Coke and Pepsi Face Boycott in Muslim-Majority Countries Amidst Gaza Conflict

Coke and Pepsi Face Boycott in Muslim-Majority Countries Amidst Gaza Conflict

Over decades, Coca-Cola and PepsiCo have invested heavily in Muslim-majority countries, such as Egypt and Pakistan. However, a consumer boycott is challenging their dominance due to perceptions that these brands represent America and, by extension, Israel during the ongoing Gaza conflict.

Sales Decline and Market Share Loss

In Egypt, Coca-Cola sales have plummeted, while local brand V7 has seen a surge in exports. In Bangladesh, Coke faced an outcry over an insensitive advertising campaign, leading to its cancellation. Pepsi’s rapid growth in the Middle East has also stalled since the October 2023 Hamas attacks on Israel.

Local Brands Gaining Ground

Pakistan-based Cola Next has capitalized on the boycott by emphasizing its local heritage. Its sales have soared, along with other local brands like Pakola. Local sodas are gaining popularity due to their affordability and perceived alignment with national sentiment.

Historical Targets and Boycott Strategy

Coca-Cola and PepsiCo have faced boycott pressure in the Muslim world before. After opening a factory in Israel in the 1960s, Coke faced an Arab League boycott that benefited Pepsi. Both companies have also faced criticism over their acquisitions, such as PepsiCo’s purchase of SodaStream.

Financial Impact and Long-Term Concerns

While it’s difficult to quantify lost sales, Western beverage brands have experienced a 7% decline in the Middle East. Analysts warn of potential long-term damage to consumer loyalty if habits break due to boycotts.

PepsiCo’s Perspective and Future Plans

PepsiCo CEO Ramon Laguarta acknowledges the impact of boycotts in certain geographies but remains optimistic, emphasizing the company’s commitment to managing through challenges. Both Coca-Cola and PepsiCo continue to see these countries as potential growth areas and are investing in technology and sponsorships.

Bangladesh Backfire and Western Brands

In Bangladesh, Coke’s advertising campaign sparked an outcry, exacerbating the boycott. Other American brands, such as McDonald’s and Starbucks, have also faced anti-Israel boycott pressure.

Inflation and Economic Turmoil

Beyond boycotts, inflation and economic turmoil in Pakistan, Egypt, and Bangladesh have eroded consumer spending power, making cheaper local brands more appealing. Coke’s market share in Pakistan has declined in recent years.

Local Brands’ Success and Community Involvement

Local soda companies are capitalizing on the boycott by emphasizing their local roots and sponsoring community events. Cola Next’s factories are struggling to keep up with demand, and V7 is expanding its exports. By building strong community ties, Coca-Cola and PepsiCo hope to maintain a foothold in these countries amidst the current challenges.