Java Chip Frappuccinos. Dragon Fruit Mango Freshener. White chocolate iced mochas.
Sydney-based food blogger Walla Abu-Eid has amassed a huge Instagram following by posting viral recipe videos of homemade Starbucks staples to her 240,000 followers.
The goal is not to save money by making their own delicious drinks, but to avoid Western brands, which Abu-Eid says support Israel’s war on Gaza.
“Boycott Starbucks for Supporting Genocide in Gaza,” Abu-Eid instructs viewers in one clip of December 2023. “Starbucks loses $11 billion worldwide to boycotts – let’s keep it going!”
These boycotts, stemming from a legal dispute the coffee shop chain had with labor unions over a pro-Palestinian post on social media, have real-world repercussions.
In mid-August, Starbucks ousted Laxman Narasimhan as its CEO for a year and a half in his role amid falling sales exacerbated by customer boycotts in Israel.
Starbucks shares fell 20% in 2024 before former Chipotle CEO Brian Niccol was announced as a replacement.
In May, Starbucks reported a 15% drop in net income (to $772 million) compared to this time last year.
Nowhere has Starbucks’ business been hurt more than in the Middle East, where it described a “significant impact on traffic and sales” in late January.
In March, Starbucks franchisee in the Middle East, the Alshaya Group, laid off more than 2,000 employees, or 4 percent of its workforce, as a result of boycotts that accelerated sales declines and “continued challenging business conditions.”
In May, Starbucks’ Malaysian operation, run by Kuala Lumpur-based investment firm Berjaya Food Berhad, reported a third consecutive decline in sales at its 411 licensed outlets, which it “attributed to the ongoing boycott” and saw nearly 50% drop in income in the first quarter of the year.
Starbucks is just one of many Western brands that are experiencing big sales following boycotts and protests over their perceived support for Israel.
On social media sites, lists circulated brands that should be blacklisted for their support of Israel.
Especially in Muslim-majority countries such as Egypt, Indonesia, Saudi Arabia, Kuwait and Pakistan, consumers shunned alleged pro-Israel brands such as Coca-Cola, L’Oréal, KFC, McDonald’s and Pizza Hut – and consumer boycotts gained momentum . take a bite out of the profits.
Financial Times reported that Americana Restaurants – which operates major US food chains across the Middle East including KFC, Pizza Hut and Krispy Kreme – saw profits fall 40% in the second quarter of this year.
In early 2024, McDonald’s reported its first quarterly sales shortfall in nearly four years, driven by a slump in demand at stores in the Middle East and Muslim-majority countries such as Indonesia and Malaysia.
That trend continued in the burger chain’s second-quarter earnings in July, where CEO Chris Kempczinski noted that “we continue to be adversely affected by the war in the Middle East,” where 5% of the company’s 40,000 stores are located.
McDonald’s sales were further damaged after the pro-Palestinian Boycott, Divestment and Sanctions (BDS) movement called for a global boycott of the burger giant after McDonald’s Israel announced it would give away 100,000 free meals to Israeli security and rescue forces.
But McDonald’s headquarters distanced itself from the actions of its Israeli venture and blamed the backlash on the boycott about “disinformation”.
McDonald’s franchisees in the Middle East went one step further together pledged $3 million to support the Palestinians.
“We ask Almighty God to protect our beloved country and all Arab and Muslim countries from all evil and hatred,” the statement said. tweet posted to the McDonald’s Oman store, which pledged $100,000 to Gaza.
Started in 2005, encourages the BDS movement consumers to shift their purchasing habits away from Israeli companies while encouraging local and national governments to boycott Israeli products and their government.
The anti-Israel movement is inspired by the large-scale boycott against apartheid in South Africa that helped end white rule in 1994.
While global economic boycotts undoubtedly affect corporate profits, the precise and quantifiable numbers of these declines are still difficult to measure among Wall Street analysts.
Boycotts are “very difficult to verify or quantify, [but] it’s definitely something investors are thinking about these days,” Danilo Gargiulo saidsenior research analyst at investment company AB Bernstein.
