Danone Morocco saga highlights enduring role of consumer boycott

Centrale Danone lost 40 percent of its sales and suffered a net loss of €13.5 million in the first half of 2018. (Reuters)
Updated 12 January 2019
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Danone Morocco saga highlights enduring role of consumer boycott

  • Success of social media campaign against high milk prices is in the tradition of the great Iranian tobacco revolt
  • Centrale Danone employs 6,000 people in Morocco but did not renew contracts with more 880 temporary workers as it was forced to cut milk production by 30 percent

LONDON: In April, a series of posts appeared on Facebook and Twitter, urging the people of Morocco not to buy Danone brand fresh milk as a protest against the company’s high prices.
Within weeks, Centrale Danone, which is French-owned, lost 40 percent of its sales and suffered a net loss of €13.5 million in the first half of 2018.
It did not stop there. The company employs 6,000 people in Morocco but did not renew contracts with more 880 temporary workers as it was forced to cut milk production by 30 percent. That led to disgruntled employees protesting in front of the national parliament against the boycott which threatened their livelihoods.
Two months later, in June, the chief executive of Danone, Emmanuel Faber, arrived in Morocco to “listen and understand the reasons for the boycott from the people on the ground.”
In September, after a consultation exercise lasting weeks, Faber announced a cut in the price of fresh pasteurised milk and revealed a new, cheaper semi-skimmed milk-in-a-pouch. He also declared that despite its troubles, Danone “will never leave Morocco.”
As well as Danone milk, protesters targeted Sidi Ali mineral water and Afriquia petrol stations.
“It was an incredible campaign,” said Soraya El-Kahlaoui, a lecturer in Morocco. “It involved all types of people — working class, the bourgeoisie — and it got the result everyone wanted.”
The Danone boycott in Morocco succeeded because it was about more than milk prices. It was also about popular struggle.
“For any protest to succeed, people have to be mobilized, they have to be persuaded of the rightness of a cause,” said John Chalcraft, professor of Middle East history and politics at the London School of Economics. As a tool of protest, boycotting can be both powerful and safe, he added. “People have a role without the risk of ending up in prison. No one can accuse them of breaking the law.”
Nor is it new to the Middle East. In 1890, Iranians revolted en masse against the Shah granting a tobacco concession to Britain. The deal gave the Imperial Tobacco Corporation of Persia a monopoly over the production, and sale of tobacco for 50 years. In return, the Shah, Nasir Al-Din, was to be paid £15,000 a year (equivalent to $2.35 million today) plus a share of the profits.

 

Coming on top of other concessions granted to foreigners, this was too much. Persian tobacco was much prized and at the time the industry employed more than 200,000 people. The first protests were organized by bazaaris (merchants) but the clergy soon joined in, issuing a fatwa against tobacco consumption. The merchants closed the bazaars and Iranians — such heavy smokers that they even lit up in mosques — gave up smoking. Beaten by the boycott, the Shah canceled the concession in January 1892.
Just as the tobacco boycott was a protest against exploitation by the rich, so the inflated milk prices in Morocco were seen as evidence of collusion between big business and the government.
“It would not be stupid to compare that earlier period with the contemporary one,” said Chalcraft. “Boycott is a familiar form of protest in the Middle East.”
In 1945, the Arab League adopted a boycott of all Israeli goods. Six years later, they extended the boycott to anyone trading with Israel. The blacklisted companies included big names such as Revlon, Bulova Watches and the Chase Manhattan Bank. The boycott ended gradually. Egypt dropped out in 1979, Jordan and the Palestinian Authority in 1994 and finally, the GCC in 1994.
It was partly revived in 2005 when Palestinians launched the Boycott, Divestment and Sanctions (BDS) movement against Israel, and more particularly against goods emanating from or being sold in the settlements in the Occupied Territories.
Patrick Barwise, emeritus professor of management and marketing at London Business School, doubts the effectiveness of boycotts.
“The buying behavior of most consumers is much less affected by ethical concerns than they might claim in response to a survey,” he said. “Tech firms such as Facebook, Amazon and Uber have been widely criticized for some of their business and labor management practices but very few consumers have stopped using them on those grounds.”
Danone said the milk boycott was in reality a wider protest against the high cost of living in Morocco. After conducting a wide public consultation exercise over the summer, involving nearly 10 million people, Danone reduced the price of a 470ml pack of milk down to what it was 10 years ago.
The milk boycotters’ slogan was “Khali i rib” — “let the milk flow.” Danone adopted the same slogan as it tried to rebuild consumer trust.
“It hasn’t worked,” said Soraya El-Kahlaoui. “The image of the brand is very damaged.”

