Boycotting Israel — economic activism or self-harm? – Business

In the face of the US government’s efforts to suppress dissent, student protests denouncing Israel’s genocide in Gaza are gaining momentum within prestigious American universities. Simultaneously, in Pakistan and various other Muslim nations, individuals are quietly channelling their anger by boycotting brands and products of companies linked to incriminated identities or heritage.

The protestors encamped in major US campuses are advocating for their universities to disassociate from Israel and companies backing what they perceive as a one-sided war.

Some incidents of harassment and hooliganism targeting employees, distributors, carriers and outlets of Western brands have also been reported from major cities but mostly in smaller towns in Pakistan. The increased threats and the decline in business compelled some overseas companies to scale down their operations in the country, either through the closure of outlets perceived to be vulnerable or the postponement of expansion plans.

According to market sources, McDonald’s, Pepsi, Coke, KFC, and Nestle have emerged as primary targets of consumer discontent. While these companies and their representative bodies are hesitant to disclose specific data regarding sales or volume losses, they acknowledge a noticeable decline in business since the onset of the violent conflict in Gaza in early October 2023.

Public sentiment against Israel has led to a 20-30pc sales decline and the closure of several popular Western company outlets over the past six months

Though reluctant to provide a formal statement, executives of department store chains in Pakistan have privately confirmed a shift in consumer preferences towards local alternatives for soft drinks, juices, bottled water, packaged milk, and dairy products such as butter, cheese, creams, and bread spreads.

A leading business representative for foreign firms in Pakistan attempted to underplay the significance of the shift in consumer behaviour, attributing the decline in performance to factors such as demand-suppressing inflation and the slowdown in Pakistan’s economy.

“There is demand contraction due to record-high inflation and policy rates, alongside rising energy costs and a weakened currency. This has affected the prosperity levels and employment rates, consequently impacting the performance of nearly all businesses dealing in consumer goods, restaurants and high-value items like automobiles,” he commented anonymously.

“While we lack precise data, it’s amply evident that the current challenging environment has affected both local and global brands,” he noted.

A seasoned marketing expert made intriguing observations, supported by anecdotal evidence, affirming the quiet boycott of readily recognisable Western brands in Pakistan.

Without any major political party, civil rights organisation or religious group spearheading the boycott campaign, the influence of unidentified social media activists appears to have swayed public sentiment. Their calls have prompted expressions of discontent, aiming to inflict economic repercussions on perceived propagators of war crimes and their backers.

He didn’t brush aside the impact of the overall weak economy on consumer demand. However, he noted that the heightened strain on well-known Western brands couldn’t be fully understood without considering the dimensions of public support for the Palestinian cause in the country.

There is palpable resentment over death and destruction in Gaza due to Israel’s bombing actively supported by Western governments.

“Without concrete evidence, it’s hard to dissect the decline in consumer demand. However, I am inclined to believe that the trend towards local brands in the market is largely driven by anti-West sentiments, fueled by the complicity of the West in violent Israeli aggression.”

However, he raised doubts about the sustainability of this trend. “Once the conflict subsides and the situation begins to return to normal, Pakistani consumers may revert to their previous habits. Collective memory tends to be short. People often forget and move on,” he noted.

A retail-savvy professional acknowledged an undeniable trend, citing the closure of roughly a dozen outlets of popular Western companies in the past six months, accompanied by an estimated sales decline ranging from 20 per cent to 30pc.

To fill this gap, local brands like Cola Next and Gourmet Cola have swiftly expanded their presence in the market. Meanwhile, failed brands like Master Cola are reportedly preparing to reopen their closed factories to capitalise on the rising demand for local beverages.

A franchise owner whose outlet fell victim to mob violence deplored the endangerment of lives and properties under the guise of a noble cause. “While protesting is a legitimate right, blindly following instigators with potentially ulterior motives is self-destructive. Take Coke in Pakistan, for instance. It’s a subsidiary of a Turkish company, Coca-Cola Icecek, not the US-based Coca-Cola International. Many companies assumed to be American are actually listed in the country’s stock with minimal American shareholding.”

“Furthermore, the boycott is hurting Pakistani employees all across the value chain. The reality is that wealthy corporations have the capacity to absorb losses, but Pakistani workers and suppliers may not,” he observed.

The CEO of another foreign company highlighted that beyond the demand suppression of about 10pc, it’s the harassment of employees and threats to dedicated outlets that have severely impacted his company. “We’ve had to scale down the visibility of our brand name to mitigate the risk of vandalism,” he stated.

In the process of conducting background research and gathering insights from marketeers, executives, officials and experts, a prevalent fear of being targeted by violent mobs was evident. Many were hesitant to voice their opinion, and those who did declined to be quoted, despite their valuable insights.

Officials from economic ministries had limited insight to share regarding how the government intends to deal with emerging market trends, especially in light of concerns from overseas investors and the imperative to attract new foreign direct investment to bridge the investment gap.

The boycott, divestment and sanctions movement formally commenced 19 years back, in 2005, following the International Court of Justice’s ruling that Israel’s security barriers in the West Bank contravened international law. The verdict catalysed a global initiative to highlight the Palestinian cause and advocate cessation of Israel’s apartheid policies.

It concentrated on mobilising people to refrain from purchasing Israeli goods or engaging in business with entities linked to Israel. While the campaign has gained some traction over time, its popularity surged following Israel’s deplorable actions in Gaza, intensifying anti-Israel sentiments, particularly in the Muslim world.

Published in Dawn, The Business and Finance Weekly, April 29th, 2024