was used in the 20th century to fight apartheid in South Africa and has been widely wielded against Israel through the Boycott, Divestment and Sanctions movement.
Many consumers shunning Coca-Cola and PepsiCo cite US 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 division was $6 billion in 2023, earnings releases show. The same year, Coca-Cola's revenue from its Europe, Middle East and Africa region was $8 billion, company filings show.
In the six months following the Oct. 7 Hamas attacks on Israel that triggered the invasion of Gaza, PepsiCo beverage volumes in the 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 there. In the same period last year, volumes rose in high single digits.
Coca-Cola has said it does not fund military operations in Israel or any country. In response to a Reuters request, 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 in the West Bank. The company's $25 million plant in Gaza, opened in 2016, has been destroyed in the war, he said. Employees were unharmed, he said.
Khouri said boycotts were a matter of personal choice but didn't really help Palestinians. In the West Bank itself, he said, they had limited sales impact.
"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 market research firm GlobalData.
PepsiCo, which entered Israel in the early 1990s, itself faced boycotts when it purchased Israel's SodaStream for $3.2 billion in 2018.
In recent years though, Muslim-majority countries with young, rising populations have provided some of the soda giants' fastest growth. In Pakistan alone, Coca-Cola says it has invested $1 billion since 2008, yielding years of double-digit sales growth. PepsiCo had similar gains, according to securities filings.
Now, both are losing ground to local brands.
Cola Next, which is cheaper than Coke and Pepsi, changed its ad slogan in March to "Because Cola Next is Pakistani," emphasizing its local roots.
Cola Next's factories cannot meet the surge in demand, Mian Zulfiqar Ahmed, the CEO of the brand's parent company, Mezan Beverages, said in an interview. He declined to share volume figures.
Restaurants, Karachi's private schools association and university students have all taken part in anti-Coca-Cola actions, eroding goodwill built through sponsorship of Coke Studio, a popular music show in Pakistan.
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.
BANGLADESH BACKFIRE
In Bangladesh, Coke launched an advertisement showing a shopkeeper talking about the company's operations in Palestine.
After a public outcry over perceived insensitivity, Coke pulled the ad in June and apologized. In response to a question from Reuters, the company said the campaign "missed the mark."
The ad made the boycott worse, said one Bangladeshi advertising executive, who declined to be named because he was not authorized to speak to the media. 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.
As well as boycotts, inflation and economic turmoil in Pakistan, Egypt and Bangladesh eroded consumers' buying power even before the war, making cheaper local brands more appealing.
Last year, Coke's market share in the consumer sector in Pakistan fell to 5.7% from 6.3% in 2022, according to GlobalData, while Pepsi's fell to 10.4% from 10.8%.
FUTURE PLANS
Coca-Cola and its bottlers, and PepsiCo, still see the countries as important areas for growth, particularly as Western markets slow down.
Despite the boycotts, Coke invested another $22 million upgrading technology in Pakistan in April, it said in a press release at the time.
Coca-Cola's bottler in Pakistan said to investors in May that it remained "positive about the opportunity" the world's fifth most-populous country offers, and that it invested in the market with a long-term commitment.
In recent weeks, PepsiCo reintroduced a brand called Teem soda, traditionally lemon-lime flavored, in Pakistani market, a spokesperson confirmed. The product is now available in a cola flavor with "Made in Pakistan" printed prominently on the label.
The companies are also still injecting the Coke and Pepsi brands into the fabric of local communities by sponsoring charities, musicians and cricket teams.
Those moves are key to Coke and Pepsi keeping a toehold in the countries long-term even as they face setbacks now, Georgetown's Musgrave said.
"Anything you can do to make yourself an ally or presence, a part of a community," helps, he said.

Thailand has netted more than 1.3 million kilograms of highly destructive blackchin tilapia fish, the government said Tuesday, as it battles to stamp out the invasive species.

Shoals of blackchin tilapia, which can produce up to 500 young at a time, have been found in 19 Thai provinces, damaging ecosystems in rivers, swamps and canals by preying on small fish, shrimp and snail larvae.

As well as the ecological impact, the government is worried about the effect on the kingdom's crucial fish-farming industry.

Fishing authorities caught 1,332,000 kilograms of blackchin tilapia between February and August 28, according to Nattacha Boonchaiinsawat, the vice-president of a parliamentary committee set up to tackle the spread of the fish.

"We talked to local residents and found out that the spread of tilapia has got worse -- they found them in small canals, which was not the case before," he told AFP.

The outbreak of tilapia will cost the Thai economy at least 10 billion baht ($293 million), Nattacha said.

The fish, native to West Africa, were first discovered in Thailand's rivers in 2010 before spreading rapidly in 2018, and are now also found in the US state of Florida and in the Philippines.

In July, the Thai government declared the eradication of the species a national priority and began encouraging people to consume the fish.

Promotional activities in central Phetchaburi province advertised tilapia-based fish sauces and sausages.

Restaurants have also increasingly used the fish in cuisine, fried with garlic or sun-dried.

It remains unclear how the fish arrived in Thailand, but local media reports have said they could have been imported by a company from Ghana in 2010.

A parliamentary investigation is under way to determine the cause of the infestation, Nattacha said.

The Thai government has encouraged locals to catch the fish, offering to pay people 15 baht ($0.42) per kilogram.

It has also designated 75 vending areas around the country where the fish can be sold.

Authorities have released predator species to hunt down the tilapia and are also developing genetically modified blackchin tilapia to produce sterile offspring.

A UN science panel warned last year that the tilapia are spreading faster than ever, wrecking crops, distributing disease and upending ecosystems.

More than 37,000 alien species have taken hold far from their places of origin, costing upwards of $400 billion a year in damages and lost income, the UN panel said.

Coke and Pepsi Boycott over Gaza Lifts Muslim Countries' Local Sodas