Managers of two soda-bottling plants in the occupied Palestinian territory have reported that PepsiCo and Coca-Cola bottlers in the West Bank are experiencing shortages of cans and sugar due to the prolonged closure of a crucial border crossing with Jordan. The closure of the Allenby bridge crossing, a crucial conduit for trade, has resulted from enhanced restrictions following an incident in early September where a Jordanian gunman fatally shot three Israeli civilians.
Hatim Omari, who manages a Pepsi bottling plant in Jericho, outlined that the facility has been without supplies for canned soft drinks for over two weeks and has been unable to procure cans or sugar for more than a month. The plant’s sugar supply previously came from Saudi Arabia, according to Omari.
Similarly, staff at a Coca-Cola bottler in Ramallah, managed by Imad Hindi of National Beverage Company, report dwindling supplies of sugar and cans, which is affecting the production of some soft drink flavors. Hindi warned that if the situation persists, it could lead to significant setbacks for private sector enterprises, including their own.
Neither PepsiCo nor Coca-Cola have provided comments on the developments. The bottling operations, while sometimes involving stakes from the U.S.-based parent companies, function as separate businesses.
This supply chain challenge is not isolated, as conflicts in the Middle East have impacted logistical routes over the past year, compelling global companies to alter shipping routes and navigate heightened risks in regions like the Red Sea. Associate professor Paul Musgrave from Georgetown University in Qatar noted the complexities businesses face, from securing basic materials to sustaining operations amid disruptions.
The financial burden of operating within the Palestinian territories is significantly higher compared to neighboring regions, as highlighted by Hindi. The Pepsi bottling plant has experienced a 35% decline in production, with operations now heavily reliant on plastic bottles, which offer lower profit margins than cans. High unemployment rates in the West Bank further impact local purchasing power and sales volumes.
In response to these challenges, the Pepsi plant has reduced its operations to a single shift, affecting its workforce of 200 employees. Cultural and consumer dynamics also influence the market, with boycotts of U.S.-based brands impacting sales in some Muslim-majority areas.
PepsiCo CEO Ramon Laguarta acknowledged the impact of geopolitical tensions on business performance in the Middle East during a recent investor call, indicating that these challenges are likely to persist. Coca-Cola is scheduled to release its third-quarter financial results in late October.
The backdrop to these commercial inconveniences lies in the broader Israeli-Palestinian conflict. Last October, Israel launched a military operation against Hamas in Gaza, following an unprecedented raid that resulted in the deaths of 1,200 Israelis and 250 abductions. The conflict has claimed over 41,000 Palestinian lives in Gaza over the past year. Among the infrastructure damaged was a $25 million Coca-Cola plant in Gaza, and a Pepsi facility that ceased operations following partial destruction.
