Java Chip Frappuccino. Mango Dragonfruit Refresher. Iced White Chocolate Mocha. Sydney-based food blogger Wala Abu Eid has built a huge following on Instagram by posting homemade recipe videos of Starbucks classics to her 240,000 followers.
The aim is not to save money by making a tasty drink himself, but to avoid Western brands that Abu Eid says support Israel's war on Gaza.
“Boycott Starbucks for supporting the genocide in Gaza,” Abu Eid urged his viewers. clip Starting in December 2023. “Starbucks has lost $11 billion worldwide due to the boycott. Let's keep the boycott going!”
The boycotts, which stem from a legal battle the coffee chain had with a labor union over pro-Palestinian social media posts, have had real-world consequences: In mid-August, Starbucks fired Lakshman Narasimhan as CEO after a year and a half in the job amid a plummeting sales due to customer boycotts over Israel.
At the time it was announced that former Chipotle CEO Brian Niccol would take over, Starbucks shares were trading down 20% in 2024. In May, Starbucks reported a 15% drop in net income (to $772 million) compared to the same period last year.
Starbucks' business has been hardest hit in the Middle East, where the company said it experienced a “significant impact on customer traffic and sales” in late January.
In March, Starbucks' Middle East franchise, Alshaya Group, laid off more than 2,000 employees, or 4% of its workforce, as a result of sluggish sales and “ongoing difficult trading conditions” due to the boycott.
In May, Starbucks' Malaysian operation, run by Kuala Lumpur-based investment firm Berjaya Food Berhad, reported a third consecutive year of declining revenue at its 411 licensed stores, which the company blamed on the ongoing boycott. Revenues fall by 50% In the first quarter of this year.
Starbucks is just one of many Western brands to have seen its revenue hit by boycotts and protests over its perceived support for Israel. list There are opinions floating around about brands that should be blacklisted because they support Israel.
Consumer boycotts have squeezed profits, particularly in Muslim-majority countries such as Egypt, Indonesia, Saudi Arabia, Kuwait and Pakistan, as consumers shun brands seen as pro-Israel, including Coca-Cola, L'Oreal, KFC, McDonald's and Pizza Hut.
Financial Times Reported Americana Restaurants, which operates major US food chains across the Middle East including KFC, Pizza Hut and Krispy Kreme, reported a 40% drop in profits in the second quarter of this year.
At the start of 2024, McDonald's reported lower-than-expected quarterly sales for the first time in nearly four years due to weak demand at restaurants in Muslim-majority countries such as the Middle East, Indonesia and Malaysia.
The trend continued in the burger chain's second-quarter earnings report in July, when CEO Chris Kempczinski said: attention The company said 5% of its 40,000 stores are in the Middle East and that they “continue to be adversely affected by the conflict in the Middle East.”
After McDonald's Israel announced it would provide 100,000 free meals to Israeli security forces and rescue workers, the chain's sales took a further hit after the pro-Palestinian Boycott, Divestment and Sanctions (BDS) movement called for a global boycott of the burger giant.
However, McDonald's headquarters distanced itself from the actions of its Israeli operations. Condemned Boycott backlash against “misinformation.”
McDonald's franchisees in the Middle East have gone a step further and made a joint pledge. $3 million To support the Palestinians.
“We pray to Almighty God to protect our beloved country and all Arab and Islamic countries from all evil and hatred,” it said. Tweet Post McDonald's Oman operations had pledged $100,000 to Gaza.
The BDS movement, which began in 2005, urges consumers to change their buying habits from Israeli companies, while also urging local and national governments to boycott Israeli products and government.
The anti-Israel movement was inspired by South Africa's widespread anti-apartheid boycott movement, which helped end white rule in 1994.
There's no doubt that the global economic boycott is impacting corporate earnings, but precise, quantitative figures for the decline remain difficult to gauge, even among Wall Street analysts.
