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BONUS EPISODE: A Conversation About Middle East Boycotts Hitting Global Brands · Bloomberg Intelligence

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  Speaker 1: I'm Stephen Caroll in London. Welcome to this special presentation
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  Speaker 1: from Bloomberg Radio. The Israel Hamas War began with the
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  Speaker 1: October seventh attack and the largest loss of Jewish life
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  Speaker 1: since the Holocaust. Israel's military response in Gaza has left
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  Speaker 1: tens of thousands of people dead and sparked violence in
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  Speaker 1: many parts of the Middle East. The conflict has upended
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  Speaker 1: international relations, and the consequences are also being felt in
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  Speaker 1: the business world, with some of the biggest global brands affected,
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  Speaker 1: driven by anger against the United States and some European
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  Speaker 1: countries for their support of Israel. Businesses like Starbucks, McDonald's
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  Speaker 1: and Zara have been targeted by protests and boycott calls.
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  Speaker 1: The campaigns have spread online in videos like those you've
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  Speaker 1: just heard. Some companies have seen their sales hit. Others
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  Speaker 1: have faced pr ordeals issuing public statements about their political neutrality.
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  Speaker 1: As consumers in the Middle East of elsewhere switch their
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  Speaker 1: spending habits, there have been winners and losers. Bloomberg has
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  Speaker 1: been investigating the extent an effect of these changes across
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  Speaker 1: the Middle East and to discuss I'm joined by our
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  Speaker 1: reporters Sama Elwardani in Cairo and Lena Rashdan normally based
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  Speaker 1: in Dubai, but here with me in the London studio Leane,
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  Speaker 1: I'd like to start with you. Can you talk us
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  Speaker 1: through the scale of these boycotts, which companies are being
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  Speaker 1: targeted and why, Stephen.
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  Speaker 2: The key movement to be aware of here is the
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  Speaker 2: Palestinian led boycott, divestment sanctions. It's an almost two decade
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  Speaker 2: old movement that protests international support for Israel's actions in
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  Speaker 2: Palastinian territories and advocates applying pressure on Israel to comply
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  Speaker 2: with international law through targeting certain businesses and institutions accused
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  Speaker 2: of supporting Israel. So I'm seeing this ever since October seven.
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  Speaker 2: The companies that have been hit the most. One of
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  Speaker 2: them is McDonald's. Calls to boycott McDonald's happened after images
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  Speaker 2: circulated of McDonald's branches and Israel handing meals to Israeli soldiers.
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  Speaker 2: Starbucks entered a lawsuit against the Starbucks Workers United after
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  Speaker 2: they made a statement in solidarity with Palestine. We have
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  Speaker 2: Coca Cola and Pepsi. They both have some involvement with
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  Speaker 2: manufacturing in Israel. So really, these companies that are being
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  Speaker 2: accused of supporting violations against Palestinian rights.
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  Speaker 1: They're being hit, yeah, And of course these companies have
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  Speaker 1: responded to some of these claims, talking about disinformation and
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  Speaker 1: inaccurate reports regarding their position. In the case of McDonald's,
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  Speaker 1: for example, they're saying that the corporation is not funding
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  Speaker 1: or supporting any governments involved in the conflicts. Starbucks also
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  Speaker 1: issuing a statement saying they have no political agenda and
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  Speaker 1: they don't use their profits to fund any government or
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  Speaker 1: military operations anywhere. So the companies have been responding to
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  Speaker 1: this as well. But what do we know about how
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  Speaker 1: businesses are being affected by these boycott calls?
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  Speaker 2: So from eyewitnesses and our reporters across several Middle Eastern countries,
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  Speaker 2: we're seeing branches all over these fast food chains and
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  Speaker 2: these cafes being almost empty, deserted. Supermarkets and restaurants are
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  Speaker 2: no longer carrying Coca Cola or Pepsi brand, I mean
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  Speaker 2: fizzy drinks or really any item that falls within that company.
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  Speaker 2: And in recent weeks the McDonald's CEO it warnant that
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  Speaker 2: his firm is seeing meaningful business impact. And we've also
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  Speaker 2: seen that shares of Americana Restaurants International, the Middle East
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  Speaker 2: franchise operator for KFC, Pizza Hut, Krispy Kreme and Hardy's.
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  Speaker 2: They've declared significant plice in smid October, and a lot
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  Speaker 2: of end lists are saying that's that the hit to
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  Speaker 2: profits is from the boycott.
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  Speaker 1: Okay, And of course we'll get more information from these companies.
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  Speaker 1: We're expecting it in their next set of earnings results
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  Speaker 1: as well. Salma, you've been speaking to some consumers who've
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  Speaker 1: changed their spending habits as a result of these campaigns.
