KSA Coffee Market Outlook to 2030

KSA Coffee Market Overview

• The coffee market in Saudi Arabia is valued at USD 4.3 billion. This valuation reflects the significant demand for coffee, driven primarily by the younger population's increasing interest in premium coffee products, as well as the growth in caf culture. The market is heavily influenced by consumer preferences for high-quality, locally produced, and sustainable coffee. Major companies like Nestl and Baja are capitalizing on this trend, with Nestl recently announcing investments to expand production and establish a state-of-the-art manufacturing plant.

• Key cities dominating the Saudi coffee market include Riyadh, Jeddah, and Dammam. These urban centers account for a large share of coffee consumption due to their population density, higher disposable incomes, and a well-established caf culture. Riyadh, in particular, is home to many specialty coffee shops that cater to a rising number of coffee aficionados, driving the dominance of these regions in the market.
• The Saudi government, under its Vision 2030 program, has allocated SAR 200 million to boost coffee cultivation in the Jazan region, which is known for producing Saudi Khawlani coffee. By the end of 2024, the Ministry of Environment, Water, and Agriculture aims to plant over 1 million coffee trees. This initiative is expected to increase local production by 40%, as indicated in government agricultural reports, providing an alternative to imported coffee.

KSA Coffee Market Segmentation

By Product Type: The market is segmented by product type into ground coffee, instant coffee (pods and capsules), whole bean coffee, and specialty coffee. Recently, instant coffee has dominated the product type segmentation, primarily due to the convenience it offers to busy consumers. With more individuals working longer hours, instant coffee provides a quick and easy way to enjoy coffee, leading to its growing popularity. Brands like Nestl and Keurig have strengthened their market positions by introducing high-quality pods and capsules that appeal to this demand.

By Distribution Channel: The market is also segmented by distribution channels, including supermarkets and hypermarkets, online retail, convenience stores, and cafs. Supermarkets and hypermarkets lead in market share as they provide a one-stop shop for coffee products, from instant coffee to premium specialty beans. The widespread availability of various brands and the convenience of shopping for groceries alongside coffee make this channel the preferred choice for most consumers.

KSA Coffee Market Competitive Landscape

The market is dominated by both global and local players. Major global companies like Nestl, Starbucks, and Jacobs Douwe Egberts have established a presence in the country, while local companies like Baja and Brew92 have made inroads by focusing on the unique preferences of Saudi consumers.

KSA Coffee Market Analysis

Market Growth Drivers

• Increasing Consumer Preferences for Specialty Coffee: The growing demand for high-quality specialty coffee in Saudi Arabia is driving the coffee market. A number of consumers are shifting towards premium products. The Saudi government reports that imports of green coffee beans have risen steadily, with over 83,000 tons imported in 2023 to meet the growing demand for specialty coffees, especially from Ethiopia and Colombia.
• Rising Investments in Local Coffee Production: The Saudi government is pushing for local coffee production to reduce dependency on imports. By 2024, the country plans to increase domestic coffee production to 5,000 tons annually, according to the Ministry of Agriculture. This push for local production is complemented by the government's financial support for farmers in the Jazan region, where coffee cultivation is expanding.
• Growing Coffee Culture Among Youth and Expats: Saudi Arabia has witnessed a surge in the coffee culture, with an increasing number of coffee shops, particularly in urban centers like Riyadh and Jeddah. The General Authority for Statistics shows that more than 1,500 coffee shops were opened across the Kingdom in 2023, and this number is expected to rise to over 2,000 by 2025.

Market Challenges

• High Dependence on Coffee Imports: Despite efforts to boost local production, Saudi Arabia remains heavily dependent on imported coffee beans. In 2023, over 83,000 tons of green coffee were imported, a number that continues to grow annually. The reliance on imports exposes the market to fluctuations in global coffee prices, supply chain disruptions, and quality inconsistencies.
• Environmental Constraints for Coffee Cultivation: Saudi Arabia's arid climate and limited water resources pose challenges for coffee cultivation, especially in regions like Jazan. The National Center for Meteorology reported that water availability in coffee-growing regions decreased by 12% in 2023 due to lower-than-average rainfall, making it difficult for local farmers to scale up production.

KSA Coffee Market Future Outlook

Over the next five years, the KSA Coffee industry is expected to experience growth driven by factors such as the increasing demand for premium coffee products, the expansion of specialty coffee chains, and government initiatives to boost local coffee production under Vision 2030.

Future Market Opportunities

• Growth in Local Coffee Production: Over the next five years, local coffee production is expected to increase due to continued government support and investments in the agricultural sector. By 2028, Saudi Arabia is projected to produce over 7,000 tons of locally grown coffee annually, up from 2,500 tons in 2024, according to agricultural forecasts from the Ministry of Agriculture.
• Expansion of Coffee Retail Outlets: The number of coffee shops and retail outlets in Saudi Arabia is expected to grow rapidly, with over 2,500 new outlets projected by 2027, as estimated by the Ministry of Commerce. This expansion will be fueled by both international and local brands looking to tap into the growing consumer base and coffee culture among Saudi youth.