Boycotts are “very difficult to verify and quantify” [but] That's definitely something investors are thinking about these days.” said Danilo Gargiulo, senior research analyst at investment firm AB Bernstein.
Gargiulo added that multinational companies in the spotlight often try to avoid lengthy comments to quell the furor surrounding such boycotts. “The last thing they want to do is reveal the impact and have further action taken against their brands,” he said. said.
The current global economic boycott movement is different from others in its scope and intensity: Feverish waves of consumer anger and the boycotts that follow them usually tend to be short-lived, Michael Barnett, a professor of management and international business at Rutgers Business School, told The Post.
“People often have short memories. Almost every day a new problem arises, and concerns about yesterday's news fade away. Old habits and desires begin to outweigh lingering concerns,” he said.
The American clothing brand Abercrombie & Fitch is a good example of a boycott that erupted online following accusations such as: “Brand discrimination” The company was on the brink of bankruptcy in the 2010s, but by 2023 its stock price had risen 285% and it had emerged as a retail giant.
Barnett noted that a boycott of Israel could permanently change consumer habits in some places.
Egypt, for example, experienced this phenomenon firsthand after the Arab League's boycott of Coca-Cola. 1967 to 1991 A boycott was started in 1920 by the Egyptian government to prevent the construction of manufacturing plants in neighboring Israel. First in history Soda drinks.
Critics of BDS charge that the movement unfairly targets Israel and, as a result, damages American brands that do business with Israel in any way. Some US states, including Texas, Ohio, Florida, Georgia, Pennsylvania and Colorado, have gone so far as to enact anti-BDS laws that make boycotting Israel illegal.
In 2016, former New York Governor Andrew Cuomo signed an executive order directing state agencies to stop doing business with any institutions or companies that support the BDS movement. “If you boycott Israel, New York will boycott you,” he said. said At the time he announced his new policy.
Cuomo's move is backed by many. “We should find ways to support and protect American businesses that are being attacked by anti-Semites abroad,” Richard Goldberg, a senior adviser to the Foundation for Defense of Democracies who specializes in US anti-boycott law, told The Washington Post.
As the war in Gaza continues, many Western brands in Middle Eastern markets with real (or fictitious) ties to Israel expect business to stall or at best falter. “As long as this war continues, we don’t see any significant improvement. [in the Middle East markets] “What's happening right now is a human tragedy and it's a burden for brands like ours,” McDonald's CEO Kempczinski told investors in February.
Some experts, such as Strive Asset Management co-founder Anson Frerichs, suggest more time is needed to determine whether the boycott of Israel will have a significant impact on the long-term cash flows of brands that do business with Israel.
“We want to see the trend actually continue for probably two or three quarters before we can say this boycott has actually been successful,” he said.
While the consumer boycott tide shows little sign of abating, corporate-level discussions have also begun among boards and executives about the merits of doing business with Israel.
In May, Barclays' annual general meeting was disrupted by anti-Israel protesters, and then in August the bank announced plans to withdraw from an Israeli bond auction, largely due to ongoing calls for a boycott of the bank over its ties to Israel and its defense suppliers.
Meanwhile, at Amazon, a shareholder proposal submitted for a 2024 proxy vote questions the world's largest retailer's ties to the Jewish state, stating that among the government customers served by Amazon Web Services (AWS) is the Israeli government, which “uses AWS to support an apartheid regime where Palestinians are surveilled, illegally detained, and tortured.”
As the war in Gaza enters its second year next month, efforts to influence and infiltrate the corporate governance system are likely to continue.
As is already beginning to happen, the ESG and DEI metrics that have captured the attention of shareholder activists over the past decade may soon be replaced by an equally obsessive focus on BDS and Israel. This is isolation as a form of “socially responsible investing” and, as the dismal performance of DEI-focused companies suggests, it is always the bottom line and shareholders that ultimately pay the price.
Jonathan Harounoff is the author of the upcoming book “Unveiled: Inside Iran's #WomenLifeFreedom Revolt.”
