Executive Summary

This report examines the ongoing consumer boycotts targeting PepsiCo due to its perceived support for Israel during the Gaza conflict, particularly following the escalation of violence in October 2023. The boycott, primarily driven by grassroots movements in Muslim-majority countries, stems from PepsiCo’s ownership of the Israeli company SodaStream and its association with the United States, a key ally of Israel. The report analyzes the origins, scope, impact, and responses to the boycott, incorporating specific sales decline data for PepsiCo as of April 20, 2025. Key findings include a 7% sales decline for Western beverage brands in the Middle East in the first half of 2024, a 4% sales drop in PepsiCo’s Africa, Middle East, and South Asia division in Q3 2024, and a surge in local soda brands, alongside PepsiCo’s efforts to mitigate the boycott’s effects through strategic marketing and regional investments.

1. Background and Context

1.1 Gaza Conflict Overview

The Gaza conflict intensified on October 7, 2023, following an Israeli attack on Palestine, prompting a large-scale Israeli military operation. As of April 2025, the conflict has resulted in over 40,000 Palestinian deaths, according to Gaza authorities, and caused a severe humanitarian crisis. This has fueled global outrage, particularly in Muslim-majority countries, where consumers have targeted Western brands perceived as complicit in supporting Israel.

1.2 PepsiCo’s Connection to Israel

PepsiCo, an American multinational, entered the Israeli market in the early 1990s and faced scrutiny after acquiring SodaStream, an Israeli home carbonation company, for $3.2 billion in 2018. SodaStream’s operations, including a factory in the West Bank (closed in 2015), have been criticized by the Boycott, Divestment, and Sanctions (BDS) movement for allegedly benefiting from Israel’s occupation of Palestinian territories. Additionally, PepsiCo’s American identity ties it to U.S. foreign policy, which includes significant military and financial support for Israel, further fueling boycott calls.

1.3 Historical Precedents

PepsiCo has faced boycotts in the Middle East before. From 1967 to 1991, the Arab League boycotted Coca-Cola for operating in Israel, inadvertently benefiting PepsiCo. However, the current boycott targets both companies as symbols of American influence. The BDS movement, active since 2005, has long advocated for boycotts of companies with Israeli ties, providing a framework for the current campaign.

2. Origins and Drivers of the Boycott

2.1 Grassroots Activism

The boycott is largely spontaneous, driven by consumers in Muslim-majority countries such as Pakistan, Egypt, Lebanon, and Bangladesh. Social media platforms, including X, have amplified calls to avoid PepsiCo products, with posts citing SodaStream’s Israeli origins and U.S. support for Israel. For example, a Pakistani corporate executive, Sunbal Hassan, excluded Pepsi from her April 2024 wedding menu in Karachi, opting for local brand Cola Next to avoid contributing to U.S. tax revenues.

2.2 Specific Triggers

• SodaStream Ownership: PepsiCo’s 2018 acquisition of SodaStream remains a focal point for BDS activists, who argue it profits from Israel’s occupation.

• “Stay Thirsty” Campaign: In Egypt, PepsiCo’s 2023 marketing slogan “Stay Thirsty” was perceived as insensitive amid the Gaza crisis, intensifying boycott calls. Critics interpreted it as mocking the boycott movement, though PepsiCo clarified it was not context-specific.

• New Logo Controversy: In Lebanon, PepsiCo’s global logo redesign, announced in March 2023 but rolled out locally in early 2024, sparked renewed boycott calls. Some residents misinterpreted it as an attempt to deflect criticism, leading to actions like emptying Pepsi bottles into the sea.

2.3 Role of BDS and Social Media

The BDS movement has listed PepsiCo as a boycott target, urging consumers to choose local alternatives. On X, posts from April 2025 show activists in Pakistan removing Pepsi logos from storefronts and South Asian workers in the Gulf urging locals to avoid Pepsi. These actions reflect a broader sentiment of solidarity with Palestinians, often framed as resistance to “Israeli genocide in Gaza.”

3. Scope and Geographic Spread

3.1 Key Regions

• Pakistan: In Karachi, protesters removed Pepsi logos from shops in April 2025, citing SodaStream ties. Local brands like Cola Next and Pakola have surged, capturing 12% of the soft drink market, up from 2.5% pre-boycott.

