Boycott Boost – How Indonesian and Malaysian Brands Are Benefiting

The sizzle of frying oil and the enticing aroma of spiced chicken have taken on a new meaning in Indonesia. It’s not just about a satisfying meal anymore; it’s a symbol of a shifting consumer landscape, a testament to the power of collective action, and a boost for Indonesian brands. Almaz Fried Chicken, a homegrown fast-food chain, has become a prime example of this phenomenon. Exploding onto the scene with a rapid expansion of 37 outlets across Indonesia—concentrated in the bustling Greater Jakarta area and with a growing presence on Sumatra Island—Almaz’s success is inextricably linked to the widespread boycott of Israeli-linked products that gained momentum in late 2023. This boycott has ignited a powerful trend: Indonesian consumers actively choosing local alternatives.

Related: Indonesian Halal Cosmetics Brands Challenge L’Oreal and Unilever

Capitalizing on a Cause

Almaz isn’t simply selling crispy chicken; it’s selling an idea, a sense of solidarity. The company has astutely tapped into a deep-seated national sentiment of support for Palestine. “Our customers feel that by buying Almaz products, they’re not only getting quality food but also contributing to a noble cause,” Chief Executive Okta Wirawan explained to Nikkei Asia. This statement encapsulates the core of Almaz’s appeal. The company’s commitment to donating 5% of its profits to charity, with a specific focus on aiding Palestinians, resonates profoundly with Indonesians, who represent the world’s largest Muslim population. This charitable aspect adds another layer of meaning to each purchase, transforming a simple meal into an act of support.

This strategy isn’t unique to Almaz. It reflects a broader trend of businesses aligning themselves with social and political causes that resonate with their target market. In a globalized world where consumers are increasingly conscious of the ethical implications of their purchases, this approach can be a powerful driver of brand loyalty.

Boycott Bites Western Brands

The boycott isn’t confined to Indonesia; it’s a regional phenomenon rippling through Muslim-majority nations like Malaysia. Over a year since the resurgence of the Israeli-Palestinian conflict, the boycott continues to impact consumer behavior. The targets are clear: Western brands perceived to have ties, whether real or perceived, to Israel. This perception, often fueled by social media and online campaigns, has proven potent.

The impact has been particularly pronounced on food chains and consumer goods companies. Established global giants like KFC, McDonald’s, Pizza Hut, Starbucks, and Unilever have experienced noticeable declines in sales in these regions. Local operations of these multinational corporations are feeling the pressure as Indonesians and Malaysians actively seek out alternatives. This decline isn’t just a temporary dip; it represents a significant shift in consumer preferences, potentially leading to long-term market share erosion for these brands.

A New Era for Indonesian Brands

This shift in consumer behavior has created a fertile ground for local businesses. The boycott has acted as a catalyst, spurring the growth of Indonesian brands across a diverse range of sectors. From food and beverages, like Almaz Fried Chicken, to cosmetics, fashion, and household goods, local entrepreneurs are seizing the opportunity to fill the void left by boycotting consumers.

This trend has the potential to fundamentally reshape the consumer landscape in both Indonesia and Malaysia. It’s not just about replacing foreign brands with local equivalents; it’s about fostering a more vibrant and self-sufficient local economy. This can lead to increased job creation, greater economic independence, and the development of unique, culturally relevant products and services.

The Rise of Local Coffee Culture

The coffee industry provides a compelling case study. In Malaysia, Starbucks has witnessed a significant exodus of customers, many of whom are now frequenting local coffee shops like ZUS Coffee and Gigi Coffee. These local chains offer a similar experience to Starbucks, with comfortable seating, Wi-Fi, and a variety of coffee beverages, but without the perceived association with Israel.

Independent cafes are also experiencing a surge in popularity. “Since the boycott, we’ve seen a clear increase in customers at our independent cafe,” shared a barista at Artisan Roast Coffee in Kuala Lumpur. This surge is attributed to a combination of factors: the existing trend of young Malaysians embracing coffee culture and the boycott providing an additional push towards local businesses. Artisan Roast has reported sales increases of 10% to 20%, demonstrating the tangible impact of the boycott on local businesses.

