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

I'm Stephen Caroll in London. Welcome to this special presentation 0:00:03.720 --> 0:00:07.440 from Bloomberg Radio. The Israel Hamas War began with the 0:00:07.480 --> 0:00:10.920 October seventh attack and the largest loss of Jewish life 0:00:10.920 --> 0:00:15.000 since the Holocaust. Israel's military response in Gaza has left 0:00:15.040 --> 0:00:18.159 tens of thousands of people dead and sparked violence in 0:00:18.200 --> 0:00:21.600 many parts of the Middle East. The conflict has upended 0:00:21.600 --> 0:00:25.040 international relations, and the consequences are also being felt in 0:00:25.079 --> 0:00:28.720 the business world, with some of the biggest global brands affected, 0:00:45.000 --> 0:00:53.479 driven by anger against the United States and some European 0:00:53.520 --> 0:00:57.400 countries for their support of Israel. Businesses like Starbucks, McDonald's 0:00:57.400 --> 0:01:00.760 and Zara have been targeted by protests and boycott calls. 0:01:01.120 --> 0:01:04.080 The campaigns have spread online in videos like those you've 0:01:04.120 --> 0:01:07.760 just heard. Some companies have seen their sales hit. Others 0:01:07.840 --> 0:01:12.919 have faced pr ordeals issuing public statements about their political neutrality. 0:01:13.640 --> 0:01:15.959 As consumers in the Middle East of elsewhere switch their 0:01:16.000 --> 0:01:19.120 spending habits, there have been winners and losers. Bloomberg has 0:01:19.160 --> 0:01:22.000 been investigating the extent an effect of these changes across 0:01:22.000 --> 0:01:24.360 the Middle East and to discuss I'm joined by our 0:01:24.360 --> 0:01:28.040 reporters Sama Elwardani in Cairo and Lena Rashdan normally based 0:01:28.040 --> 0:01:30.880 in Dubai, but here with me in the London studio Leane, 0:01:30.880 --> 0:01:33.120 I'd like to start with you. Can you talk us 0:01:33.120 --> 0:01:36.000 through the scale of these boycotts, which companies are being 0:01:36.000 --> 0:01:38.240 targeted and why, Stephen. 0:01:38.280 --> 0:01:40.319 The key movement to be aware of here is the 0:01:40.480 --> 0:01:45.280 Palestinian led boycott, divestment sanctions. It's an almost two decade 0:01:45.440 --> 0:01:49.160 old movement that protests international support for Israel's actions in 0:01:49.160 --> 0:01:53.520 Palastinian territories and advocates applying pressure on Israel to comply 0:01:53.600 --> 0:01:58.240 with international law through targeting certain businesses and institutions accused 0:01:58.240 --> 0:02:02.200 of supporting Israel. So I'm seeing this ever since October seven. 0:02:02.440 --> 0:02:04.560 The companies that have been hit the most. One of 0:02:04.560 --> 0:02:09.120 them is McDonald's. Calls to boycott McDonald's happened after images 0:02:09.160 --> 0:02:17.120 circulated of McDonald's branches and Israel handing meals to Israeli soldiers. 0:02:17.160 --> 0:02:21.640 Starbucks entered a lawsuit against the Starbucks Workers United after 0:02:21.639 --> 0:02:24.919 they made a statement in solidarity with Palestine. We have 0:02:25.080 --> 0:02:28.400 Coca Cola and Pepsi. They both have some involvement with 0:02:28.480 --> 0:02:32.480 manufacturing in Israel. So really, these companies that are being 0:02:32.600 --> 0:02:36.240 accused of supporting violations against Palestinian rights. 0:02:36.960 --> 0:02:39.040 They're being hit, yeah, And of course these companies have 0:02:39.400 --> 0:02:42.920 responded to some of these claims, talking about disinformation and 0:02:42.960 --> 0:02:46.280 inaccurate reports regarding their position. In the case of McDonald's, 0:02:46.320 --> 0:02:49.240 for example, they're saying that the corporation is not funding 0:02:49.320 --> 0:02:52.400 or supporting any governments involved in the conflicts. Starbucks also 0:02:52.440 --> 0:02:55.440 issuing a statement saying they have no political agenda and 0:02:55.440 --> 0:02:57.760 they don't use their profits to fund any government or 0:02:57.800 --> 0:03:01.120 military operations anywhere. So the companies have been responding to 0:03:01.200 --> 0:03:04.239 this as well. But what do we know about how 0:03:04.440 --> 0:03:07.240 businesses are being affected by these boycott calls? 