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

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<v Speaker 1>I'm Stephen Caroll in London. Welcome to this special presentation

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<v Speaker 1>from Bloomberg Radio. The Israel Hamas War began with the

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<v Speaker 1>October seventh attack and the largest loss of Jewish life

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<v Speaker 1>since the Holocaust. Israel's military response in Gaza has left

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<v Speaker 1>tens of thousands of people dead and sparked violence in

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<v Speaker 1>many parts of the Middle East. The conflict has upended

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<v Speaker 1>international relations, and the consequences are also being felt in

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<v Speaker 1>the business world, with some of the biggest global brands affected,

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<v Speaker 1>driven by anger against the United States and some European

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<v Speaker 1>countries for their support of Israel. Businesses like Starbucks, McDonald's

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<v Speaker 1>and Zara have been targeted by protests and boycott calls.

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<v Speaker 1>The campaigns have spread online in videos like those you've

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<v Speaker 1>just heard. Some companies have seen their sales hit. Others

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<v Speaker 1>have faced pr ordeals issuing public statements about their political neutrality.

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<v Speaker 1>As consumers in the Middle East of elsewhere switch their

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<v Speaker 1>spending habits, there have been winners and losers. Bloomberg has

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<v Speaker 1>been investigating the extent an effect of these changes across

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<v Speaker 1>the Middle East and to discuss I'm joined by our

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<v Speaker 1>reporters Sama Elwardani in Cairo and Lena Rashdan normally based

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<v Speaker 1>in Dubai, but here with me in the London studio Leane,

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<v Speaker 1>I'd like to start with you. Can you talk us

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<v Speaker 1>through the scale of these boycotts, which companies are being

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<v Speaker 1>targeted and why, Stephen.

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<v Speaker 2>The key movement to be aware of here is the

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<v Speaker 2>Palestinian led boycott, divestment sanctions. It's an almost two decade

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<v Speaker 2>old movement that protests international support for Israel's actions in

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<v Speaker 2>Palastinian territories and advocates applying pressure on Israel to comply

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<v Speaker 2>with international law through targeting certain businesses and institutions accused

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<v Speaker 2>of supporting Israel. So I'm seeing this ever since October seven.

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<v Speaker 2>The companies that have been hit the most. One of

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<v Speaker 2>them is McDonald's. Calls to boycott McDonald's happened after images

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<v Speaker 2>circulated of McDonald's branches and Israel handing meals to Israeli soldiers.

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<v Speaker 2>Starbucks entered a lawsuit against the Starbucks Workers United after

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<v Speaker 2>they made a statement in solidarity with Palestine. We have

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<v Speaker 2>Coca Cola and Pepsi. They both have some involvement with

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<v Speaker 2>manufacturing in Israel. So really, these companies that are being

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<v Speaker 2>accused of supporting violations against Palestinian rights.

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<v Speaker 1>They're being hit, yeah, And of course these companies have

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<v Speaker 1>responded to some of these claims, talking about disinformation and

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<v Speaker 1>inaccurate reports regarding their position. In the case of McDonald's,

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<v Speaker 1>for example, they're saying that the corporation is not funding

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<v Speaker 1>or supporting any governments involved in the conflicts. Starbucks also

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<v Speaker 1>issuing a statement saying they have no political agenda and

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<v Speaker 1>they don't use their profits to fund any government or

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<v Speaker 1>military operations anywhere. So the companies have been responding to

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<v Speaker 1>this as well. But what do we know about how

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<v Speaker 1>businesses are being affected by these boycott calls?

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<v Speaker 2>So from eyewitnesses and our reporters across several Middle Eastern countries,

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<v Speaker 2>we're seeing branches all over these fast food chains and

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<v Speaker 2>these cafes being almost empty, deserted. Supermarkets and restaurants are

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<v Speaker 2>no longer carrying Coca Cola or Pepsi brand, I mean

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<v Speaker 2>fizzy drinks or really any item that falls within that company.

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<v Speaker 2>And in recent weeks the McDonald's CEO it warnant that

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<v Speaker 2>his firm is seeing meaningful business impact. And we've also

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<v Speaker 2>seen that shares of Americana Restaurants International, the Middle East

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<v Speaker 2>franchise operator for KFC, Pizza Hut, Krispy Kreme and Hardy's.

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<v Speaker 2>They've declared significant plice in smid October, and a lot

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<v Speaker 2>of end lists are saying that's that the hit to

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<v Speaker 2>profits is from the boycott.

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<v Speaker 1>Okay, And of course we'll get more information from these companies.

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<v Speaker 1>We're expecting it in their next set of earnings results

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<v Speaker 1>as well. Salma, you've been speaking to some consumers who've

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<v Speaker 1>changed their spending habits as a result of these campaigns.

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<v Speaker 1>Let's listen to part of one of your conversations with

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<v Speaker 1>Sarah L. Masri, who works as a project manager in

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<v Speaker 1>a cultural organization in Egypt.

