Coca-Cola and Israel

Claim:   Coca-Cola was once considered anti-Semitic for refusing to do business in Israel.

Origins:   The last forty-odd years have seen allegations of anti-Semitism hurled at both Coca-Cola and Pepsi, and for both companies the charges stemmed from their one-time reluctance to do business with Israel.

Successfully

doing business in the Middle East often depended upon not doing business in Israel. The Arab League was quick to boycott, and multinational concerns were forced to choose between the smaller market of Israel and the much larger market of the combined Arab states. For firms caught in the middle, it was a "no win" situation.

Coca-Cola's turn in the harsh spotlight of public opinion came in 1966.

April 1 1966: At a press conference in Tel Aviv, businessman Moshe Bornstein accused Coca-Cola of refusing to do business in Israel out of fear of reprisals and loss of profits in the Arab soft drink market. A week later in New York, the Anti-Defamation League of the B'nai B'rith released a statement backing up the charges, triggering headlines across the U.S.A. Coca-Cola was in hot water, and the American public was demanding answers. It was also rejecting the answers it was getting.

In 1949 Coca-Cola had attempted to open a bottling plant in Israel, but its efforts had been blocked by the Israeli government. As long as no one questioned the company too closely, the failure of this one stab at the Israeli market appeared to provide a satisfactory answer for Coca-Cola's conspicuous absence from the Israeli market. In the meanwhile, Coca-Cola was content to continue quietly serving the much larger Arab market, a market it was likely to lose if it began operating in Israel.

In 1961 an incident in Cairo involving civil servant Mohammad Abu Shadi momentarily shattered the quiet. Shadi had come into possession of a Coca-Cola bottle manufactured in Ethiopia, mistaken the Amharic lettering on its label for Hebrew, and publicly accused Coca-Cola of doing business with Israel.

The manager of Coca-Cola's Egyptian bottling operations wasted no time (and little thought) in assuring the press that Coca-Cola would never allow the Israelis a franchise. With their hands forced by their bottler's impolitic statement, company officials quickly invented the explanation that Israel was too small to support a franchise and gave their reasons for staying away as purely economic, not political. For the time being, this seemed to keep a lid on the brewing

storm.

It wasn't until 1966 that people began to wonder openly why it was that nearby Cyprus had no difficulty supporting its Coca-Cola franchise despite their having only one-tenth the population of Israel. The comfortable aura of quiet was shattered by Bornstein's charges and the subsequent uproar they raised in the U.S.A.

When these issues came to light in 1966, they proved highly embarrassing to Coca-Cola. The administrators of Mount Sinai Hospital in Manhattan announced they would stop serving Coke, and the owners of Nathan's Famous Hot Dog Emporium on Coney Island followed suit. Faced with the prospect of a Jewish boycott in America, the company attempted to right the tipped canoe by announcing it would open a bottling plant in Tel Aviv. (Such is the price of business: Israel with the fury of America behind it became a much more attractive market than it ever had been all on its own.) The Arab League struck back by placing Coca-Cola on its boycott list. The boycott began in August 1968 and lasted until May 1991 (or until 1979 in Egypt, where they made their own rules).

Pepsi's entry into Israel in 1992 did not go smoothly: the evolution theme of its "Choice of a New Generation" ad campaign (in which man was portrayed as evolving from a monkey into a Pepsi drinker) angered the strictly observant haredi community. Though Pepsi pulled the campaign from Israel, it found itself in more hot water over a 1993 Michael Jackson tour. Jackson's unthinking flashbulb-popping arrival on a Sabbath was viewed by many observant Jews as a desecration. For a time Pepsi lost its kashrut (kosher) certificate because it was deemed to be promoting a culture that would corrupt the nation's youth through rock music concerts and advertisements featuring scantily-clad women.

Prior to 1992, Pepsi had backed the other horse, choosing to service the lucrative Coke-less Arab markets in the boycott days. For its decision to stay out of Israel (and thus itself avoid being placed on the Arab League's blacklist), Pepsi faced continued criticism in the United States. In certain circles it was considered politically incorrect to be seen drinking Pepsi.

The Anti-Defamation League of the B'nai B'rith investigated claims that Pepsi was participating in the boycott of Israel. U.S. law prohibited American companies from taking part in this boycott, but the law was vague, and outright violations were hard to pin down. Nothing ever came of the investigations, and Pepsi was never placed on the American government's list of violators.

Pepsi always denied it was the fear of losing their Arab markets that kept them out of Israel. Like Coca-Cola in 1961, Pepsi fell back upon the claim of Israel's being too small to support a franchise. At least this time the excuse was a bit more believable; Coca-Cola's already holding down the lion's share of the Israeli soft drink market gave this claim a bit more plausibility. Even so, Pepsi was doing business in many other small markets and much more often than not competing head-to-head against Coca-Cola. If these conditions were keeping them out of Israel, then why weren't they equally keeping them out of these other markets?

Many people in the United States believed Pepsi was going along with the boycott, whether it was proveable in the eyes of U.S. law or not. Those lucrative Arab markets did not come without a price, and Pepsi paid it in loss of goodwill in the U.S. A significant number of American cola drinkers grew up suspecting Pepsi of being anti-Israel and refrained from buying their product. By contrast, Coca-Cola appeared heroic.

This appearance failed to take into account Coca-Cola's fast stepping to shake off similar charges in the 1960s. Pepsi's mud-spattered skirts were but Coca-Cola's hand-me-downs — same skirt, just a bit older.

Today you can get either Coke or Pepsi in anywhere in the Middle East, and the days of the boycott have faded into memory. Even so, there are still those who observe the stricture of "Coke is for Jews; Pepsi is for Arabs." Old wounds are not necessarily healed wounds.

Barbara "Pepsi challenge" Mikkelson

Last updated:   15 May 2011

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