0:03:07.919 --> 0:03:11.720 So from eyewitnesses and our reporters across several Middle Eastern countries, 0:03:12.040 --> 0:03:15.560 we're seeing branches all over these fast food chains and 0:03:15.760 --> 0:03:21.160 these cafes being almost empty, deserted. Supermarkets and restaurants are 0:03:21.200 --> 0:03:24.480 no longer carrying Coca Cola or Pepsi brand, I mean 0:03:24.520 --> 0:03:28.119 fizzy drinks or really any item that falls within that company. 0:03:28.520 --> 0:03:31.680 And in recent weeks the McDonald's CEO it warnant that 0:03:31.720 --> 0:03:36.280 his firm is seeing meaningful business impact. And we've also 0:03:36.320 --> 0:03:40.000 seen that shares of Americana Restaurants International, the Middle East 0:03:40.080 --> 0:03:43.840 franchise operator for KFC, Pizza Hut, Krispy Kreme and Hardy's. 0:03:44.440 --> 0:03:47.800 They've declared significant plice in smid October, and a lot 0:03:47.840 --> 0:03:50.480 of end lists are saying that's that the hit to 0:03:50.560 --> 0:03:51.960 profits is from the boycott. 0:03:52.160 --> 0:03:54.560 Okay, And of course we'll get more information from these companies. 0:03:54.600 --> 0:03:57.040 We're expecting it in their next set of earnings results 0:03:57.080 --> 0:04:00.440 as well. Salma, you've been speaking to some consumers who've 0:04:00.520 --> 0:04:03.160 changed their spending habits as a result of these campaigns. 0:04:03.240 --> 0:04:05.840 Let's listen to part of one of your conversations with 0:04:05.960 --> 0:04:08.720 Sarah L. Masri, who works as a project manager in 0:04:08.760 --> 0:04:10.400 a cultural organization in Egypt. 0:04:12.920 --> 0:04:20.680 And look, here's why I think boycotting is important because 0:04:20.760 --> 0:04:24.240 largely we're helpless. We're their closest neighbor and we are 0:04:24.279 --> 0:04:33.080 supposed to be doing more, but we can't. We are 0:04:33.080 --> 0:04:37.880 restricted by decisions governments are takeing them. So I believe 0:04:37.920 --> 0:04:41.360 that boycotting is the only weapon of the people. It's 0:04:41.400 --> 0:04:50.120 the only thing people have control of. Verry was the 0:04:50.160 --> 0:04:52.760 best product for me, but when I found out it's 0:04:52.760 --> 0:04:55.720 on the boycott list, I decided to boycott it and 0:04:55.760 --> 0:04:57.440 started looking for alternatives. 0:05:00.120 --> 0:05:03.960 Sarah Mazri there speaking to Salma Elwadani. Salma, I wonder 0:05:04.120 --> 0:05:06.360 that conversation we heard from Sara there in her decision 0:05:06.400 --> 0:05:10.360 to stop buying fairy how widespread our opinions like these 0:05:10.560 --> 0:05:12.440 in Egypt and across the Mid Least. 0:05:12.960 --> 0:05:13.400 A lot of. 0:05:13.320 --> 0:05:16.479 People like Sara are turning to local alternatives since the 0:05:16.480 --> 0:05:19.400 beginning of the war in protest again is Western government 0:05:19.440 --> 0:05:20.719 support for Israel. 0:05:21.560 --> 0:05:23.640 You can see the evidence in the streets of Cairo. 0:05:23.720 --> 0:05:27.919 For example, we're the ones very very popular global fast 0:05:27.920 --> 0:05:32.120 food chains and shops are largely empty. Pro Palestinian sentiment 0:05:32.200 --> 0:05:35.719 has traditionally been strong in Egypt, Jordan, create and a 0:05:35.720 --> 0:05:38.080 lot of countries in the Middle East, and since October, 0:05:38.120 --> 0:05:41.279 Buket calls have circulated on social media, lasting dozens of 0:05:41.320 --> 0:05:45.640 companies and products, prompting shoppers to shift to local alternatives. 0:05:45.880 --> 0:05:48.640 I think the point that Sarah is making here is 0:05:48.760 --> 0:05:51.919 very important and is being shared by a lot of 0:05:51.960 --> 0:05:55.359 people here is that in this region, where there's a 0:05:55.440 --> 0:05:57.839 little chance of people to take to street to the 0:05:57.880 --> 0:06:01.880 streets because of the securities, the boycot can be the 0:06:02.520 --> 0:06:05.120 best or even the only way to make their voices 0:06:05.200 --> 0:06:07.680 hear the only thing that you can't control is where 0:06:07.680 --> 0:06:10.600 I put my money. Some of the people that are 0:06:10.720 --> 0:06:14.279 interviewed were also saying that joining the boycout made them 0:06:14.480 --> 0:06:16.720 more conscious of the power as consumers. 0:06:16.800 --> 0:06:18.400 So the supermarket trips. 