The Saudi market for Beverages is valued at $2.61 billion dollars. Growing at a CAGR of 6 percent, the market is expected to reach over $5.1 billion b

As you know, the global food and beverage market is expected to grow due to a rising population and income.  Saudi Arabia, whose share of the global sector is $40 billion, aims to grow its food processing activities in segments with competitive advantages such as dates, dairy, and confectionery products. Currently, imports meet a significant amount of consumption whereas import and re-export activities are somewhat limited. Meat and poultry, dairy, fruits, and confectionery products account for the majority of imports.

 

The Saudi market for Confectionery, Starch Products, and Coffee is valued at $8 billion, of which an estimated $6.4 billion worth of products is imported.  Growing at a CAGR of 6 percent, the market is expected to reach over $12.3 billion by 2021. Local manufacturing, which includes production of starches from rice and potatoes, grain and rice milling (e.g. production of flour, rice, wheat), as well as bakery products, cocoa, sugar confectionery, is valued at over $1.2 billion.  An estimated $1.2 billion of products is exported.  Recent market trends emphasize value-led growth via “premiumization” of confectionery products (e.g. high-end chocolate). In addition, manufacturers are also turning to “snacking” via miniaturization (e.g. portable yoghurt pots as snacks) or through new products to satisfy consumers’ demand for healthy and convenient products.

 

Saudi Arabia imports a significant amount of confectionery products, partially due to large local demand, especially for Chocolate.  Moreover, the segment has large demand across the region.  With Saudi Arabia’s relatively cheap labor costs and free trade agreements with many countries, there is potential for expansion of local manufacturing to meet not only the growing local demand but also regional and international demand, particularly in the MENA and Asian markets. Partnering with major suppliers of raw materials at competitive prices and expanding the production of chocolate and biscuits will enable Saudi Arabia to increase exports to these target markets.

 

The Saudi market for Beverages is valued at $2.61 billion dollars. Growing at a CAGR of 6 percent, the market is expected to reach over $5.1 billion by 2021. While this segment is met mostly through local production, the segment should be preserved while the products offered should reflect rising health consciousness among consumers.

 

The Saudi market for Animal and Vegetable Oils is valued at $1.6 billion dollars. Growing at a CAGR of 9 percent, the market is expected to reach over $2.54 billion by 2021. Due to limitations concerning agricultural activities, unrefined and refined oils are largely imported. This exposes the Kingdom to price risk related to the volatility of the price of imports and supply risk.

 

Given that the global food and beverage market is growing both globally and locally, the Kingdom aims to capitalize on this lucrative sector by expanding local production in the segments where competitive advantages exist, as well as tackle certain challenges currently faced by food processors.

A focus on the production of dairy, seafood, and date products in addition to positioning Saudi Arabia as a Halal meat hub, is an essential part of the strategy. Additionally, the Kingdom aims to provide food processors with the support needed to facilitate growth in several the key sectors, while also maintaining currently established sectors.

 

Source: U.S-Saudi Arabian Business Council