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SodaStream to move controversial factory from Israeli settlement SodaStream to move controversial factory West Bank Israeli settlement
(about 1 hour later)
SodaStream slashed its forecast on Wednesday, citing difficult business conditions in the US and other markets, and announced that it would move its factory out of an Israeli settlement in the West Bank. Palestinian activists have hailed a decision by SodaStream International, an Israeli-owned soft drink company, to close its controversial factory in a settlement in the occupied West Bank, calling the decision a victory for the campaign for boycott, disinvestment and sanctions. The company, which sells its fizzy drinks maker in 45 countries, said that the decision to move the plant to Lehavim in Israel’s southern Negev region was for “purely commercial” reasons and was not connected to pressure from pro-Palestinian groups because of its location, said SodaStream representative Nirit Hurwitz.Actor Scarlett Johansson got caught up in a high-profile row over the factory earlier this year after agreeing to serve as SodaStream’s global brand ambassador – drawing fire from Oxfam, for which she had previously served in a similar role.
The company had already warned this month that demand for its soda machines and flavours would not be as strong as it had expected as it struggled to lure new buyers. It cited weak conditions in France and the Czech Republic, in addition to the US. The Holywood star then cut ties with the charity, citing “a fundamental difference of opinion”. Oxfam opposes all trade from Israeli settlements, saying they are illegal and deny Palestinian rights.
SodaStream now expects net income will fall about 42% this year, while revenue will decrease 9%. In July the company forecast a 5% dip in net income and revenue growth of 5%. Its shares lost 54 cents, or 2.4%, to $21.38 in midday trading. “SodaStream’s announcement … shows that the boycott, divestment and sanctions (BDS) movement is increasingly capable of holding corporate criminals to account for their participation in Israeli apartheid and colonialism,” said Rafeef Ziadah, a spokesperson.
The guidance issued on Wednesday implies the company will report about $24.4m in net income and $512.1m in revenue in 2014. Analysts had expected $539m in revenue. “[The] BDS campaign pressure has forced retailers across Europe and North America to drop SodaStream, and the company’s share price has tumbled in recent months as our movement has caused increasing reputational damage to the SodaStream brand.”
Meanwhile, the company said the move out of the West bank was not driven by pressure from pro-Palestinian activists. The factory, in the industrial zone of Mishor Adumim – adjacent to the large Israeli settlement of Maale Adumim between Jerusalem and Jericho – is scheduled to close by late 2015.SodaStream has branded its machines as a cheaper, more environmentally friendly alternative to buying bottled or canned drinks such as Coke and Pepsi.The company had defended itself as employing 500 Palestinians, along with 450 Israeli Arab and 350 Israeli Jewish citizens, and insisted that closure for political reasons would benefit no one.But the BDS statement said: “any suggestion that SodaStream is employing Palestinians in an illegal Israeli settlement on stolen Palestinian land out of the kindness of its heart is ludicrous.”The BDS movement, which has made significant strides in recent years, calls for an end to Israel’s occupation of Palestinian lands conquered in the 1967 war and the dismantling of its West Bank wall; granting full equality to Palestinian citizens of Israel; and respecting and promoting the rights of Palestinian refugees to return to their homes. Its position on Palestinian refugees is widely interpreted as implying that it does not support a two-state solution to the conflict. Its statement said: “Even if this announced closure goes ahead, SodaStream will remain implicated in the displacement of Palestinians. Its new Lehavim factory is close to Rahat, a planned township in the Naqab (Negev) desert, where Palestinian Bedouins are being forcefully transferred against their will. Sodastream, as a beneficiary of this plan, is complicit with this violation of human rights.”The success of the BDS movement relfectes mounting pressure, especially from Europe, from NGOs, trade unions, churches and others which are forcing their governments to take action against Israel. The European Union is taking an increasingly tougher line and the boycott movement is gaining traction in the US, where it had struggled to win support.
Nirit Hurwitz said that the decision to move the facility to Lehavim in Israel’s southern Negev region is for “purely commercial” reasons and is not connected to pressure from Palestinian activists who had boycotted the company because of its location.
Activists launched a campaign boycotting the company because of the factory being in an Israeli settlement in the West Bank, a territory captured by Israel in 1967 that is claimed by the Palestinians. Such settlements have been judged illegal under international law.
Hurwitz said the new location received a $20m grant from the Israeli government. The new location “will become our flagship manufacturing site and is expected to deliver operational excellence and result in savings of 2% percent across our entire cost base”, she said.
The Palestinian boycott campaign welcomed the announced move, saying its boycott caused retailers to drop SodaStream.
SodaStream says it employs hundreds of Palestinians and gives them equal benefits to Israeli workers. Most of them are from nearby West Bank towns. For Palestinian workers from Ramallah, the new facility will be 107km (66 miles) away. For those from Hebron, it will be 48km away.
“We are offering all employees the opportunity to join us in Lehavim, and specifically, we are working with the Israeli government to secure work permits for our Palestinian employees,” SodaStream’s CEO, Daniel Birnbaum, said.