Gargiulo added that in most cases, the multinationals that have come under the spotlight have tried to avoid lengthy comments to limit the noise surrounding such boycotts. “The last thing you want to do is discover the impact and potentially take further action against their brands,” he said.
The current global economic boycott movement is no different in its scope and intensity from other boycott movements.
The typical bouts of consumer outrage and accompanying boycotts tend to be fleeting, Michael Barnett, a professor of management and global entrepreneurship at Rutgers Business School, told The Post.
“The public memory is usually short. New issues emerge almost daily, displacing concerns from yesterday’s news. Old habits and desires begin to outweigh lingering fears,” he said.
American clothing brand Abercrombie & Fitch is a case in point, having faced a viral boycott for being accused of “discrimination as a brand” and headed for bankruptcy in 2010—only to re-establish itself as a retail behemoth with a 285% stock price increase in 2023.
Barnett noted that Israeli boycotts could permanently change consumer habits in some geographies.
For example, Egypt experienced this phenomenon firsthand after the Arab League boycott of Coca-Cola 1967 to 1991 to build a production plant in neighboring Israel.
A wave of boycotts helped spark a tremendous revival of Spiro Spathis, founded in 1920 as the Egyptian the first ever soda drink.
Critics of BDS accuse the movement of unfairly singling out Israel and subsequently harming American brands that do business with Israel in one way or another.
Some US states have gone so far as to pass anti-BDS laws that make boycotting Israel illegal, including Texas, Ohio, Florida, Georgia, Pennsylvania, and Colorado.
In 2016, former New York Governor Andrew Cuomo signed an executive order ordering state agencies to stop doing business with institutions or companies that support the BDS movement. “If you boycott Israel, New York will boycott you,” he said at the time he announced the new policy.
Many events champion Cuomo. “We should find ways to support and defend American companies that are being attacked by anti-Semites in foreign countries,” Richard Goldberg, senior counsel at the Foundation for Defense of Democracies, who specializes in U.S. anti-boycott laws, told The Post.
As the war in Gaza continues, many Western brands in Middle Eastern markets with genuine (or apocryphal) ties to Israel expect business to decline or at best stagnate. “As long as this war lasts. . . we do not expect any significant improvement [in the Middle East markets] . . . It’s a human tragedy that’s happening, and it puts a strain on brands like ours,” McDonald’s CEO Kempczinski told investors in February.
Some experts, such as Anson Frericks, co-founder of Strive Asset Management, suggest more time is needed to determine whether Israeli boycotts have a material impact on the long-term cash flow of brands doing business with Israel.
“I would like to see that there is actually a trend going on for probably two or three quarters,” he said, “before I would say that this boycott has actually been successful.”
While the consumer boycott wave shows no sign of abating, boardrooms and executives are also beginning to discuss the benefits of doing business with Israel at the corporate level.
In May, Barclays’ annual shareholder meeting was disrupted by anti-Israel protesters. Then in August, the bank announced plans to pull out of auctions of Israeli government bonds, in part because of ongoing calls to boycott Barclays over its ties to Israel and the country’s defense suppliers.
Elsewhere at Amazon, a shareholder proposal filed for its 2024 authorization questioned the largest retailer’s ties to the Jewish state, saying that among the government customers served by Amazon Web Services (AWS) is the Israeli government, which “uses AWS to support the apartheid system.” under which Palestinians are tracked, illegally detained and tortured.
As the war in Gaza enters its second year next month, efforts to influence and infiltrate corporate governance systems are likely to continue.
As it has already begun, the ESG and DEI metrics that have so captured the attention of shareholder activists over the past decade may soon be replaced by an equally obsessive focus on BDS and Israel. It’s isolation as a form of “socially responsible investing” – and as the dismal performance of DEI-focused firms suggests, it’s the bottom line – and shareholders – who always end up paying the price.
Jonathan Harounoff is the author of the forthcoming book “Unveiled: Inside Iran’s #WomenLifeFreedom Revolt”