• Widespread boycotts result in weaker sales for McDonald’s as the multinational corporation falls short of growth targets, particularly in the Middle East.
• Domestic alternatives, like Spiro Spathis in Egypt, gain traction potentially reducing reliance on Western goods in the Middle East.
As a result of widespread boycotting by Muslims and non-Muslims alike, multinational corporations are finding themselves in a tough spot, seeing reduced sales and progressively losing their reputations in many parts of the world. Notably, McDonald’s, Starbucks, Coca-Cola and Domino’s are among the high-profile names that have been affected by the boycotts due to their ties with Israel.
McDonald’s has recently reported weaker-than-expected sales in its fourth quarter. The company attributed this downturn to a drop in demand at its restaurants in the Middle East and predominantly Muslim countries like Indonesia and Malaysia. Despite setting a growth target of 5.5% for sales in the Middle East, India, and China during the October to December period, McDonald’s fell significantly short, achieving only 0.7% growth. It is probable that sales contracted specifically in the Middle East. The global sales picture also reflects a slowdown, with a mere 3.4% growth during the same period, marking a notable deceleration from the robust 8.8% growth witnessed in the preceding quarter.
The controversy surrounding McDonald’s intensified when its Israel branch provided free meals to Israeli troops during the Gaza conflict, sparking widespread condemnation and calls for a global boycott. The impact has been particularly pronounced in the Middle East, where at least 5% of McDonald’s franchises are registered. Despite efforts by franchises in Saudi Arabia, Oman, Kuwait, the United Arab Emirates, Jordan, Bahrain, and Turkey to distance themselves from the free food campaign and pledge aid to Gaza, the company’s sales in the region have taken a hit.
Starbucks, another global giant, has also found itself losing sales. The coffee chain slashed its annual sales forecast after experiencing a significant impact on traffic and sales, particularly in the Middle East. Starbucks Workers United, a union representing thousands of baristas in the U.S., added fuel to the fire by expressing support for Palestinians in a now-deleted post, leading to a legal battle with Starbucks.
Coca-Cola, no stranger to controversy in the Middle East, has once again found its brand on social media boycott lists. The company’s past affiliations with Israel and its American identity have fueled the calls for a boycott. In Turkey, the parliament voted to remove Coca-Cola from shops and restaurants on its grounds, resulting in a reported 22% drop in sales for the last quarter of 2023.
In Egypt, the boycott of Coca-Cola and other American soft drinks has spurred the resurgence of Spiro Spathis, a century-old local soda brand. The brand has experienced a significant surge in sales amid the consumer shift away from American beverages. This is an interesting development it has the potential to contribute to reduced dependence on American and Western goods in the region. When consumers actively choose local alternatives over foreign products, it can influence market dynamics and promote the growth of domestic industries.
While these shifts may not be formalized protectionist policies imposed by governments, they do indicate a growing awareness and desire among consumers to support local businesses. This trend could lead to increased self-sufficiency and a diversified marketplace in the Middle East, reducing reliance on imports from American and Western companies. And this should be a desirable long-term goal for Muslim countries as it reduces the leverage that Israel’s supporters have over many Muslim countries.
