As members of the public, it is common to rely on global institutions such as the United Nations and the International Court of Justice to uphold international law and address humanitarian issues, especially those involving vulnerable populations. However, there is a perception that these organisations, along with world leaders, have not adequately addressed the ongoing situation in Gaza, despite calls for condemnation and internal investigations. In response, some consumers choose to express their stance by adjusting their spending habits to reflect their solidarity with the Palestinian people.
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What is Happening in The Middle East?
It has been ten months since the Israeli assault on Gaza, which followed Hamas’ attack on a music festival in Israel on October 7, 2023. This Israeli bombardment appears to have triggered a series of reactions among neighboring Middle Eastern nations. In April, Israel targeted the Iranian embassy complex in Damascus, Syria. In retaliation, Iran launched a series of drone and missile attacks against Israeli positions, with many of these intercepted by Israel’s missile defense systems, as reported by Vox.
More recently, Israel carried out a covert operation in Tehran, killing Hamas leader Ismail Haniyeh with an explosive device smuggled into his guesthouse during a presidential inauguration. According to the New York Times, the bomb was detonated remotely once it was confirmed that Haniyeh was in his room. As of now, Iran has yet to respond, but political tensions in the region continue to escalate.
BDS, Burgers & Boycotts
There has been widespread condemnation and numerous calls for a ceasefire, yet these often yield minimal results. As a result, consumers are boycotting food and beverage companies including Coca-Cola, KFC, McDonalds, Domino’s Pizza and Starbucks. This consumer protest aligns with the Boycott, Divestment, Sanctions (BDS) movement, which urges individuals to avoid engaging with entities linked to Israel until it adheres to international law and ceases its oppression of Palestinians. Omar Barghouti, a founder of the BDS Movement, characterises this call as a boycott of products and services from companies involved in Israel’s apartheid practices, colonial settlements, war crimes against Palestinians, and the ongoing crisis affecting 2.3 million Palestinians in Gaza.
Do we care enough about Palestine to #BoycottCocaCola?
Coca-Cola has a factory in Atarot. Atarot is an illegal Israeli settlement built on land stolen from Palestinians. Lets all make a pledge for Palestine to boycott Coca-Cola from Ramadan and for life!
Sign the pledge here… pic.twitter.com/hsI7I8AhjI
— Friends of Al Aqsa (@FriendsofAlAqsa) February 15, 2024
In the case of Coca-Cola, AJPlus reports that the alternative cola movement has gained traction in Asian and Southeast Asian countries such as Bangladesh, Pakistan, Malaysia, and Indonesia, where independent soda sales are surging due to consumer solidarity with Palestinians. The boycott of Coca-Cola has roots in Atarot, an Israeli settlement in the occupied West Bank, which is considered illegal under international law. This settlement houses a facility that distributes Coca-Cola products. Critics argue that Israel profits from occupation and apartheid through this arrangement. As a result, Coca-Cola has lost at least 23 percent of its market share. The rise of alternative sodas and drinks not only competes with Coca-Cola’s monopoly on the market but allows smaller, Independent and local brands to gain a profit as consumers wish to invest in brands that align with their political beliefs.
Aside from Coca-Cola, food and beverage companies across the spectrum have faced some form of backlash since the start of the bombardment in October 2023. The first was with social media posts that showcased McDonald’s Israeli branch donating food to IDF (Israeli Defence Force) soldiers. This caused a wave of criticism on social media as users voiced concern for Palestinians who were suffering from a lack of food and basic necessities against images of soldiers posing with packaged food.
McDonald’s is donating thousands of free meals to the Israel Defence Forces and citizens after Hamas attacks. It’s donating 4000 meals daily to the IDF and citizens. Moreover offering a 50% discount for soldiers/security forces who come to restaurants#Israel #Isreal #Palestine pic.twitter.com/MTJbCp9fyw
— Bilal ur Rehman (@BilalurRehman17) October 13, 2023
In a last-ditch effort to manage public backlash, McDonald’s, Starbucks, and Domino’s later issued statements clarifying that their companies had no direct ties to Israel and that the food donations were made by individual franchisees, thereby absolving the corporate entities of responsibility. Despite these “clarifications”, the damage was already done, leading to a widespread boycott of brands perceived as having Zionist affiliations or Israeli connections, a movement significantly amplified by BDS and social media.
Israeli franchisee owner Omri Padan announced that the company would acquire 225 of its franchisee restaurants in Israel following a downturn in sales since October 7 stating that he would “had signed an agreement to sell the Israeli outposts back to McDonald’s Corporation.” “The most pronounced impact that we’re seeing is in the Middle East and in Muslim countries like Indonesia and Malaysia,” McDonald’s CEO Chris Kempczinski said in an earnings call according to Al Jazeera.