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  Speaker 1: Let's listen to part of one of your conversations with
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  Speaker 1: Sarah L. Masri, who works as a project manager in
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  Speaker 1: a cultural organization in Egypt.
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  Speaker 3: And look, here's why I think boycotting is important because
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  Speaker 3: largely we're helpless. We're their closest neighbor and we are
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  Speaker 3: supposed to be doing more, but we can't. We are
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  Speaker 3: restricted by decisions governments are takeing them. So I believe
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  Speaker 3: that boycotting is the only weapon of the people. It's
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  Speaker 3: the only thing people have control of. Verry was the
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  Speaker 3: best product for me, but when I found out it's
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  Speaker 3: on the boycott list, I decided to boycott it and
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  Speaker 3: started looking for alternatives.
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  Speaker 1: Sarah Mazri there speaking to Salma Elwadani. Salma, I wonder
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  Speaker 1: that conversation we heard from Sara there in her decision
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  Speaker 1: to stop buying fairy how widespread our opinions like these
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  Speaker 1: in Egypt and across the Mid Least.
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  Speaker 4: A lot of.
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  Speaker 5: People like Sara are turning to local alternatives since the
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  Speaker 5: beginning of the war in protest again is Western government
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  Speaker 5: support for Israel.
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  Speaker 4: You can see the evidence in the streets of Cairo.
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  Speaker 5: For example, we're the ones very very popular global fast
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  Speaker 5: food chains and shops are largely empty. Pro Palestinian sentiment
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  Speaker 5: has traditionally been strong in Egypt, Jordan, create and a
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  Speaker 5: lot of countries in the Middle East, and since October,
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  Speaker 5: Buket calls have circulated on social media, lasting dozens of
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  Speaker 5: companies and products, prompting shoppers to shift to local alternatives.
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  Speaker 5: I think the point that Sarah is making here is
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  Speaker 5: very important and is being shared by a lot of
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  Speaker 5: people here is that in this region, where there's a
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  Speaker 5: little chance of people to take to street to the
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  Speaker 5: streets because of the securities, the boycot can be the
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  Speaker 5: best or even the only way to make their voices
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  Speaker 5: hear the only thing that you can't control is where
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  Speaker 5: I put my money. Some of the people that are
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  Speaker 5: interviewed were also saying that joining the boycout made them
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  Speaker 5: more conscious of the power as consumers.
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  Speaker 4: So the supermarket trips.
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  Speaker 5: Are now less about grabbing the favorite or even the
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  Speaker 5: cheapest product.
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  Speaker 4: It's more about the values behind it.
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  Speaker 5: Consumers are becoming more mindful and conscious of the human
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  Speaker 5: costs of the consumption and are demanding greater transparency and
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  Speaker 5: are expecting a specific set of standards and ethics from
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  Speaker 5: the brands they buy.
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  Speaker 1: That's really interesting to put it in that context for us.
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  Speaker 1: Another parts of this story are the companies who've been
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  Speaker 1: benefiting from the boycotts of other brands. You've been speaking
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  Speaker 1: to some of them, including a soda maker in Egypt
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  Speaker 1: that's seen a big boost in their sales.
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  Speaker 4: What have they told you, Yes, definitely.
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  Speaker 5: The past three months have witnessed the rise of local brands.
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  Speaker 5: Social media users and influencers have been using the platforms
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  Speaker 5: to advocate and the view local product instead of Western ones.
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  Speaker 6: And this video we will be seeing how to find
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  Speaker 6: brands that support Palestine now that all this boycott is happening.
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  Speaker 6: Due to the current issues. A lot of us have
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  Speaker 6: a lot of information on what brands to boycott, but
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  Speaker 6: not exactly what brands to support. Which brands are in
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  Speaker 6: favor of Palestine that we can buyas alternatives to the
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  Speaker 6: brands that we are to boycott.
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  Speaker 4: One of the companies is Peers Pattests.
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  Speaker 5: It's an old Egyptian company that used to have popularity
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  Speaker 5: one hundred years ago and used to take pride as
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  Speaker 5: the first maid and needypt soda, but then was overtaken
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  Speaker 5: by the rise of global Western brands over the decades.
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  Speaker 4: Now it's the opposite.
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  Speaker 5: Since October, people took to social media to promote for
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  Speaker 5: it and look.
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  Speaker 4: For it everywhere they were.
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  Speaker 5: The company was bombarded with calls from customers making orders,
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  Speaker 5: and that's because consumers are going to restaurants and supermarkets
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  Speaker 5: asking for Spiro or any other local soda maker.
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  Speaker 4: And the company was saying that the sales have more
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  Speaker 4: than triple because of that. And there's so many stories
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  Speaker 4: like that.