0:06:18.120 --> 0:06:21.680 Are now less about grabbing the favorite or even the 0:06:21.760 --> 0:06:22.799 cheapest product. 0:06:23.200 --> 0:06:24.960 It's more about the values behind it. 0:06:25.120 --> 0:06:28.760 Consumers are becoming more mindful and conscious of the human 0:06:28.800 --> 0:06:31.800 costs of the consumption and are demanding greater transparency and 0:06:31.839 --> 0:06:34.640 are expecting a specific set of standards and ethics from 0:06:34.720 --> 0:06:35.640 the brands they buy. 0:06:36.040 --> 0:06:38.680 That's really interesting to put it in that context for us. 0:06:38.720 --> 0:06:41.640 Another parts of this story are the companies who've been 0:06:41.960 --> 0:06:45.520 benefiting from the boycotts of other brands. You've been speaking 0:06:45.560 --> 0:06:47.520 to some of them, including a soda maker in Egypt 0:06:47.520 --> 0:06:49.080 that's seen a big boost in their sales. 0:06:49.080 --> 0:06:51.440 What have they told you, Yes, definitely. 0:06:51.480 --> 0:06:54.560 The past three months have witnessed the rise of local brands. 0:06:54.760 --> 0:06:58.160 Social media users and influencers have been using the platforms 0:06:58.200 --> 0:07:01.400 to advocate and the view local product instead of Western ones. 0:07:02.720 --> 0:07:04.920 And this video we will be seeing how to find 0:07:04.960 --> 0:07:08.320 brands that support Palestine now that all this boycott is happening. 0:07:08.360 --> 0:07:10.240 Due to the current issues. A lot of us have 0:07:10.360 --> 0:07:12.640 a lot of information on what brands to boycott, but 0:07:12.760 --> 0:07:15.680 not exactly what brands to support. Which brands are in 0:07:15.680 --> 0:07:18.760 favor of Palestine that we can buyas alternatives to the 0:07:18.760 --> 0:07:20.160 brands that we are to boycott. 0:07:23.040 --> 0:07:24.800 One of the companies is Peers Pattests. 0:07:25.000 --> 0:07:27.840 It's an old Egyptian company that used to have popularity 0:07:28.040 --> 0:07:30.920 one hundred years ago and used to take pride as 0:07:30.960 --> 0:07:34.600 the first maid and needypt soda, but then was overtaken 0:07:34.600 --> 0:07:37.920 by the rise of global Western brands over the decades. 0:07:38.280 --> 0:07:39.400 Now it's the opposite. 0:07:39.560 --> 0:07:43.200 Since October, people took to social media to promote for 0:07:43.240 --> 0:07:43.960 it and look. 0:07:43.800 --> 0:07:45.360 For it everywhere they were. 0:07:46.080 --> 0:07:50.840 The company was bombarded with calls from customers making orders, 0:07:51.160 --> 0:07:54.400 and that's because consumers are going to restaurants and supermarkets 0:07:54.480 --> 0:07:57.640 asking for Spiro or any other local soda maker. 0:07:58.320 --> 0:08:00.760 And the company was saying that the sales have more 0:08:00.800 --> 0:08:03.520 than triple because of that. And there's so many stories 0:08:03.560 --> 0:08:04.360 like that. 0:08:04.760 --> 0:08:06.320 In fact, Lean you were speaking to the founder of 0:08:06.320 --> 0:08:09.760 a cafe chain in Jordan called Astrolabe about this. Starbucks 0:08:09.800 --> 0:08:11.880 is a big competitor of theirs. Let's take a listen 0:08:12.160 --> 0:08:14.120 to what he told you about what's happened to their 0:08:14.160 --> 0:08:15.960 business since the war started. 0:08:16.680 --> 0:08:25.520 Is the there was a big increase in business. We're 0:08:25.520 --> 0:08:27.640 in a growth phase and we have year to year growth, 0:08:28.080 --> 0:08:35.520 but after October there was even greater rise in sales. 0:08:35.200 --> 0:08:44.880 What you can lutly dining Starbucks, and. 0:08:44.920 --> 0:08:46.960 Of course the main reason was the boycott, because we 0:08:47.000 --> 0:08:50.960 are direct competitors with Starbucks. Mainly we're present wherever Starbucks is. 0:08:51.120 --> 0:08:53.120 We have a branch in downtown a man right next 0:08:53.160 --> 0:08:54.880 to Starbucks water War as they. 0:08:54.800 --> 0:09:01.360 Say, lean, do those like Moa Fauri see this consumer 0:09:01.400 --> 0:09:02.920 shift as something that's lasting. 0:09:03.480 --> 0:09:06.200 Yeah, So Farrei went on to mention that he's seeing 0:09:06.240 --> 0:09:08.680 more and more interest from investors and in speaking with 0:09:08.760 --> 0:09:12.840 other local coffee shops in Jordan, they're they're seeing increased 0:09:12.840 --> 0:09:20.160 demand as the boycotts get more widespread with time, and 0:09:20.200 --> 0:09:23.600 we're seeing several food and beverage companies coming up with 0:09:23.640 --> 0:09:27.760 their own alternatives for what's on the boycott list. So owners, 0:09:27.880 --> 0:09:31.160 executives and investors are viewing this as a long lasting trend. 