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Shifting Consumer Behavior In Southeast Asia
While Starbucks and Mcdonald’s faced sizeable losses, there is something to be said about why Starbucks was impacted the way it was when compared to McDonalds. Fast food chains like McDonald’s are deeply embedded in everyday life, with their affordable prices and familiar flavors making it challenging for consumers to turn away from their offerings. In contrast, Starbucks represents a caffeinated luxury; with numerous coffee shops available on nearly every corner, finding an alternative is relatively simple compared to breaking the habit of craving McDonald’s signature salted fries and nuggets. Consequently, choosing to boycott Starbucks is a more straightforward decision particularly when factoring alternative options and competitive pricing. This shift in consumer behavior contributed to Starbucks’ declining sales, leading to the dismissal of Starbucks CEO Laxman Narasimhan amid declining sales and mounting pressure from activist investors.
Additionally, KFC also faced numerous branch closures across Southeast Asia. According to The Straits Times, KFC has temporarily closed roughly 20 percent of its locations in Malaysia due to a sustained boycott of US-affiliated businesses linked to the ongoing Gaza conflict. The Nanyang Siang Pau Chinese-language daily reports that QSR Brands, which manages the KFC franchise in Malaysia, has suspended operations at 108 restaurants across the country, as confirmed by Google Maps data.
Consumers in Southeast Asia are becoming increasingly aware of global political issues that influence the purchasing choices they make. Recent escalations in the Israeli-Palestinian conflict, particularly Israel’s military actions in Gaza, have heightened global attention and outrage. The international community, including many Southeast Asian countries, have expressed strong condemnation of the humanitarian impact of Israel’s actions in Gaza, including civilian casualties and infrastructure damage. Southeast Asian nations such as Indonesia and Malaysia with significant Muslim populations or strong pro-Palestinian sentiments are particularly vocal in their support for the Palestinian cause and critical of brands perceived to support Israeli policies.
Applications like the “No Thanks” App, are a new phenomenon amongst Malaysians and Asian consumers as it helps them filter out products and brands with Israeli ties by scanning barcodes and searching for products that are listed for the boycott movement which as the app describes “makes your shopping easy when you know what brand you don’t want to buy, and the app helps you with that, just scan the product and the app will tell you.”
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Shravani Mali, Consumer Analyst at GlobalData, comments: “Several well-known brands have been negatively impacted by consumers boycotting companies they believe to be pro-Palestine or pro-Israel. This can be substantiated by a GlobalData Consumer Survey, wherein 48 percent of respondents across the globe strongly/somewhat agree that they are boycotting products from certain brands due to recent wars and conflicts. However, this figure increases substantially to over two-thirds in Malaysia (70 percent) and Indonesia (69 percent).”
Geopolitical tensions, such as the Israel–Hamas war, continue to pose a significant risk factor for brands. In the age of social media, brand boycotts over geopolitical tensions are becoming increasingly common. Moreover, Southeast consumers are more likely to boycott brands than consumers in most other markets, says GlobalData, a leading data and analytics company.
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Deepak Nautiyal, Consumer and Retail Commercial Director, APAC and Middle East at GlobalData, adds: “The ongoing war in Palestine holds significant implications for Western foodservice companies. For instance, earlier this year, Americana Restaurants International, a food and beverage company operating brands such as KFC, Pizza Hut, and Krispy Kreme with approximately 2,500 locations throughout the Middle East and North Africa, laid off about 100 employees and reported a 15 percent decline in revenue for the last quarter of 2023.”
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The boycotts have resulted in significant revenue losses for affected brands, compelling them to reassess their market strategies and public relations approaches in the region. Southeast Asia’s diverse consumer base means that companies must carefully manage their brand image and political associations to avoid alienating large segments of their customer base in Southeast Asia. Furthermore, boycotts and public protests can strain diplomatic relations between Southeast Asian countries and Western nations, influencing broader geopolitical dynamics. While there is some criticism faced by regional boycotts which state that they do not have a huge impact on the actual outcome of a ceasefire and instead affect the livelihoods of local workers, there is a need for brands to navigate complex geopolitical landscapes and regional sentiments by demonstrating corporate social responsibility and ethical stances on international issues to regain lost consumer trust and support.
This article contains quotes provided by Shravani Mali, Consumer Analyst at GlobalData and Deepak Nautiyal, Consumer and Retail Commercial Director, APAC and Middle East at GlobalData.
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