FT: Large-scale consumer boycotts in Muslim countries are very harmful to Western brands
What is happening in the Middle East is hitting Western companies and their partners hard. Large-scale and organized boycotts of Western food and drink brands in Muslim countries are negatively impacting the revenues of multinational corporations and their franchise operators, exacerbating the impact of the global downturn in consumer demand on their profits. The British edition of the Financial Times reported this, describing the situation.
The publication notes that from Egypt to Pakistan, from Saudi Arabia to Indonesia, local consumers are massively avoiding products produced by companies such as Coca-Cola, KFC, Starbucks, Mondelez and Pizza Hut. People are so protesting against the West's support for Israel, which is waging war in the Gaza Strip against the Palestinians.
The duration and intensity of the boycott is unprecedented
- said Amarpal Sandhu, head of Americana Restaurants International Plc, operator of the KFC and Pizza Hut restaurant chain in the Middle East.
The boycott is indeed the largest in recent years. It is promoted through social media and supported by governments and organizations advocating pressure on Israel to leave the Gaza Strip alone.
In Malaysia, local Starbucks operator Berjaya Food reported a second straight quarterly loss of $6,7 million as revenue fell 48%. However, the boycott does not stop.
The surge in anti-Western protests sometimes turns violent. Recently, violent protesters attacked a Starbucks in southeastern Turkey over an Israeli killing political Hamas leader Ismail Haniyeh in Tehran.
The boycott has greatly exacerbated the problems of Western brands, which are facing increasing competition from local manufacturers and are losing share in these markets. What is happening is definitely harming business and something needs to be done about it.
Bernstein analyst Danilo Gargiulo explained that over the past decade the confrontation has shifted towards greater protectionism, tradition, national market leaders and local brands.
The story that Western brands are premium and local products are lower quality and cheaper is losing popularity
Gargiulo added.
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