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<v Speaker 3>And look, here's why I think boycotting is important because

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<v Speaker 3>largely we're helpless. We're their closest neighbor and we are

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<v Speaker 3>supposed to be doing more, but we can't. We are

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<v Speaker 3>restricted by decisions governments are takeing them. So I believe

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<v Speaker 3>that boycotting is the only weapon of the people. It's

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<v Speaker 3>the only thing people have control of. Verry was the

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<v Speaker 3>best product for me, but when I found out it's

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<v Speaker 3>on the boycott list, I decided to boycott it and

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<v Speaker 3>started looking for alternatives.

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<v Speaker 1>Sarah Mazri there speaking to Salma Elwadani. Salma, I wonder

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<v Speaker 1>that conversation we heard from Sara there in her decision

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<v Speaker 1>to stop buying fairy how widespread our opinions like these

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<v Speaker 1>in Egypt and across the Mid Least.

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<v Speaker 4>A lot of.

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<v Speaker 5>People like Sara are turning to local alternatives since the

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<v Speaker 5>beginning of the war in protest again is Western government

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<v Speaker 5>support for Israel.

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<v Speaker 4>You can see the evidence in the streets of Cairo.

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<v Speaker 5>For example, we're the ones very very popular global fast

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<v Speaker 5>food chains and shops are largely empty. Pro Palestinian sentiment

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<v Speaker 5>has traditionally been strong in Egypt, Jordan, create and a

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<v Speaker 5>lot of countries in the Middle East, and since October,

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<v Speaker 5>Buket calls have circulated on social media, lasting dozens of

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<v Speaker 5>companies and products, prompting shoppers to shift to local alternatives.

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<v Speaker 5>I think the point that Sarah is making here is

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<v Speaker 5>very important and is being shared by a lot of

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<v Speaker 5>people here is that in this region, where there's a

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<v Speaker 5>little chance of people to take to street to the

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<v Speaker 5>streets because of the securities, the boycot can be the

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<v Speaker 5>best or even the only way to make their voices

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<v Speaker 5>hear the only thing that you can't control is where

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<v Speaker 5>I put my money. Some of the people that are

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<v Speaker 5>interviewed were also saying that joining the boycout made them

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<v Speaker 5>more conscious of the power as consumers.

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<v Speaker 4>So the supermarket trips.

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<v Speaker 5>Are now less about grabbing the favorite or even the

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<v Speaker 5>cheapest product.

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<v Speaker 4>It's more about the values behind it.

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<v Speaker 5>Consumers are becoming more mindful and conscious of the human

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<v Speaker 5>costs of the consumption and are demanding greater transparency and

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<v Speaker 5>are expecting a specific set of standards and ethics from

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<v Speaker 5>the brands they buy.

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<v Speaker 1>That's really interesting to put it in that context for us.

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<v Speaker 1>Another parts of this story are the companies who've been

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<v Speaker 1>benefiting from the boycotts of other brands. You've been speaking

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<v Speaker 1>to some of them, including a soda maker in Egypt

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<v Speaker 1>that's seen a big boost in their sales.

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<v Speaker 4>What have they told you, Yes, definitely.

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<v Speaker 5>The past three months have witnessed the rise of local brands.

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<v Speaker 5>Social media users and influencers have been using the platforms

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<v Speaker 5>to advocate and the view local product instead of Western ones.

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<v Speaker 6>And this video we will be seeing how to find

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<v Speaker 6>brands that support Palestine now that all this boycott is happening.

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<v Speaker 6>Due to the current issues. A lot of us have

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<v Speaker 6>a lot of information on what brands to boycott, but

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<v Speaker 6>not exactly what brands to support. Which brands are in

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<v Speaker 6>favor of Palestine that we can buyas alternatives to the

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<v Speaker 6>brands that we are to boycott.

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<v Speaker 4>One of the companies is Peers Pattests.

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<v Speaker 5>It's an old Egyptian company that used to have popularity

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<v Speaker 5>one hundred years ago and used to take pride as

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<v Speaker 5>the first maid and needypt soda, but then was overtaken

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<v Speaker 5>by the rise of global Western brands over the decades.

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<v Speaker 4>Now it's the opposite.

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<v Speaker 5>Since October, people took to social media to promote for

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<v Speaker 5>it and look.

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<v Speaker 4>For it everywhere they were.

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<v Speaker 5>The company was bombarded with calls from customers making orders,

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<v Speaker 5>and that's because consumers are going to restaurants and supermarkets

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<v Speaker 5>asking for Spiro or any other local soda maker.

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<v Speaker 4>And the company was saying that the sales have more

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<v Speaker 4>than triple because of that. And there's so many stories

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<v Speaker 4>like that.

