Big brands hit by consumer boycotts over Israel-Gaza war

Live updates: Follow the latest on Israel-Gaza Several global brands are experiencing boycotts by consumers amid allegations that they are picking the “wrong side” in the Israel-Gaza war. With McDonald's and Starbucks reporting financial results short of expectations – and acknowledging that the latest conflict has affected them – it is clear that sentiments surrounding war can hit the bottom line of global companies. The US brands – the world's biggest in their respective industries – have drawn the most fury from consumers due to their popularity and ubiquitous presence around the globe. “The more global a brand becomes, the more likely it is to be entangled in international disputes," said Paul Musgrave, an assistant professor of political science at the University of Massachusetts Amherst. "And the more picking a side comes with costs, even for the softest of products like fizzy drinks or ice cream.” Here, The National takes a look at some of the biggest corporate names that have been affected, in one way or another, by the Israel-Gaza war. The reckoning for McDonald's began in early November, shortly after one of its franchises in Israel claimed to have offered thousands of free meals to Israeli soldiers. The corporate headquarters of the world's biggest fast food chain quickly distanced itself from the issue, saying the actions of “local development licensees” were made without its “consent or approval”. That didn't stop those opposed to Israel's actions from boycotting the brand, culminating in a rare sales miss for its fiscal fourth quarter. Chicago-based McDonald's on Monday reported that sales in its international division inched up 0.7 per cent in the three months ended December 31, substantially missing a 5.5 per cent growth estimate – its first miss in almost four years – and sending its shares tumbling 4 per cent. McDonald's admitted the war “meaningfully impacted” its performance in a number of its overseas markets, from the Middle East to Indonesia, Malaysia and China. “So long as this war is going on … we're not expecting to see any significant improvement,” chief executive Chris Kempczinski said in a post-earnings call. The company did not directly address the boycotts. Global sales at Starbucks, the world's biggest coffee chain, grew 5 per cent in its fiscal first quarter, but still missed analyst estimates for a rise of nearly 7 per cent. The Seattle-based company's overseas sales recorded a 7 per cent rise – far from the more than 12 per cent expected by analysts as average spending per order fell. Starbucks seems unable to appease consumers. In December, one of its New York stores was reportedly painted with graffiti supporting Palestine and shortly afterwards the company was accused of being pro-Israel. Then, Starbucks’ Workers United posted a pro-Palestine statement on Instagram, triggering customer boycotts. Starbucks sued the union over that, demanding it stop using its name and logo, but this, in turn, led to more boycotts from those who were unhappy with the lawsuit. Chief executive Laxman Narasimhan, in its first-quarter earnings call, addressed “misperceptions about [its] position” on “events in the Middle East”, amid global boycotts. In December, Starbucks UAE unveiled a 50 per cent discount on all its products for the last two weekends of 2023. A Starbucks employee at the time admitted to The National that they had witnessed fewer customers. The food and beverage majors became involved in the war shortly after it started, when the Turkish government ordered that all their products be removed from restaurants amid their alleged support for Israel. A source from Turkey's parliament said that only Coca-Cola drinks and Nestle instant coffee were removed after public outcry, Reuters reported. The companies were widely tagged on Turkish social media at the time as among those allegedly supporting Israel's military offensive in Gaza. Atlanta-based Coca-Cola and Switzerland-based Nestlé have never addressed the allegations. The latter, however, temporarily shut down its plant in Israel in October and then reopened it a few days later, citing that it “focus[ed] on the safety of our colleagues and have taken precautionary measures”. Zara upset consumers after using statues with missing limbs surrounded by rubble in an advertising campaign in December, a move described by critics as “insensitive” who said it echoed casualties in Gaza. The campaign was swiftly condemned, with voices in the Middle East calling it “sick”, “beyond sinister” and “clearly a deliberate mock to Palestinians”. The Spanish retailer quickly pulled the campaign, and days later explained that it was conceived in July and photographed in December. It apologised for the “misunderstanding”, trying to control the damage as protesters gathered at some of their outlets. Zara, a private company, does not report its financials. Sportswear brand Puma said in December it was ceasing its sponsorship of the Israeli national football team, a move, it said, that had been planned since 2022. However, that didn't stop the critics from jumping on the German brand. Its ties with the Israel Football Association, forged in 2018, had already caused boycott calls – and the war only added to that pressure. Puma said its move was unrelated to the war, and that the company would continue to “evaluate all other existing partnerships as well as any other upcoming opportunities to ensure we have a strong roster of national teams”, according to a Financial Times report. Burger King, Pizza Hut and Papa John's are also among recognisable fast food brands that have been dragged into boycotts. However, the action against them has one thing in common: just like McDonald's, they have also been accused of Israeli support by the Palestinian BDS Movement, which campaigns for “freedom, justice and equality” for Palestinians. On social media platform X, formerly Twitter, BDS posted images of soldiers purportedly receiving food from these brands, though their authenticity could not be verified. Burger King, Pizza Hut and Papa John's – all US brands – have not publicly responded to the allegations. Meanwhile, KFC and Hardee's, which share the same operator with Pizza Hut in the Middle East – Americana Restaurants International – have also been affected by the boycotts. That forced Americana, listed in Abu Dhabi and Riyadh, Saudi Arabia, to slash nearly 100 jobs amid an internal restructuring and the boycott. Americana's operations in Egypt, the Arab world's most populous nation, has been hit the hardest, it said. In December, French insurance firm Axa's European headquarters in Dublin was mobbed and occupied by pro-Palestinian activists over alleged ties with Israeli companies. The incident spilt over to Irish insurance brokers, who were pressured to boycott the insurance major. An Axa spokesman denied the allegations, telling Irish media that the company has “no proprietary investments in any of the banks cited in recent calls for boycott”. BDS claims that HP, one of the world's biggest computer and technology companies, “helps run the biometric ID system that Israel uses to restrict Palestinian movement”. It also alleges that the California-based company is “complicit in Israel’s occupation”, providing computer hardware to and maintaining data centres in Israel. Its president and chief executive, Enrique Lores, had previously said that “HP condemns violence and its number one priority remains the safety and well-being of its employees and their families”. Germany's Siemens, meanwhile, has been alleged by BDS to also be “complicit” in “Israel’s illegal settlement enterprise”. The calls for boycotts on HP and Siemens haven't been as loud as for others, and the companies have not addressed the allegations.

Big brands hit by consumer boycotts over Israel-Gaza war

With McDonald's and Starbucks reporting slower sales, it is clear sentiments surrounding conflicts can hit global companies' bottom line