Investors advised to sell Berjaya Food shares as Starbucks boycott pinches

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The ongoing boycott of coffee chain Starbucks has led RHB Group, Malaysia's integrated financial services group, to reportedly issue a research note advising investors to sell their shares in its franchise owner, Berjaya Food. The bank reportedly noted a 24% slip in stock prices.

The recommendation comes after ground checks of Starbucks outlets showed at least a 30% fall in foot traffic. This is despite shopping centres being crowded, and most of Starbucks' competitors having regular footfalls.

The fall in foot traffic, as RHB noted, is a result of the ongoing boycott of the food and beverage chain due to its alleged support of Israel in the ongoing Israel-Hamas war.

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According to the New Straits Times, RHB's research note said the situation is worse than expected and that Starbucks has slashed forecasts for its financial year 2024-2026 net profit by 21%, 17% and 7%.

The note also reportedly highlighted that the boycott's timing is inopportune and that the outlook for Berjaya Food has turned cautious as there is seemingly no near-term resolution to the war.

RHB Group also added that the post-boycott recovery may not be straightforward either and that it might take time for Berjaya Food to regain its market share.

Additionally, RHB's research said that the brand boycott may have led consumers to try alternatives, giving competitors an extra edge to capitalise on Starbucks' chipping market share.

The boycott movement in Malaysia is steadily strengthening as consumers stop purchasing from brands that are in support of Israel. Many local brands have come forward to take a political stand and veer away from showing any support for Israel.

Grab Malaysia, for example, pledged RM1 million to MERCY Malaysia. The move aims to extend crucial aid and humanitarian support to those in need through MERCY Malaysia’s Palestine Relief Fund.

The move comes shortly after a controversial post by Grab co-founder Anthony Tan’s wife, in which she said that she “fell completely in love with Israel” after two trips there this year.

Similarly, McDonald's Malaysia donated RM1 million to the Palestine Humanitarian Fund. McDonald's said that its contribution to the Palestine Humanitarian Fund will directly support relief efforts in Gaza, addressing the critical needs of those affected by the conflict.

The donation comes days after the company released a statement addressing the fact that McDonald’s Israel donated free meals to Israeli soldiers, causing many online to question if the company was contributing to the destruction caused to those in Gaza.

In its statement, McDonald's Malaysia clarified that the actions taken by its Israel branch were those of an independent market and that it does not reflect the values or practices of McDonald's Malaysia.

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