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  Speaker 1: In fact, Lean you were speaking to the founder of
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  Speaker 1: a cafe chain in Jordan called Astrolabe about this. Starbucks
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  Speaker 1: is a big competitor of theirs. Let's take a listen
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  Speaker 1: to what he told you about what's happened to their
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  Speaker 1: business since the war started.
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  Speaker 7: Is the there was a big increase in business. We're
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  Speaker 7: in a growth phase and we have year to year growth,
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  Speaker 7: but after October there was even greater rise in sales.
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  Speaker 6: What you can lutly dining Starbucks, and.
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  Speaker 7: Of course the main reason was the boycott, because we
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  Speaker 7: are direct competitors with Starbucks. Mainly we're present wherever Starbucks is.
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  Speaker 7: We have a branch in downtown a man right next
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  Speaker 7: to Starbucks water War as they.
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  Speaker 1: Say, lean, do those like Moa Fauri see this consumer
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  Speaker 1: shift as something that's lasting.
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  Speaker 2: Yeah, So Farrei went on to mention that he's seeing
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  Speaker 2: more and more interest from investors and in speaking with
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  Speaker 2: other local coffee shops in Jordan, they're they're seeing increased
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  Speaker 2: demand as the boycotts get more widespread with time, and
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  Speaker 2: we're seeing several food and beverage companies coming up with
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  Speaker 2: their own alternatives for what's on the boycott list. So owners,
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  Speaker 2: executives and investors are viewing this as a long lasting trend.
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  Speaker 2: These BDS lists have been around for about eighteen years,
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  Speaker 2: but with the large death toll, it's surpassing twenty five thousand.
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  Speaker 2: The UN has said the war has displaced eighty five
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  Speaker 2: percent of Guzzler's residence. The intensity of the situation has
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  Speaker 2: meant that the boycotts are being taken more seriously.
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  Speaker 1: Yeah, absolutely, on the scale of that of course, very
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  Speaker 1: important to remember when thinking about this part of the
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  Speaker 1: story as well. Sama for the brands that have seen
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  Speaker 1: their products boycotted, are they like to be able to
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  Speaker 1: win those customers back.
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  Speaker 5: I mean, it's still too early to tell if the
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  Speaker 5: ongoing boycott campaigns are going to last or if there's
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  Speaker 5: a way for these companies to regain customers' trust.
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  Speaker 4: In the Middle East.
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  Speaker 5: There have been boycott campaigns in the past that had
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  Speaker 5: gradually waned after the conflict was over and people went
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  Speaker 5: back to buying and consuming. But people who lived through
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  Speaker 5: these campaigns in the recent past feel that this time
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  Speaker 5: around is different. One It's been more than three months
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  Speaker 5: and people are still boycotting and it's a long time,
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  Speaker 5: and also the continuous war.
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  Speaker 4: Is fueling that sentiment.
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  Speaker 5: And the fact that unlike in the past, there's a
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  Speaker 5: digital footprint now and people have social media and can
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  Speaker 5: see hor epic scenes as they happen and they're directly
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  Speaker 5: correlating this with these products that they're boycotting.
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  Speaker 4: So it's i would say, harder to.
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  Speaker 5: Raise from the collective memory lean what other sectors could
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  Speaker 5: see their businesses affected or how could this evolve as
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  Speaker 5: there's no end in sight to the conflict in Gaza.
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  Speaker 2: Really it could be any business besides the food and
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  Speaker 2: beverage sectors. We've seen retail being affected. There's been calls
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  Speaker 2: to boycott several stores cut for the French grocer, their
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  Speaker 2: branches have been boycotted in the Middle East, and in
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  Speaker 2: speaking with Antless and professors, they're saying, really, any company
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  Speaker 2: associated with the US or Europe, the policies of those
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  Speaker 2: governments will affect how people in the Middle East or
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  Speaker 2: in Muslim majority countries will view these goods and how
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  Speaker 2: they will start consuming from now on.
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  Speaker 1: And we'll be watching to see how this evolves as
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  Speaker 1: the US and Europe have upded the pressure on Israel
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  Speaker 1: to the casualties in Gaza and find a longer term
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  Speaker 1: resolution to the conflict. Thanks to our reporters Leena rush
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  Speaker 1: Down here in London and Salma Elwardani in Cairo, you
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  Speaker 1: can read more on this story on Bloomberg dot com
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  Speaker 1: and on the Terminal. This special program was produced by
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  Speaker 1: Chris pitt Our audio engineer was Rufel Hussein. You can
• 12:22
  Speaker 1: hear more stories like this on the Bloomberg Daybreak Europe podcast,
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  Speaker 1: available every weekday wherever you usually get your podcasts. I'm
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  Speaker 1: Stephen Carol. Thank you for listening. This is Bloomberg