• Egypt: Sales of Pepsi and Coca-Cola dropped significantly since October 2023, with local brands like Spiro Spathis and V7 gaining traction. V7 exported three times more bottles in 2024 than the previous year.

• Lebanon: Residents in southern Lebanon and Saida destroyed Pepsi products and blocked distribution trucks in 2024, driven by Hezbollah’s influence and solidarity with Gaza.

• Bangladesh: An outcry forced Coca-Cola to cancel an anti-boycott ad campaign, indicating strong consumer sentiment that likely extends to Pepsi.

• Gulf Countries: Sentiment in the Gulf, including Saudi Arabia and the UAE, is mixed, with boycott participation less pronounced but visible in grassroots actions. A South Asian worker’s plea to avoid Pepsi in April 2025 gained attention on X.

• India: X posts from April 2025 suggest boycotts of Pepsi and Coca-Cola have boosted local brands like Campa Cola, though no major organized campaign is confirmed.

3.2 Global Reach

While the boycott is most intense in Muslim-majority countries, it has limited traction in Western markets like the U.S. and Europe, where consumer awareness of SodaStream’s Israeli ties is lower. The boycott’s global impact is constrained by PepsiCo’s diversified portfolio and strong brand loyalty in non-affected regions.

4. Economic and Market Impact

4.1 Sales Decline

• Middle East (Overall): Western beverage brands, including PepsiCo, saw a 7% sales decline in the Middle East in the first half of 2024, according to NielsenIQ.

• PepsiCo-Specific Data:

  • Africa, Middle East, and South Asia Division: PepsiCo’s beverage volumes in this division showed near-zero growth in the six months following October 2023, compared to 8% and 15% growth in the same periods of 2022/23.

  • Q3 2024: PepsiCo reported a 4% sales decline in its Africa, Middle East, and South Asia division, attributed to boycott-related consumer shifts and geopolitical tensions.

  • Egypt: While exact figures for Pepsi are unavailable, shopkeepers reported lower Pepsi sales in 2024, aligning with Coca-Cola’s double-digit volume decline in the same period.

  • Pakistan: Pepsi’s market share in the consumer sector fell from 10.8% in 2022 to 10.4% in 2023, partly due to boycotts and economic factors like inflation.

• Unverified Claims: A post on X from March 2024 claimed PepsiCo lost $650 million due to the boycott, but this figure lacks corroboration from reliable sources and should be treated as inconclusive.

4.2 Rise of Local Brands

• Pakistan: Cola Next adopted the slogan “Because Cola Next is Pakistani,” and its factories struggled to meet demand. Pakola’s popularity also soared, with local brands reaching 12% of the soft drink market.

• Egypt: Spiro Spathis saw an 80% sales increase since late 2023, while V7’s exports tripled and domestic sales rose by 40%.

• Bangladesh: Local brand MOJO gained traction as consumers shunned Western sodas.

4.3 Financial Resilience

PepsiCo’s CEO, Ramon Laguarta, stated in July 2024 that the boycotts were “not meaningful to our top and bottom lines,” citing the $6 billion revenue from the Africa, Middle East, and South Asia division in 2023 as a small fraction of global earnings. However, Q2 2024 financials showed $18 billion in global profits, suggesting global revenues cushioned regional losses. Sustained boycotts could still erode long-term market share in high-growth regions.

5. PepsiCo’s Response

5.1 Official Statements

PepsiCo has consistently denied affiliations with any government or military in the Gaza conflict. In response to Reuters, the company stated, “Neither the company nor any of our brands are affiliated with any government or military in the conflict.” It also pledged $1 million in humanitarian aid for Israel and Gaza in October 2023, matching employee donations to nonprofits.

5.2 Strategic Moves

• Local Branding: In Pakistan, PepsiCo reintroduced Teem Soda in 2024 with a “Made in Pakistan” label in a cola flavor to appeal to nationalist sentiments.

• Investment Continuity: Despite boycotts, PepsiCo maintained investments in the region, aligning with Coca-Cola’s $22 million upgrade in Pakistan in April 2024.

• Portfolio Diversification: PepsiCo’s $1.65 billion acquisition of Poppi, a prebiotic soda, in March 2025 aims to offset declining traditional soda sales, though not directly tied to the boycott.