0:09:31.480 --> 0:09:34.800 These BDS lists have been around for about eighteen years, 0:09:35.559 --> 0:09:39.120 but with the large death toll, it's surpassing twenty five thousand. 0:09:39.800 --> 0:09:42.360 The UN has said the war has displaced eighty five 0:09:42.400 --> 0:09:46.319 percent of Guzzler's residence. The intensity of the situation has 0:09:46.360 --> 0:09:49.320 meant that the boycotts are being taken more seriously. 0:09:49.440 --> 0:09:51.640 Yeah, absolutely, on the scale of that of course, very 0:09:51.679 --> 0:09:54.280 important to remember when thinking about this part of the 0:09:54.280 --> 0:09:57.680 story as well. Sama for the brands that have seen 0:09:57.720 --> 0:10:00.680 their products boycotted, are they like to be able to 0:10:00.679 --> 0:10:01.880 win those customers back. 0:10:04.280 --> 0:10:06.600 I mean, it's still too early to tell if the 0:10:06.679 --> 0:10:10.280 ongoing boycott campaigns are going to last or if there's 0:10:10.280 --> 0:10:13.440 a way for these companies to regain customers' trust. 0:10:13.679 --> 0:10:14.880 In the Middle East. 0:10:16.480 --> 0:10:18.880 There have been boycott campaigns in the past that had 0:10:19.080 --> 0:10:22.480 gradually waned after the conflict was over and people went 0:10:22.520 --> 0:10:28.240 back to buying and consuming. But people who lived through 0:10:28.320 --> 0:10:31.960 these campaigns in the recent past feel that this time 0:10:32.000 --> 0:10:36.400 around is different. One It's been more than three months 0:10:36.400 --> 0:10:39.079 and people are still boycotting and it's a long time, 0:10:39.440 --> 0:10:41.480 and also the continuous war. 0:10:41.800 --> 0:10:43.520 Is fueling that sentiment. 0:10:46.720 --> 0:10:49.000 And the fact that unlike in the past, there's a 0:10:49.080 --> 0:10:53.240 digital footprint now and people have social media and can 0:10:53.280 --> 0:10:57.760 see hor epic scenes as they happen and they're directly 0:10:57.800 --> 0:11:01.320 correlating this with these products that they're boycotting. 0:11:01.600 --> 0:11:03.920 So it's i would say, harder to. 0:11:03.960 --> 0:11:10.000 Raise from the collective memory lean what other sectors could 0:11:10.000 --> 0:11:13.280 see their businesses affected or how could this evolve as 0:11:13.360 --> 0:11:15.640 there's no end in sight to the conflict in Gaza. 0:11:16.120 --> 0:11:19.959 Really it could be any business besides the food and 0:11:20.000 --> 0:11:24.080 beverage sectors. We've seen retail being affected. There's been calls 0:11:24.120 --> 0:11:30.120 to boycott several stores cut for the French grocer, their 0:11:30.160 --> 0:11:34.480 branches have been boycotted in the Middle East, and in 0:11:34.559 --> 0:11:39.840 speaking with Antless and professors, they're saying, really, any company 0:11:39.880 --> 0:11:45.120 associated with the US or Europe, the policies of those 0:11:45.160 --> 0:11:48.640 governments will affect how people in the Middle East or 0:11:48.679 --> 0:11:52.839 in Muslim majority countries will view these goods and how 0:11:52.880 --> 0:11:54.840 they will start consuming from now on. 0:11:55.480 --> 0:11:57.480 And we'll be watching to see how this evolves as 0:11:57.520 --> 0:11:59.640 the US and Europe have upded the pressure on Israel 0:11:59.720 --> 0:12:02.679 to the casualties in Gaza and find a longer term 0:12:02.760 --> 0:12:10.280 resolution to the conflict. Thanks to our reporters Leena rush 0:12:10.320 --> 0:12:13.280 Down here in London and Salma Elwardani in Cairo, you 0:12:13.280 --> 0:12:16.000 can read more on this story on Bloomberg dot com 0:12:16.000 --> 0:12:19.240 and on the Terminal. This special program was produced by 0:12:19.320 --> 0:12:22.600 Chris pitt Our audio engineer was Rufel Hussein. You can 0:12:22.640 --> 0:12:25.640 hear more stories like this on the Bloomberg Daybreak Europe podcast, 0:12:25.880 --> 0:12:29.600 available every weekday wherever you usually get your podcasts. I'm 0:12:29.640 --> 0:12:33.280 Stephen Carol. Thank you for listening. This is Bloomberg