I'm Stephen Caroll in London. Welcome to this special presentation from Bloomberg Radio. The Israel Hamas War began with the October seventh attack and the largest loss of Jewish life since the Holocaust. Israel's military response in Gaza has left tens of thousands of people dead and sparked violence in
many parts of the Middle East. The conflict has upended international relations, and the consequences are also being felt in the business world, with some of the biggest global brands affected, driven by anger against the United States and some European countries for their support of Israel. Businesses like Starbucks, McDonald's and Zara have been targeted by protests and boycott calls. The campaigns have spread online in videos like those you've
just heard. Some companies have seen their sales hit. Others have faced pr ordeals issuing public statements about their political neutrality. As consumers in the Middle East of elsewhere switch their
spending habits, there have been winners and losers. Bloomberg has been investigating the extent an effect of these changes across the Middle East and to discuss I'm joined by our reporters Sama Elwardani in Cairo and Lena Rashdan normally based in Dubai, but here with me in the London studio Leane, I'd like to start with you. Can you talk us through the scale of these boycotts, which companies are being targeted and why, Stephen.
The key movement to be aware of here is the Palestinian led boycott, divestment sanctions. It's an almost two decade old movement that protests international support for Israel's actions in Palastinian territories and advocates applying pressure on Israel to comply with international law through targeting certain businesses and institutions accused of supporting Israel. So I'm seeing this ever since October seven. The companies that have been hit the most. One of
them is McDonald's. Calls to boycott McDonald's happened after images circulated of McDonald's branches and Israel handing meals to Israeli soldiers. Starbucks entered a lawsuit against the Starbucks Workers United after they made a statement in solidarity with Palestine. We have Coca Cola and Pepsi. They both have some involvement with manufacturing in Israel. So really, these companies that are being accused of supporting violations against Palestinian rights.
They're being hit, yeah, And of course these companies have responded to some of these claims, talking about disinformation and inaccurate reports regarding their position. In the case of McDonald's, for example, they're saying that the corporation is not funding or supporting any governments involved in the conflicts. Starbucks also issuing a statement saying they have no political agenda and they don't use their profits to fund any government or
military operations anywhere. So the companies have been responding to this as well. But what do we know about how businesses are being affected by these boycott calls?
So from eyewitnesses and our reporters across several Middle Eastern countries, we're seeing branches all over these fast food chains and these cafes being almost empty, deserted. Supermarkets and restaurants are no longer carrying Coca Cola or Pepsi brand, I mean fizzy drinks or really any item that falls within that company. And in recent weeks the McDonald's CEO it warnant that
his firm is seeing meaningful business impact. And we've also seen that shares of Americana Restaurants International, the Middle East franchise operator for KFC, Pizza Hut, Krispy Kreme and Hardy's. They've declared significant plice in smid October, and a lot of end lists are saying that's that the hit to profits is from the boycott.
Okay, And of course we'll get more information from these companies. We're expecting it in their next set of earnings results as well. Salma, you've been speaking to some consumers who've changed their spending habits as a result of these campaigns. Let's listen to part of one of your conversations with Sarah L. Masri, who works as a project manager in a cultural organization in Egypt.
And look, here's why I think boycotting is important because largely we're helpless. We're their closest neighbor and we are supposed to be doing more, but we can't. We are restricted by decisions governments are takeing them. So I believe that boycotting is the only weapon of the people. It's the only thing people have control of. Verry was the best product for me, but when I found out it's on the boycott list, I decided to boycott it and started looking for alternatives.
Sarah Mazri there speaking to Salma Elwadani. Salma, I wonder that conversation we heard from Sara there in her decision to stop buying fairy how widespread our opinions like these in Egypt and across the Mid Least.
A lot of.
People like Sara are turning to local alternatives since the beginning of the war in protest again is Western government support for Israel.
You can see the evidence in the streets of Cairo.
For example, we're the ones very very popular global fast food chains and shops are largely empty. Pro Palestinian sentiment has traditionally been strong in Egypt, Jordan, create and a lot of countries in the Middle East, and since October, Buket calls have circulated on social media, lasting dozens of companies and products, prompting shoppers to shift to local alternatives.
I think the point that Sarah is making here is very important and is being shared by a lot of people here is that in this region, where there's a little chance of people to take to street to the streets because of the securities, the boycot can be the best or even the only way to make their voices hear the only thing that you can't control is where I put my money. Some of the people that are interviewed were also saying that joining the boycout made them more conscious of the power as consumers.
