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Arab Boycott Compliance Move May Remove Marketing Fizz from Schweppes

British opponents of the Arab boycott are looking to the United States to put pressure on Cadbury-Schweppes, the international United Kingdom-owned soft drinks and confectionery group, which is considering reducing its ties with Israel in order to have its name removed from the Arab blacklist.

This has emerged following disclosure of a letter from a Cadbury-Schweppes senior director to the Arab boycott office in Damascus discussing the prospects for ending the group’s bottling and trademark arrangements with Israel’s Jaf-Ora Company, based in Rehovot. The British anti-boycott committee, which as a matter of principle is opposed to all boycotts, is apparently reluctant to advise British friends of Israel to take retaliatory action against Cadbury-Schweppes should it terminate its trade ties with Israel.

However, Cadbury-Schweppes, which was highly embarrassed by the leak of its exchanges with Damascus, has evidently been informed through other channels that it could lose far more than its relatively minor business in Israel if it succumbed to Arab pressures.

POSSIBLE REACTIONS IN BRITAIN

In Britain, the company could earn the displeasure of major retail chains, such as Marks and Spencer and Tesco, renowned for their active support of the State of Israel. Both these companies are biding their time before taking any public action.

But boycott watchers here believe there would be a far stronger backlash in the U.S. because of the greater militancy of the American Jewish community and because, unlike Britain, the U.S. has legislation outlawing compliance with the Arab boycott by American companies or American subsidiaries of overseas concerns.

The world’s third biggest soft-drinks company, Cadbury-Schweppes sees its biggest opportunities in North America, where last year it realized a pre-tax profit of 415 million Pounds Sterling, nearly a quarter of its world-wide profit.

Together with it’s newly acquired subsidiary Canada Dry, it controls around 3.2 percent of America’s huge soft drinks market. While still dwarfed by Coca Cola and Pepsico, it is confident of further growth there.

CONFIDENTIAL LETTER DISCLOSED

The group’s bid to conciliate the Arabs emerged in a confidential letter from Mervyn Blakeney, managing director of Schweppes International, to the Damascus boycott office, which had been circulated anonymously to various Jewish organizations before being quoted in the Israeli press last week.

In this letter, Blakeney had said the company “undertakes, that at the request of the Central Office for the Boycott of Israel, it will formally instruct its wholly owned subsidiary Schweppes International Limited (SIL)…. to give formal notice on April 30, 1988, to Jaf-Ora Limited that SIL will terminate its bottling and trade mark arrangements on April 30, 1989.”

Such a move would have serious consequences for Jaf-Ora which employs 400 people and last year had a turnover of $30 million, of which $20 million was directly concerned with Schweppes.

From brief public comments by Blakeney and Danny Bibro, chairman of Jaf-Ora, it appears that delicate negotiations are also going on to ensure that Jaf-Ora will not go out of business should the bottling agreement be terminated.

Blakeney has been reported as saying “we have every reason to believe that these negotiations will end successfully and that production will continue in Israel.” Bibro has made similar upbeat comments.

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