5.3 Marketing Missteps

The “Stay Thirsty” campaign in Egypt and the delayed logo rollout in Lebanon were perceived as tone-deaf, highlighting PepsiCo’s challenges in navigating regional sensitivities.

6. Criticisms and Challenges

6.1 Effectiveness Debate

Palestinian-American businessman Zahi Khouri, whose Coca-Cola plant in Gaza was destroyed, argued that boycotts have limited impact in the West Bank and do not address the root issue of occupation. Critics like Khouri suggest political solutions over economic protests.

6.2 Economic Harm to Locals

In Egypt, the Federation of Egyptian Chambers of Commerce warned in November 2023 that boycotts could harm local investors and workers, as Western firms receive only 5% of local unit revenues.

6.3 Misinformation

False claims, such as PepsiCo being an Israeli company or redesigning cans to support Palestine, have circulated on social media, complicating the boycott narrative. These were debunked by USA Today and The Quint, confirming PepsiCo’s American ownership and the pre-war origin of certain designs.

7. Recent Developments (April 2025)

• Pakistan Protests: On April 11, 2025, Karachi residents removed Pepsi logos from storefronts, with actions widely shared on X.

• Gulf Sentiment: A South Asian worker’s video urging Gulf locals to avoid Pepsi went viral on April 18, 2025, reflecting persistent grassroots pressure.

• India’s Local Boost: X posts on April 7, 2025, noted a rise in Campa Cola sales, linked to boycott sentiment, though not formally organized.

• Lebanon’s Ongoing Actions: Destruction of Pepsi products continued in southern Lebanon, driven by local bans on distribution.

8. Analysis and Implications

8.1 Short-Term Impact

The boycott has disrupted PepsiCo’s growth in the Middle East, with a 7% regional sales decline in H1 2024 and a 4% divisional sales drop in Q3 2024. The shift to local brands is evident, but PepsiCo’s global scale mitigates immediate financial damage.

8.2 Long-Term Risks

Sustained boycotts could erode PepsiCo’s market share in high-growth markets like Pakistan and Egypt, where young populations drive soda consumption. The rise of local competitors poses a structural challenge.

8.3 Broader Trends

The boycott reflects a growing trend of “activist capitalism,” where consumers use purchasing power to express political views. This aligns with historical boycotts, such as those against apartheid South Africa.

9. Recommendations for Stakeholders

9.1 For PepsiCo

• Cultural Sensitivity: Avoid marketing campaigns that could be misinterpreted in conflict-sensitive regions.

• Transparency: Publicly clarify SodaStream’s current operations and PepsiCo’s stance on the conflict to counter misinformation.

• Local Engagement: Strengthen ties with local communities through targeted CSR initiatives, emphasizing humanitarian aid.

9.2 For Activists

• Focus on Impact: Prioritize targeted boycotts with clear demands, as per BDS guidelines, to maximize pressure.

• Combat Misinformation: Verify claims before amplifying to maintain credibility.

9.3 For Consumers

• Informed Choices: Research company ties using reliable sources like BDS or Ethical Consumer to make effective boycott decisions.

• Support Alternatives: Patronize local brands to sustain economic shifts without harming local workers.

10. Conclusion

The boycott of PepsiCo due to the Gaza conflict is a significant grassroots movement, driven by anger over Israel’s actions and PepsiCo’s SodaStream ownership. It has caused a 7% sales decline in the Middle East in H1 2024, a 4% divisional sales drop in Q3 2024, and boosted local brands, but PepsiCo’s global resilience limits immediate financial impact. The boycott underscores the power of consumer activism but faces challenges like misinformation and economic harm to local stakeholders. As the conflict persists, PepsiCo must navigate cultural sensitivities and strategic investments to maintain its market position, while activists and consumers refine their approach for maximum impact.

11. Sources

• Reuters, September 4, 2024

• AGBI, July 16, 2024

• Business Recorder, September 4, 2024

• DAWN, September 4, 2024

• AGBI, November 6, 2024

• Daily Sabah, September 4, 2024

• Yahoo Finance, September 4, 2024

• Arab News, September 3, 2024

• Invezz, September 4, 2024

• Middle East Monitor, September 4, 2024

• USA Today, November 14, 2023

• The National, November 17, 2023

• The Quint, November 2, 2023

• L’Orient Today, June 21, 2024

• BDS Movement, June 11, 2024

• X Posts, April 11–19, 2025