So the supermarket trips.
Are now less about grabbing the favorite or even the cheapest product.
It's more about the values behind it.
Consumers are becoming more mindful and conscious of the human costs of the consumption and are demanding greater transparency and are expecting a specific set of standards and ethics from the brands they buy.
That's really interesting to put it in that context for us. Another parts of this story are the companies who've been benefiting from the boycotts of other brands. You've been speaking to some of them, including a soda maker in Egypt that's seen a big boost in their sales.
What have they told you, Yes, definitely.
The past three months have witnessed the rise of local brands. Social media users and influencers have been using the platforms to advocate and the view local product instead of Western ones.
And this video we will be seeing how to find brands that support Palestine now that all this boycott is happening. Due to the current issues. A lot of us have a lot of information on what brands to boycott, but not exactly what brands to support. Which brands are in favor of Palestine that we can buyas alternatives to the brands that we are to boycott.
One of the companies is Peers Pattests.
It's an old Egyptian company that used to have popularity one hundred years ago and used to take pride as the first maid and needypt soda, but then was overtaken by the rise of global Western brands over the decades.
Now it's the opposite.
Since October, people took to social media to promote for it and look.
For it everywhere they were.
The company was bombarded with calls from customers making orders, and that's because consumers are going to restaurants and supermarkets asking for Spiro or any other local soda maker.
And the company was saying that the sales have more than triple because of that. And there's so many stories like that.
In fact, Lean you were speaking to the founder of a cafe chain in Jordan called Astrolabe about this. Starbucks is a big competitor of theirs. Let's take a listen to what he told you about what's happened to their business since the war started.
Is the there was a big increase in business. We're in a growth phase and we have year to year growth, but after October there was even greater rise in sales.
What you can lutly dining Starbucks, and.
Of course the main reason was the boycott, because we are direct competitors with Starbucks. Mainly we're present wherever Starbucks is. We have a branch in downtown a man right next to Starbucks water War as they.
Say, lean, do those like Moa Fauri see this consumer shift as something that's lasting.
Yeah, So Farrei went on to mention that he's seeing more and more interest from investors and in speaking with other local coffee shops in Jordan, they're they're seeing increased demand as the boycotts get more widespread with time, and we're seeing several food and beverage companies coming up with their own alternatives for what's on the boycott list. So owners, executives and investors are viewing this as a long lasting trend.
These BDS lists have been around for about eighteen years, but with the large death toll, it's surpassing twenty five thousand. The UN has said the war has displaced eighty five percent of Guzzler's residence. The intensity of the situation has meant that the boycotts are being taken more seriously.
Yeah, absolutely, on the scale of that of course, very important to remember when thinking about this part of the story as well. Sama for the brands that have seen their products boycotted, are they like to be able to win those customers back.
I mean, it's still too early to tell if the ongoing boycott campaigns are going to last or if there's a way for these companies to regain customers' trust.
In the Middle East.
There have been boycott campaigns in the past that had gradually waned after the conflict was over and people went back to buying and consuming. But people who lived through these campaigns in the recent past feel that this time around is different. One It's been more than three months and people are still boycotting and it's a long time, and also the continuous war.
Is fueling that sentiment.
And the fact that unlike in the past, there's a digital footprint now and people have social media and can see hor epic scenes as they happen and they're directly correlating this with these products that they're boycotting.
So it's i would say, harder to.
Raise from the collective memory lean what other sectors could see their businesses affected or how could this evolve as there's no end in sight to the conflict in Gaza.
Really it could be any business besides the food and
beverage sectors. We've seen retail being affected. There's been calls to boycott several stores cut for the French grocer, their branches have been boycotted in the Middle East, and in speaking with Antless and professors, they're saying, really, any company associated with the US or Europe, the policies of those governments will affect how people in the Middle East or in Muslim majority countries will view these goods and how they will start consuming from now on.
And we'll be watching to see how this evolves as the US and Europe have upded the pressure on Israel to the casualties in Gaza and find a longer term resolution to the conflict. Thanks to our reporters Leena rush Down here in London and Salma Elwardani in Cairo, you can read more on this story on Bloomberg dot com and on the Terminal. This special program was produced by Chris pitt Our audio engineer was Rufel Hussein. You can hear more stories like this on the Bloomberg Daybreak Europe podcast,
available every weekday wherever you usually get your podcasts. I'm Stephen Carol. Thank you for listening. This is Bloomberg