In Indonesia, Fore Coffee has capitalized on the changing market dynamics. Recognizing the crucial role of halal certification in a predominantly Muslim country, Fore proactively obtained this certification shortly after the escalation of the Israeli-Palestinian conflict. This strategic move has undoubtedly facilitated their rapid expansion and solidified their position as a leading local coffee brand. “Having halal certification significantly impacts our sales,” Fore co-founder and CEO Vico Lomar told Nikkei Asia. He also acknowledged the potential role of the boycott in encouraging a preference for local products.

Global Trend with Local Impact

A recent consumer survey conducted by GlobalData provides valuable insights into the prevalence of boycotts globally. While approximately half of the respondents worldwide have participated in boycotts related to recent conflicts, the figures are significantly higher in Indonesia and Malaysia, with around 70% of respondents reporting participation. This highlights the particularly strong resonance of this issue in these countries.

This high level of participation underscores the power of collective action and the growing influence of consumer activism. In an increasingly interconnected world, consumers are using their purchasing power to express their political and social views, holding brands accountable for their perceived ethical stances.

Geopolitical Undercurrents

The consumer boycott is just one manifestation of deeper geopolitical tensions. Indonesia and Malaysia have historically been strong supporters of Palestine, maintaining no formal diplomatic ties with Israel. This stance was recently reiterated by Indonesian President Prabowo Subianto at a gathering of Muslim-majority nations in Egypt. He openly criticized the perceived “double standards” of Western nations concerning human rights in the context of the Israeli-Palestinian conflict, stating, “Human rights aren’t just for Muslim peoples. This is the reality, and it’s very sad.”

Malaysian Prime Minister Anwar Ibrahim has also been vocal in his criticism of the United States’ support for Israel. He has resisted pressure to designate Hamas as a terrorist organization and has implemented a ban on Israeli ships entering Malaysian ports. These political pronouncements further amplify the sentiment driving the consumer boycott.

The Long-Term Outlook

The long-term consequences of this boycott remain to be fully seen. While local brands like Almaz and Fore Coffee are currently experiencing a surge in popularity, the critical question of sustainability looms. Can these companies maintain their growth trajectory and cultivate lasting brand loyalty beyond the immediate emotional impetus of the boycott? This is a crucial challenge they must address to solidify their market positions.

Several factors will influence the long-term success of these Indonesian brands. These include:

• Product Quality and Innovation: Maintaining high-quality products and continuously innovating to meet evolving consumer preferences is essential.
• Competitive Pricing: Offering competitive prices is crucial in attracting and retaining customers.
• Effective Marketing and Branding: Building strong brand identities and engaging in effective marketing campaigns will be vital for long-term growth.
• Supply Chain Management: Establishing robust and efficient supply chains is necessary to meet increasing demand.

For established international brands, the boycott presents a significant challenge. They must carefully navigate the complex geopolitical landscape while attempting to retain their market share in key markets like Indonesia and Malaysia. Some potential strategies Indonesian and Malaysian Brands could consider include:

1. Publicly clarifying their stance on the conflict: This could involve issuing statements emphasizing their neutrality or supporting humanitarian efforts.
2. Engaging in dialogue with local communities: Building relationships with local stakeholders and understanding their concerns can help mitigate negative perceptions.
3. Investing in local communities: Demonstrating a commitment to local development and social responsibility can help rebuild trust.
4. Adapting their marketing strategies: Tailoring their marketing messages to resonate with local cultural values and sensitivities can be crucial.

The current situation represents a significant turning point in the consumer landscape of Indonesia and Malaysia. It’s a testament to the power of consumer activism and the growing importance of ethical consumption. The rise of Indonesian brands is a key outcome of this shift, and their ability to adapt and innovate will determine their long-term success in this evolving market. It’s a complex situation with no easy answers, but one thing is clear: the consumer landscape has changed, and businesses must adapt to this new reality.