Mecca Cola: I don't buy it
Last month I wrote several pieces on the boycott of Danish goods that arose from the publication of cartoon images of the Prophet Mohammed. In " Will the Boycott of Danish Goods Work?" I pointed to anecdotal and empirical evidence showing that boycotts don't always have the intended detrimental impact on the target. For this to happen, the boycotters need to have:
patience, a carefully-crafted strategy for the management of public perception, and a sophisticated understanding of the incentive structure of the target.
In "Boycott of the Danes" I quoted a local paper, the Khaleej Times, that said this about the economic impact of the boycott of Danish goods:
So far, Arla Foods, one of Europe’s largest dairy companies, is suffering most, but the effects could spread. Danish goods are threatened in 20 Muslim countries, representing 10 billion kroner ($1.6 billion) annually, said Steen Bocian, a chief analyst with Danske Bank.
In "My Students Speak about the Danish Boycott" I summarized the entries of dozens of my students' blog posts about the boycott. (I teach in the United Arab Emirates). The majority were supportive of and sympathetic to the boycott. Several also noticed that the boycott of Danish goods had provided a rare opportunity for local (Arabic) companies to pick up market share, particulary in the dairy products segment:
Boycotting Danish products will increase the sales of its substitutes. For example, instead of using Lurpak butter for a specific kind of food, now the people will turn to Arabic gee instead. Therefore, in the coming days we will notice a huge increase in the sales of substitute products.
To recap then: while boycotts don't always work, early evidence suggested that this one was hurting specific firms, particularly those making fairly undifferentiated foodstuffs like butter, cheese, and yogurt. Furthermore, Arabic local companies making similar products seemed posied to benefit from the Danish companies misfortune of happening to be Danish at the wrong place and at the wrong time. With those thoughts in mind, consider the exceprt below from an article entitled "Mecca Cola rides anti-West wave with cafe chain plan" . The article makes a claim about an upsurge in sales of Mecca Cola in the wake of the Danish boycott. It's a claim I have heard repeated in several Middle Eastern papers and news outlets in the last few weeks:
Riding on anti-Western anger over issues like Palestine, Iraq, Iran and Afghanistan, Mecca Cola has achieved impressive sales in several Muslim countries. Pakistan, Algeria, Yemen, Malaysia and France are Mecca Cola's top markets, (Mecca Cola chairman Taoufik) Mathlouthi said.Demand for Mecca Cola, first launched in October 2002 in France, is estimated to be 1.5 million cans per month in the Gulf region alone, but the company is able to meet only half this demand.
"We need to increase our production capacity," he said. The company imports all its cans from Malaysia to be filled at various plants.
Mathlouthi said the company has signed an agreement with Dubai Industrial City to acquire 300,000 square feet of land to set up a plant.
"The plant will comprise a filling unit, one section for making concentrates for drinks and one tea and coffee packaging section," said the Mecca Cola chief, who does not like to call himself a businessman. "I am promoter of a concept. I launched Mecca Cola to break the hegemony of Western drinks," said Mathlouthi, a French citizen of Tunisian origin.
He said the anger against the blasphemous Danish cartoons of the Prophet Mohammad (PBUH) has increased Mecca Cola sales three-fold.
"We did not benefit directly from the boycott of Danish products because these were mostly dairy products. "But the anger over this issue has attracted more Muslims to our products," he added.
I take issue with Mathlouthi's argument. The part I do agree with this is that sales of Mecca Cola did not benefit directly from the boycott of Danish products. There is no reason why it should have. If the Danes even make cola, little if any of it was sold in the UAE. So what Mecca Cola's CEO would have us believe is that the boycott of Danish dairy products has spilled over into a stronger preference in certain parts of the Muslim world for transparently Muslim products, especially for those intended to challenge Western hegemony in the soft drink market.
I don't buy it. Even if sales of Mecca Cola tripled in the weeks after the publication of the cartoons, it is unlikely that this was anything other than a spike in demand. In the absence of solid indicators of a more permanent shift in consumer preferences, it would be foolish to make resource allocation and production decisions based on outrage over the publication of the cartoons. But if Mathlouthi does do so, then this gives he and I one other point of agreement: he's not a businessman. Rather, he's a very clever marketer. But that's not the same thing.
Update: My colleague, neighbor, and fellow UAE-based blogger John Chilton of The Emirates Economist also has something interesting to say about Mecca Cola this morning.
Tags: uae | Middle East | Denmark | Cartoons | mohammed cartoon | muslim cartoon | jyllands-posten mohammed | muhammad cartoon | muslim cartoons | mecca cola |
See also: Carnival of Danish Recipes | New Cola hates America |