FASTFACTS

With products sold in over 120 markets, Danone generated sales of €24.7 billion in 2017.


World leaders prepare for Davos amid gloomy forecasts

Klaus Schwab, founder and executive chairman of the World Economic Forum. (AFP)
Updated 53 min 56 sec ago
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World leaders prepare for Davos amid gloomy forecasts

  • Delegates to annual forum to include presidents of Iraq and Afghanistan

DUBAI: World leaders are preparing to head to the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, amid the riskiest global backdrop in years, according to a report from the event organizer itself.

As the WEF announced the names of some of the 3,000 participants set to attend the meeting and details of the four-day agenda, it also published a gloomy outlook on international politics, economics, the environment and technology. 

Rising geopolitical and geo-economic tensions are the most urgent risks in 2019, with 90 percent of experts surveyed expecting further economic confrontation between major powers, according to the WEF’s annual Global Risks Report.

“The world’s ability to foster collective action in the face of urgent major crises has reached crisis levels, with worsening international relations hindering action across a growing array of serious challenges. Meanwhile, a darkening economic outlook, in part caused by geopolitical tensions, looks set to further reduce the potential for international cooperation in 2019,” it added.

Although political and economic worries were top of the immediate agenda for the 1,000 experts polled by the WEF, the environment and climate change are also a cause for concern, as are “rapidly evolving” cyber and technological threats, the WEF said.

Børge Brende, the WEF president, said: “With global trade and economic growth at risk in 2019, there is a more urgent need than ever to renew the architecture of international cooperation. We simply do not have the gunpowder to deal with the kind of slowdown that current dynamics might lead us toward. What we need now is coordinated, concerted action to sustain growth and to tackle the grave threats facing our world today.”

The leaders who will begin to arrive in Switzerland in the next week include Shinzo Abe, prime minister of Japan; Jair Bolsonaro, president of Brazil; Angela Merkel, chancellor of Germany; and Wang Qishan, vice president of China.

With US President Donald Trump pulling out of the meeting to deal with the partial government shutdown, the American delegation is expected to be led by Steven Mnuchin, Treasury secretary, and Mike Pompeo, secretary of state.

The Middle East is well represented at the meeting, with at least nine heads of state or government from the region, including Palestine, Iraq, Egypt, Jordan and Lebanon. Saudi Arabia will be represented by a team of senior policymakers and business leaders.

The risk report will give them all food for thought in the Alpine resort.

Asking whether the world is “sleepwalking into a crisis,” the report responded: “Global risks are intensifying but the collective will to tackle them appears to be lacking. Instead, divisions are hardening. The world’s move into a new phase of strongly state-centered politics continued throughout 2018.

“The idea of ‘taking back control’ — whether domestically from political rivals or externally from multilateral or supranational organizations — resonates across many countries and many issues.”

Macro-economic risks have moved into sharper focus, it said. 

“Financial market volatility increased and the headwinds facing the global economy intensified. The rate of global growth appears to have peaked,” the report said, pointing to a slowdown in growth forecasts for China as well as high levels of global debt — at 225 percent of global gross domestic product (GDP), significantly higher than before the financial crisis 10 years ago.

Raising the prospect of a “climate catastrophe,” the report said extreme weather, which many experts attribute to rapid climate change, was a risk of great concern. “The results of climate inaction are becoming increasingly clear,’ the WEF said.

Of the 3,000 participants at Davos, which runs from Jan. 22 to 25, around 78 percent are men, with an average age of 54. 

The oldest will be the 92-year-old British broadcaster David Attenborough, the youngest 16-year-old South African wildlife photographer Skye Meaker.