AMERICA may be girding for war with Iraq but it is already fighting “cola wars” throughout the Middle East.

As a boycott against US products spreads across the Islamic world, Muslim manufacturers are taking on America’s biggest brand names by producing their own fizzy drinks.

Factories in Iran making Zam Zam Cola are struggling to keep up with demand for their slightly sickly version of Pepsi and Coca-Cola.

Ten million bottles of Zam Zam have been exported to Saudi Arabia and Gulf countries in the past four months and the Iranians are working overtime to churn out enough of their cola to slake the thirsts of the two million Muslims expected in Saudi Arabia for the annual pilgrimage to Mecca.

This cola has been so successful that others are racing to get in on the act. Tawfiq Mathlouthi, a French Muslim entrepreneur, will launch Mecca Cola in Paris next month. No superstar is being paid millions to sing its jingle but there will be an advertising campaign promising that 10 per cent of the profits will go to a Palestinian children’s charity.

M Mathlouthi admits he has taken the idea from the producers of Zam Zam but says he has had inquiries from interested parties in Belgium and the Netherlands. He has high hopes that British Muslims may acquire a taste for it as well.

His launch is being timed for the start of Ramadan when the call for a boycott of all US brands will be stepped up.American companies such as McDonald’s, Starbucks, Nike and the cola giants admit the campaign is wounding them. Sales of Coca-Cola have dropped between 20 and 40 per cent in some countries.

In Morocco, a government official estimates sales of Pepsi and Coca-Cola could fall by half in the north, which is a stronghold of Islamic groups. In the United Arab Emirates, sales of the local Star Cola are up by 40 per cent over the past three months.

The Islamic cola warriors say this is an easy way for Muslims to feel they are punishing George W. Bush.

Mr Mathlouthi said his Mecca Cola would “answer the needs of world citizens by contributing to the fight against American imperialism and the fascism of the Zionist entity”. The advertising men promise to come up with a snappier slogan.

Advertising chiefs say the Islamic cola campaign represents a new attack on America’s grip on fast-food outlets, soft drinks, leisure wear and cigarette brands.

Rita Clifton, chairman of Interbrand, the global brand consultancy, said last night: “This is an alternative to the usual protest which just says, ‘Don’t eat or drink these American brands’. This has the powerful message, ‘Hurt the US by supporting your own brands’.

“Coca-Cola is the world’s most valuable brand — worth £45 billion — so it’s not going to be put out of business. But no company wants to be boycotted or have its product poured out in the streets by protesters.”

Zam Zam’s executives are delighted at putting one over on the “Great Satan” but are careful not to gloat in their adverts. Similarly, while Coke and Pepsi are stepping up their promotions in the Gulf they do not want to get dragged into a war of words with Zam Zam.

Bahram Kheiry, Zam Zam’s marketing manager, said: “We are proud our country is producing something that replaces world products.”

The cola is named after the waters that flow from the Zamzam holy spring in Mecca. It exceeded all expectations by selling four million cans in its first week. After the success of its original cola, Zam Zam now comes in other flavours such as orange, lemon and lime.

The company, which also produces non-alcoholic “Islamic beer”, has a long pedigree in Iran, where it was founded in 1954 and today has 47 per cent of the domestic market. For many years it was the Iranian partner of Pepsi-Cola until their contract was ended after the 1979 revolution.

Zam Zam was taken over by the Foundation of the Dispossessed, a powerful state charity run by clerics, and today it employs more than 7,000 people in its 17 factories in Iran. They are now planning to build factories in the Persian Gulf.

Its cola is already exported to Saudi Arabia, Bahrain, Qatar, the United Arab Emirates, Oman, Kuwait, Afghanistan and Iraq, and the company says it will soon ship its drinks to Lebanon, Syria and Denmark — its first European client. Mr Kheiry rattled off the inquiries he has handled in recent weeks from France, Canada, Norway, the Netherlands Germany, Indonesia, Malaysia, Pakistan, Bangladesh and several countries in Africa who fancy a taste of Zam Zam. “After Arab countries in the region started boycotting some American goods, including Coca-Cola, demand for Zam Zam really took off,” Mr Kheiri said. Coca-Cola executives distanced themselves from US Middle East policy. A spokesman said: “We are a business, so we do not get involved in political issues.”

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