It works: US brands feeling boycott threat over Gaza outrage
A longer list of boycotted products – including garment, chocolates and beauty products – are being share via social networking sites Facebook and Twitter.
Coca-Cola Co., for one, sees demand in its foreign markets is slackening.
Global soda sales growth is slowing for a third straight year. Coke missed overall growth targets in 2013 as a result. For the first time since 1999, Coke’s global soda volumes fell in the first quarter. While they bounced back in the second quarter, the trend is ominous.
While the Atlanta-based beverage company sells lots of other drinks—Minute Maid, Powerade, Dasani bottled water—it has remained basically a one-trick pony. Carbonated soft drinks still make up more than 70 percent of its global sales volumes.
Now that it can no longer lean on its foreign markets for reliable growth, it must turn around its US business, which contributes nearly 45 percent of revenue and less than 25 percent of its profit.
In India, over the past week, bottles of Sosyo, and other regionally marketed beverages – such as the MASST range of Indore-based UNO Foods, and the Big Cola, marketed by Peruvian company AJE – have replaced Coca Cola and Pepsi in many restaurants across Mumbai. This boycott of these products is part of the protest led by shops and hoteliers in Mumbai against the Israeli offensive against Palestine in Gaza.
A longer list of boycotted products – including garment, chocolates and beauty products – are being share via social social networking sites Facebook and Twitter.
While the hoteliers are losing out on business, as Coca Cola and Pepsi are popular beverages, they expressed no qualms over the loss of revenue.
Over a 1,000 hotels in the city have joined the protest, says Omear Sheikh, an office-bearer of the Indian Hoteliers Association, one of the organizations behind the boycott. “This is not a community based protest but based on humanity. We are urging all groups to join hands. The number is rising daily,” he said. The boycott will continue post Eid celebrations, he added.
Coca Cola termed the protest as “self-damaging” to the local economy given the its scale of business. It is too early to access the (financial) impact of the boycott, said Kamlesh Sharma, public relations director of Coca Cola. “They have chosen the wrong symbol of protest. Coca Coca is still selling in Palestine,” he said.
The local companies, however, aren’t complaining as they expect a rise in demand and revenue.
Sanjay Mistry, regional manager of Hajoori and Sons, which manufactures Sosyo, said, “a marginal rise of 2-5 percent in revenue is what we expect,” but the actual figures will be clear if the boycott sustains.
Ritesh Sachar, general manager, UNO Foods, said though he expected to gain from the boycott he feels there are too many local players involved for anyone to singularly benefit from the situation
There have been a few bright spots, though. The new “Share A Coke” campaign—where random containers are printed with seemingly personalized first names like Sarah or Dan or Buddy—is so popular that 20-ounce regular Coke bottles flew off the shelves in July.
Two people familiar with the matter said the company’s directors are fully supportive of Coke’s chairman and chief executive, Muhtar Kent. “He’s doing all the right stuff,’’ one such person said.
But investors are losing patience. Coke’s share price is down 1 percent in the past 12 months, compared with a 17 percent rise in the S&P 500.
“Coke remains stuck in neutral,’’ said David Winters, chief executive of Wintergreen Advisers, which holds about $100 million in Coke shares. He has become increasingly critical and last week launched a website, www.FixBigSoda.com, blasting the company’s recent performance. Coke has shaken up its North America management, boosted marketing, rolled out ad campaigns and packaging and is overhauling bottling.
Some analysts believe Coke executives are moving too slowly. “From a cost-cutting perspective, we want them to get out of the kiddie pool,’’ said Ali Dibadj, a beverage analyst at Bernstein Research. He estimates Coke can cut an additional $3 billion on top of the $1 billion in its three-year productivity plan announced in February.
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