Thursday, September 13, 2018
Elder of Ziyon
When I started blogging about BDS back in the 19th century, I tended to focus on the BDS failures, highlighting how little impact the Boycott, Divestment and Sanctions “movement” was having on the exploding Israeli economy, pointing out the triviality of BDS claimed “victories,” and noting how many of their alleged “wins” were actually hoaxes, or the result of bullying or trickery.
Over the years, others have taken up the #BDSFail meme with gusto, while I’ve tended to focus on strategy and tactics for fighting anti-Israel campaigns more generally. But a recent event, one in which BDS might have played a role in sending hundreds of millions of dollars into the Israeli treasury, seemed worth noting as potentially the greatest BDSFail of all time.
By now, most readers are probably aware of PepsiCo’s acquisition of the Israeli company SodaStream for $3.2 billion. This purchase, in and of itself, represents a stunning illustration of how little the business world takes boycott treats and bullying seriously. In addition to being one of the largest M&A deals in Israeli history, the sale also demonstrates how the Israeli economy no longer relies on just high-tech hiding inside other branded devices, but that Israeli brands (in commercial goods, no less) are playing and winning on the world stage.
The fact that the purchaser was Pepsi also demonstrates Israel’s success on other fronts. For during the heyday of the Arab boycott, Pepsi was one of the brands that was willing to sacrifice the small Israeli market for the larger Arab one. But with this purchase of Sodastream, Pepsi has demonstrated that good relations with the Jewish state may be more important than what the nations surrounding Israel say or do.
Given how much effort the BDSers have put into tarring SodaStream’s name over the years, one might think this multi-billion-dollar transaction just represents a monumental example of the boycotters being ignored. But might BDS have actually played a role in creating an environment that facilitated the sale of SodaStream for billions?
To understand this thesis (which I’ll admit is speculative), you must understand the company’s CEO Daniel Birnbaum who, in addition to creating a company that took on the world’s largest beverage manufacturers and won, also worked doggedly to keep Shimon Peres’ notion of a New Middle East – where economic cooperation would supplant political enmity – alive.
When Sodastream was operating its Mishor Adumin factory in disputed territories, Birnbaum insisted that Jewish and Arab workers be paid and treated equally in any factory his company ran. And, lest you think such behavior was just for show, when he and some of his Jewish and Palestinian co-workers visited Israel to celebrate the company’s success and the Palestinians were required to undergo a strip search, Birnbaum insisted he go through one himself in solidarity.
This is the behavior not of a money-grubbing plutocrat, but of someone willing to sacrifice certain business advantages to support a non-economic cause (in this case, the notion that Jews and Arabs can live and work in peace and friendship). And for his efforts, BDSers around the globe insisted that Birnbaum was running a slave labor camp that should be condemned and shunned.
If you, like Birnbaum, are actually altruistic as well as capitalistic, if you’ve made sacrifices – financial and personal – over the years to create a successful, growing company and then used that success to improve the lives of Israelis and Arabs that other Israelis and Arabs say can never be reconciled, how are you supposed to respond to accusations by unproductive cretins like Omar Barghouti that all the good you’ve tried to do amounts to little more than Apartheid?
One thing you can do is to start making decisions based more on economics vs. politics, especially if sacrificing economics to politics has led to nothing but propaganda being directed against the company you built. For example, shutting down the Mishor Adumin and moving operations to a larger facility in the Negev, a move supported by economic subsidies, allowed Sodastream to expand while remaining profitable. And profitable growth is the key factor a suitor is looking at when deciding what premium to pay for an acquisition.
In fact, it was just a few years after this relocation/consolidation took place that Pepsico decided to pay not one, not two, but more than three billion dollars for the company (seven times sales and more than a hundred times profit, based on its 2016 financial numbers). And while Israel does not tax foreign investors when they cash out on a sale like Pepsi’s purchase of Sodastream, Israeli investors do need to include the money they made as part of their taxable income. Which means that tens of millions of the proceeds from the sale of Sodastream will soon find their way into the coffers of the Israeli government.
This is not to say that the behavior of the boycotters played a direct role in Sodastream’s successful sale. As is usually the case in business, product, positioning and profits play more of a role than politics. But if the BDSholes made it easier for the company to stop sacrificing the bottom line for a political cause that was punished, rather than rewarded, then I think every Sodastream shareholder and Israeli tax official owes Omar Barghouti a great big hug.
