A sparrow and a fire are the subjects of a narrative. A small sparrow saw that there was a fire and wanted to help. She took off for a pond, put one drop of water in her beak, and soared back. Flying as close as she dared, she released the drop onto the flames. She went back for another after that, continuing the cycle endlessly. It had no effect on the fire.
A crow, perched nearby, seeing her efforts, questioned, “Why are you bothering with a single drop of water when you know it will make no difference?” The sparrow answered, “To satisfy my conscience”.
The boycott movement in Pakistan that is in support of Palestine is comparable to the sparrow's endeavors. It is completely irrelevant to what Israel does in Palestine or anywhere else. Nevertheless, notwithstanding the tiny economic impact, the boycott of Israeli goods is driven by people's conscience.
Over 41,000 Palestinians have died as a result of Israeli shelling of Gaza in the past year. Though its roots are considerably deeper, the Boycott, Divest, Sanctions (BDS) campaign was rekindled a year ago by the October 7 attacks.
The BDS movement is no more a new phenomenon than Israeli atrocities in Palestine. Boycott of brands linked with Israel or the US’s support for Israel is over two decades old.
According to a study by The Guardian, several US corporations reported a reduction in sales of between 25 and 40 percent in the 2000s. The typical suspects, including Pepsi, Burger King, Coca-Cola, and McDonald's, were the targets. Back then, KFC locations in Lebanon and Egypt were bombed and set on fire by student protestors.
Local cola producers also prospered at that time in a number of nations. In 2003, Iranian firms producing Zam Zam Cola found it difficult to meet the increasing demand for their sugar-sweetened variants of Pepsi and Coca-Cola.
Local Star Cola sales skyrocketed in the United Arab Emirates. The local substitutes for the boycotted products that have gained the greatest popularity in Pakistan during the past year are those in the carbonated beverage sector.
Boycott and cola wars
Salman Aleem, Secretary General of the All Pakistan Restaurant Association, states that indigenous brands now hold the lion's share of the restaurant sector, potentially surpassing 90 percent. Previously, Coca-Cola and Pepsi held almost 90 percent of the market share.
While acknowledging that supply chain problems still exist, he points out that consumers are requesting regional cola brands, which is forcing restaurants all throughout the nation to abide by their demands. Quice has gained market share in addition to Pakola and Cola Next, he claims. He continues, "Local brands are expanding their capacity to meet the increasing demand."
However, has the local business share actually increased? Has the parent firm been affected by the boycott? Regarding the growth in market share or capacity investments, local producers have remained silent.
Franchise fare
Fast food chains that have been hit hardest are McDonald's and KFC in Pakistan. The fast food chain expects the effects of the war to last as long as the conflict, according to its 2023 annual report. An October X post claimed that McDonald's Israel had given 100,000 free meals to Israeli forces, valued at 5 million shekels ($1.3 million). The Chicago-based McDonald's Corporation distanced itself from the action and subsequently bought back all of its Israeli restaurants.
Citing "false and defamatory statements" that it claimed had harmed its business, the local franchise in Malaysia—owned by the Saudi company Lonhorn Pte Ltd—filed a $1.3 million lawsuit against the Malaysia BDS organization. This led the main Palestinian coalition, the Palestinian BDS National Committee, which spearheads the global BDS movement, to support the global boycott efforts aimed at McDonald's. McDonald's has so been among the most impacted parties.
The massive fast-food chain operates under a franchise system, which permits individual owners to manage locations and hire employees. Pakistan is covered by this system. Compared to its BDS-targeted peers, McDonald's in Pakistan has adopted a more proactive stance by including a pop-up on the homepage of its local website that addresses concerns. It explains that SIZA Foods, a local business, owns and runs it entirely. Additionally, the pop-up informs that it has made a donation to the Edhi Foundation in support of Gaza humanitarian efforts.
SIZA Foods is part of the Lakhani group. Among the companies that are associated with the Lakahni banner are Cyber Internet, Century Paper & Board, Colgate Palmolive, and Century Insurance. These examples show that McDonald's is a part of one of the largest local conglomerates.
Additionally, KFC has been added to lists of boycotts. International owners of KFC and Pizza Hut are YUM! brands, which have made investments in businesses with Israeli roots. KFC is one of the brands that has been hurt the most globally; early this year, 108 of its 600 locations closed in Malaysia.
FMCGs and silver linings
Let’s do an exercise. Think about a soap. What is the first name that comes to your mind? Lux? Palmolive? Hey, how are you? Though perceived as local, Unilever's Lifebuoy brand is as globally recognized as brands like Dove or TRESemme.
In Pakistan, foreign fast-moving consumer goods corporations have a significant local presence in terms of employment and manufacturing. Observe any university recruitment event for P&G or Unilever; students swarm to apply because it advances their careers.
Multinational corporations hold a dominant share in the consumer arena. Let's take ice cream as an example. According to Ehsan Malik, CEO of the Pakistan Business Council, FrieslandCampina Engro's Omore and Unilever's Walls have almost an 80% market share.
Colgate-Palmolive, P&G, Unilever, and Reckitt Benckiser hold the majority of shares in the home and personal care industries. Aspirational values in Pakistan contribute to higher brand recall of foreign products, claims Mr. Malik. “The brand values are so strong and our people are aspirational in nature, so they like buying stuff that is globally recognised.”
In an interview earlier this year, Unilever CEO Amir Paracha discussed the boycott movement and stated that nearly all international businesses operating in Pakistan have been impacted, especially those in the FMCG industry. Explaining the gradient of damage, he said the food sector has been impacted the most, followed by soft drinks and consumer non-durables.
The GSB Hub published this content on 16 Oct,2024.