Israel’s war on Gaza: Are boycotts hurting US brands?

McDonald’s has missed sales targets partly due to boycotts against its products in some parts of the world over its perceived support for Israel, the company says.

The war on Gaza “meaningfully impacted” performance in the last quarter of 2023 in some regions, company officials said on Monday. Sales growth in the Middle East, China and India stood at 0.7 percent in the quarter, far below expectations.

The fast food company is only one of several United States brands hit by boycotts and protests over their perceived support for Israel’s war on Gaza. On social media sites, lists are going around of brands accused of supporting Israel although the ties are often not clearly explained. The push is part of a larger Boycott, Divestment and Sanctions (BDS) campaign targeting Israel-friendly brands since 2005.

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Here’s a breakdown of how some brands say they’ve been hit so far:

McDonald’s

Fast food giant McDonald’s drew the ire of Israel’s critics, especially in the Middle East, when its Israel branch gave thousands of free meals to Israeli troops in October, the month the country launched its bombardment and ground offensive in Gaza, which have now killed more than 27,000 people.

Since October, campaigners have called for a boycott of the company around the world. The impact has been more pronounced in the Middle East, where at least 5 percent of McDonald’s franchises are registered. While the growth target for sales in the Middle East, India and China was set at 5.5 percent from October to December, the company achieved 0.7 percent growth — and likely saw its sales shrink in just the Middle East. Global sales grew by 3.4 percent in the same period, compared with 8.8 percent in the preceding quarter.

Franchises in Saudi Arabia, Oman, Kuwait, the United Arab Emirates, Jordan, Bahrain and Turkey issued statements distancing themselves from the free food campaign in Israel and collectively pledged aid worth $3m to Gaza.

Chief Executive Chris Kempczinski said the company is not expecting significant changes as long as the war persists. “It’s a human tragedy what’s going on, and I think that does weigh on brands like ours,” he said.

Starbucks

Last week, coffee chain Starbucks slashed its annual sales forecast after a slump in growth. The company now expects full-year sales – globally and in the US – to grow from 4 percent to 6 percent, down from its previous range of 5 percent to 7 percent.

CEO Laxman Narasimhan told journalists that Starbucks saw a “significant impact on traffic and sales” in the Middle East due to the war in Gaza. Sales also slowed in the US, where protesters have campaigned against the Seattle-based company, calling for it to take a stand against Israel.

Starbucks’s troubles started after Starbucks Workers United, composed of thousands of baristas across more than 360 US cafes, showed support for Palestinians in a post on X days after the Gaza war broke out. The post was deleted less than an hour later.

Starbucks sued the union in an Iowa court for trademark infringement, asking the union to stop using its name and a similar logo. The post reflected “support for Hamas” and had badly damaged the company’s reputation, Starbucks said in the suit, adding that it had received more than 1,000 complaint calls. The company also said some of its cafes were vandalised.

The union countersued, asking a federal court in Pennsylvania to rule that it may continue to use the logo. It also accused Starbucks of defamation.

Both sides are engaged in ongoing, fraught negotiations on labour issues with the union demanding better pay and more consistent scheduling for workers.

Meanwhile, many people in Indonesia, the country with the world’s largest Muslim population, have been boycotting Starbucks and McDonald’s since the start of the war.

Coca-Cola

The fizzy drinks manufacturer has long been caught in the crossfire of conflict in the Middle East. From 1967 to 1991, Coke was officially boycotted by the Arab League for building a bottling plant in Israel.

Now again, the brand’s red logo is on lists of brands being circulated for boycotts on social media channels. The company does not appear to have set off any recent triggers, but its past affiliations with Israel as well as its reputation as an American company seem to be enough.

In November, Turkey’s parliament voted to remove the drink from the shops and restaurants on its grounds. Coke’s Turkey distributor reported a 22 percent drop in sales in the last quarter of 2023.

Meanwhile, in Egypt, the boycott of Coke and other American soft drinks has fuelled the revival of a 100-year-old local soda brand, Spiro Spathis, which has seen its sales surge.

Domino’s

Domino’s, a US-based pizza maker with franchises around the world, is also facing blowback. Social media posts said Domino’s also gave free food to Israeli soldiers although there’s no evidence to support the claims.

In Asia, the brand’s same-store sales dipped by 8.9 percent in the second half of 2023, mainly because consumers in Malaysia associate it with the US, an Israeli ally, a company official said.

Malaysians have rallied in their thousands to call for an end to Israel’s war in Gaza. Prime Minister Anwar Ibrahim’s office also announced in December that all Israeli-owned, Israeli-flagged or Israel-destined ships are banned from its docks. The country has no diplomatic ties with Israel.

“It’s well publicised that American brands in Asia, and I largely talk to Malaysia in this case, have been affected by what’s happening in the Middle East right now,” Don Meij, managing director for Domino’s Pizza Enterprises, told analysts.