Boycotts of Coke and Pepsi over Gaza crisis drive surge in local soda sales across Muslim countries

Amid the ongoing Gaza conflict, a wave of boycotts targeting American brands like Coca-Cola and PepsiCo is reshaping the beverage market in Muslim-majority countries. 

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These boycotts, rooted in the perception of US support for Israel, are leading consumers in countries like Egypt, Pakistan, and Bangladesh to abandon the cola giants in favor of local alternatives, significantly impacting market dynamics.

Local soda brands gain momentum

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In Egypt and Pakistan, local cola brands such as V7, Cola Next, and Pakola are experiencing a notable increase in sales, eating into the market share traditionally held by Coca-Cola and PepsiCo. 

According to a report by Reuters, the boycott has created opportunities for these regional brands to gain traction, with V7 and Cola Next seeing significant boosts in market presence.

The boycotts have gained traction as consumers in several Muslim-majority countries express their discontent with US foreign policy, particularly its support for Israel. 

This sentiment has intensified following the recent escalation of violence in Gaza, leading to a growing preference for local brands that are perceived as politically neutral.

Consumer backlash in key Muslim countries

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In Egypt, Coca-Cola’s sales have plummeted this year, while local brand V7 has capitalized on the situation, tripling its exports across the Middle East. 

Similarly, in Bangladesh, Coca-Cola faced significant backlash, resulting in the cancellation of an ad campaign deemed insensitive to the ongoing conflict. 

PepsiCo’s growth in the region has also stalled, with the company struggling to maintain its market position amid the rising tensions.

Pakistani consumers have also joined the boycott movement. 

Local brands vs. Western brands

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The boycott movement has significantly benefited local soda brands, allowing them to gain market share in regions long dominated by Western companies. 

In Pakistan, for instance, Cola Next and Pakola have seen a surge in popularity. 

These brands now reportedly account for about 12% of the soft drink market, up from 2.5% before the boycott began.

V7, the Egyptian cola brand, has experienced similar success. 

Its founder, Mohamed Nour, a former Coca-Cola executive, reported that V7’s exports have tripled this year, with domestic sales in Egypt increasing by 40%. 

This growth highlights a broader shift in consumer preferences toward local products, especially those perceived as untainted by Western political associations.

In Pakistan, Cola Next has strategically positioned itself as a patriotic alternative to Western sodas, with a slogan emphasizing its local roots: “Because Cola Next is Pakistani.” 

This marketing approach has resonated with consumers, leading to high demand and production challenges for the brand.

Impact on Coca-Cola and PepsiCo

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The boycotts have undeniably impacted Coca-Cola and PepsiCo, particularly in key markets across the Middle East. 

According to NielsenIQ, sales of Western beverage brands in the region declined by 7% in the first half of the year. PepsiCo, which had been experiencing growth in its Africa, Middle East, and South Asia division, saw a sharp slowdown in beverage volumes following the escalation in Gaza.

Coca-Cola’s performance in Egypt, where it had previously been growing steadily, also took a hit, with sales volumes declining by double-digit percentages in the first half of the year.

In response, both Coca-Cola and PepsiCo have emphasized that they do not fund military operations in Israel or any other country. 

However, despite these assurances, the boycotts have affected their sales and market share in specific regions.

While the immediate impact of the boycotts is evident, experts warn of potential long-term consequences for Coca-Cola and PepsiCo. 

Breaking established consumer habits could make it difficult for these brands to regain their lost market share. 

As consumers switch to cheaper, locally produced alternatives, the appeal of these brands may continue to grow, particularly in economically strained countries like Pakistan, Egypt, and Bangladesh.