Starbucks Coffee, the famous international coffee brand experienced a drop in visitors of up to 40 percent due to a massive boycott by Malaysians. This happened because of their support for Israel during the ongoing Middle East conflict.
According to RHB Investment Bank Bhd, the data shows the business environment for Starbucks Coffee, Berjaya Food Bhd (BFood) to be more cautious when the boycott movement may last longer than expected if the Israel-Hamas conflict is not resolved.
They said again, the period of boycott may not recover so easily and will require hard efforts to regain its share of the fiercely competitive market.
In addition, the result of checking their views when visiting several Starbucks branches found that the number of visitors was relatively low compared to normal even during peak hours in the shopping center. However, most other coffee brands are still receiving customer visits as usual.
This situation will have a worse effect than expected and the international coffee brand will have to do aggressive promotion.
The loss of dominance in this market will continue if many competitors take advantage of opportunities such as some local products that promote the Buy Muslim First (BMF) campaign to stimulate the local economy. Indirectly, many coffee lovers no longer care about the brand and choose to buy drinks without dining in the store.
The investment bank revealed a downside risk to consensus earnings with financial year 2024 earnings amounting to RM88 million optimistically. Considering the first quarter of the financial year 2024 of RM19.3 million, this situation is not affected by the boycott which includes 22 percent.
Among the main positive risks to BFood is stronger consumer sentiment and higher than expected margins.
