Coca-Cola and rival PepsiCo spent hundreds of millions of dollars over decades building demand for their soft drinks in Muslim-majority countries.
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.
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.
(Reuters)