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<v Speaker 1>In fact, Lean you were speaking to the founder of

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<v Speaker 1>a cafe chain in Jordan called Astrolabe about this. Starbucks

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<v Speaker 1>is a big competitor of theirs. Let's take a listen

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<v Speaker 1>to what he told you about what's happened to their

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<v Speaker 1>business since the war started.

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<v Speaker 7>Is the there was a big increase in business. We're

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<v Speaker 7>in a growth phase and we have year to year growth,

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<v Speaker 7>but after October there was even greater rise in sales.

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<v Speaker 6>What you can lutly dining Starbucks, and.

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<v Speaker 7>Of course the main reason was the boycott, because we

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<v Speaker 7>are direct competitors with Starbucks. Mainly we're present wherever Starbucks is.

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<v Speaker 7>We have a branch in downtown a man right next

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<v Speaker 7>to Starbucks water War as they.

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<v Speaker 1>Say, lean, do those like Moa Fauri see this consumer

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<v Speaker 1>shift as something that's lasting.

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<v Speaker 2>Yeah, So Farrei went on to mention that he's seeing

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<v Speaker 2>more and more interest from investors and in speaking with

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<v Speaker 2>other local coffee shops in Jordan, they're they're seeing increased

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<v Speaker 2>demand as the boycotts get more widespread with time, and

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<v Speaker 2>we're seeing several food and beverage companies coming up with

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<v Speaker 2>their own alternatives for what's on the boycott list. So owners,

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<v Speaker 2>executives and investors are viewing this as a long lasting trend.

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<v Speaker 2>These BDS lists have been around for about eighteen years,

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<v Speaker 2>but with the large death toll, it's surpassing twenty five thousand.

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<v Speaker 2>The UN has said the war has displaced eighty five

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<v Speaker 2>percent of Guzzler's residence. The intensity of the situation has

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<v Speaker 2>meant that the boycotts are being taken more seriously.

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<v Speaker 1>Yeah, absolutely, on the scale of that of course, very

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<v Speaker 1>important to remember when thinking about this part of the

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<v Speaker 1>story as well. Sama for the brands that have seen

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<v Speaker 1>their products boycotted, are they like to be able to

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<v Speaker 1>win those customers back.

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<v Speaker 5>I mean, it's still too early to tell if the

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<v Speaker 5>ongoing boycott campaigns are going to last or if there's

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<v Speaker 5>a way for these companies to regain customers' trust.

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<v Speaker 4>In the Middle East.

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<v Speaker 5>There have been boycott campaigns in the past that had

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<v Speaker 5>gradually waned after the conflict was over and people went

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<v Speaker 5>back to buying and consuming. But people who lived through

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<v Speaker 5>these campaigns in the recent past feel that this time

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<v Speaker 5>around is different. One It's been more than three months

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<v Speaker 5>and people are still boycotting and it's a long time,

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<v Speaker 5>and also the continuous war.

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<v Speaker 4>Is fueling that sentiment.

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<v Speaker 5>And the fact that unlike in the past, there's a

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<v Speaker 5>digital footprint now and people have social media and can

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<v Speaker 5>see hor epic scenes as they happen and they're directly

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<v Speaker 5>correlating this with these products that they're boycotting.

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<v Speaker 4>So it's i would say, harder to.

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<v Speaker 5>Raise from the collective memory lean what other sectors could

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<v Speaker 5>see their businesses affected or how could this evolve as

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<v Speaker 5>there's no end in sight to the conflict in Gaza.

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<v Speaker 2>Really it could be any business besides the food and

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<v Speaker 2>beverage sectors. We've seen retail being affected. There's been calls

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<v Speaker 2>to boycott several stores cut for the French grocer, their

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<v Speaker 2>branches have been boycotted in the Middle East, and in

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<v Speaker 2>speaking with Antless and professors, they're saying, really, any company

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<v Speaker 2>associated with the US or Europe, the policies of those

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<v Speaker 2>governments will affect how people in the Middle East or

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<v Speaker 2>in Muslim majority countries will view these goods and how

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<v Speaker 2>they will start consuming from now on.

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<v Speaker 1>And we'll be watching to see how this evolves as

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<v Speaker 1>the US and Europe have upded the pressure on Israel

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<v Speaker 1>to the casualties in Gaza and find a longer term

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<v Speaker 1>resolution to the conflict. Thanks to our reporters Leena rush

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<v Speaker 1>Down here in London and Salma Elwardani in Cairo, you

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<v Speaker 1>can read more on this story on Bloomberg dot com

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<v Speaker 1>and on the Terminal. This special program was produced by

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<v Speaker 1>Chris pitt Our audio engineer was Rufel Hussein. You can

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<v Speaker 1>hear more stories like this on the Bloomberg Daybreak Europe podcast,

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<v Speaker 1>available every weekday wherever you usually get your podcasts. I'm

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<v Speaker 1>Stephen Carol. Thank you for listening. This is Bloomberg