Coca-Cola and PepsiCo, two of the world’s largest beverage companies, are facing a growing challenge in Muslim-majority countries due to consumer boycotts.
The boycotts, sparked by the ongoing Israel-Gaza conflict, have led to a significant decline in sales for both companies in countries such as Egypt, Pakistan, and Bangladesh.
“We will manage through it over time,” said PepsiCo CEO Ramon Laguarta. “It’s not meaningful to our top line and bottom line at this point.”
The boycotts are part of a broader movement to protest US support for Israel, with many consumers choosing to shun American brands.
“With the boycott, one can play a part by not contributing to those funds,” said Sunbal Hassan, a Pakistani corporate executive who kept Coke and Pepsi off her wedding menu.
“Some consumers are deciding to make different options in their purchases because of the political perception,” said Laguarta. “We would manage through it over time.”
Local brands such as V7 in Egypt and Cola Next in Pakistan are gaining popularity, with some consumers choosing to support domestic products over international brands seen as symbols of America and, by extension, Israel.
“Only ending the occupation would help the situation,” said Zahi Khouri, founder of National Beverage Company, which sells Coke in the West Bank. “Boycotts are a matter of personal choice, but they don’t really help Palestinians.”
“If you break habits, it’s going to be harder to win you back in the long run,” said Paul Musgrave, an associate professor of government at Georgetown University in Qatar.
Coca-Cola and PepsiCo have both said that they do not fund military operations in Israel or any other country.
However, the boycotts continue to affect their businesses in the region. Western beverage brands suffered a 7% sales decline in the first half of the year across the Middle East, according to market researcher NielsenIQ.
The impact of the boycotts is being felt across the region, with Coca-Cola’s market share in Pakistan falling to 5.7% from 6.3% in 2022, according to GlobalData.
Pepsi’s market share also fell to 10.4% from 10.8% during the same period.
“Anything you can do to make yourself an ally or presence, a part of a community, helps,” said Musgrave.
Despite the challenges, both companies remain committed to the region. Coca-Cola invested an additional $22 million in Pakistan in April, while PepsiCo reintroduced its Teem soda brand in Pakistan with a “Made in Pakistan” label.
“We remain positive about the opportunity” in Pakistan, said Coca-Cola’s bottler in Pakistan. “We invested in the market with a long-term commitment.”
The boycotts highlight the complex relationship between consumer choice and geopolitical tensions.
As the conflict in Gaza continues, it remained to be seen how the situation would affect the businesses of Coca-Cola and PepsiCo in the region.
Reuters
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