SodaStream Closing West Bank Factory Targeted by Boycotts in ScarJo Split

SodaStream International Ltd. will close a factory in a West Bank settlement that had prompted calls by pro-Palestinian activists for consumers to boycott the Israeli company’s soda machines.

The plant in the industrial zone of Mishor Adumim will shut after the company opted to relocate its operations at that site and another in northern Israel by late 2015. The decision is “purely commercial” and forms part of a “global growth plan” being initiated by Lod, Israel-based SodaStream, spokeswoman Nirit Hurwitz said today by e-mail.

The move comes amid increasing international steps to boycott or sanction businesses operating in the West Bank and east Jerusalem, including local banks. SodaStream has sparred with supporters of Palestinian statehood, who have been waging a grass-roots economic battle against Israel, modeled after the campaign that helped end apartheid in South Africa.

The Boycott, Divestment and Sanctions National Committee, a coalition of Palestinian unions, political parties, and non-profit groups, welcomed the decision, according to an e-mailed statement from Rafeef Ziadah, a spokesperson for the group.

Actress Scarlett Johansson publicly split with Oxfam International this year after the U.K.-based charity criticized her role within SodaStream because of its West Bank plant. SodaStream Chief Executive Officer Daniel Birnbaum defended his company to journalists in February at a tour of the plant, which as of this year employed 500 Palestinians, 450 Israeli Arabs and 350 Israeli Jews.

Production Relocated

“We’re not a settlement, we’re a factory,” Birnbaum said Feb. 3. “We do not sustain the settlement economy, we sustain the Palestinian and Israeli economies, so shutting this factory down will have no benefit to the Palestinian people or the peace process.”

Production will be relocated to a facility in the southern town of Lehavim, Hurwitz said. SodaStream is working with the Israeli government to secure work permits for the Palestinian employees, she said.

“We remain committed to the family of our employees and will do everything in our power to enable continuity of employment for all of them, including our Palestinian employees,” Hurwitz said by e-mail.

SodaStream shares fell 3.9 percent to $21.07 at 2:26 p.m. in New York and have declined 58 percent this year.

Profit this year will be down 42 percent from 2013, and sales are forecast to drop 9 percent to $512 million, Birnbaum said on a conference call with investors today.

“Sales from the U.S. have been challenging year-to-date, and we are starting to experience pockets of softness in other markets as well,” he said. “A change in course is necessary to get our business back on track.’

Israel captured the West Bank and east Jerusalem from Jordan in the 1967 Middle East war. Palestinians want those areas to be part of an independent state.

(A previous version of this story was corrected to clarify Israel didn’t annex the West Bank.)

To contact the reporter on this story: David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Nikolaj Gammeltoft