Starbucks Malaysia confronts long-term sales decline from anti-Israel boycott

Malaysia’s largest bank has warned that the brand is likely to suffer from long-term slumping sales, despite a booming coffee market

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Starbucks has faced backlash due to its perceived connections to the US and Israel, even though it is not officially blacklisted by Boycott, Divestment, Sanctions Malaysia. Photo: Getty Images/TNS

Published: 12:09pm, 18 Nov 2024Updated: 12:14pm, 18 Nov 2024

Tycoon Vincent Tan, once Malaysia’s richest man, is grappling with a decline at his Starbucks chain as the country’s pro-Palestinian boycott of the coffee giant shows no signs of abating.

Malaysia’s largest bank Maybank has warned that the coffee brand is likely to suffer from long-term slumping sales due to entrenched consumer sentiment.

Berjaya Food Berhad (BFood), the local licensee of Starbucks, reported a pre-tax loss of 31.82 million ringgit (US$7.1 million) in its latest quarterly results – marking the fourth consecutive quarter of losses. Revenue has plummeted by more than 50 per cent year on year to just 124.19 million ringgit (US$28 million), despite a booming coffee market.

The boycott, fuelled by perceptions of Western brands as pro-Israel, has forced BFood to temporarily close over 10 per cent of its 400 branches. Starbucks has faced backlash primarily due to its perceived connections to the United States and Israel, even though it is not officially blacklisted by Boycott, Divestment, Sanctions Malaysia.

More than 41,500 Palestinians have been killed in Gaza since the beginning of the war, with nearly 100,000 wounded, Médecins Sans Frontières reported on Thursday. Around 1,200 Israelis were killed in the Hamas attack that sparked the conflict 13 months ago.

Malaysian tycoon Vincent Tan pictured in 2013. Photo: Reuters

Despite BFood’s assertion of being a locally owned business that employs more than 5,000 Malaysians, consumers have been diverting their spending elsewhere. Maybank predicts BFood’s losses could balloon to 65 million ringgit (US$14.5 million) this year, while profit expectations have been slashed by up to 15 per cent for the next two years.