KSA Food and Beverage Market Outlook to 2030

KSA Food and Beverage Market Overview

• The KSA Food and Beverage market reached a valuation of USD 22.5 billion in 2023, driven by increasing urbanization, rising disposable incomes, and a growing preference for diverse and convenient food options. The market's robust growth is also supported by significant investments in food processing and retail infrastructure, which have enhanced production capabilities and distribution networks across the kingdom.
• The market is characterized by key players such as Almarai, Savola Group, SADAFCO, Nadec, and Albaik. These companies are noted for their extensive distribution networks, strong brand recognition, and continuous innovation in product offerings.
• Jeddah and Mecca, dominates the food and beverage market. This dominance is attributed to higher population density, significant tourism activities, and substantial investments in food retail infrastructure. The influx of pilgrims and tourists boosts demand for a variety of food products, contributing to the market's growth in this region.
• In 2023, Almarai announced the launch of a new line of organic dairy products aimed at the Saudi market, focusing on enhancing health and wellness among consumers. This move not only aims to strengthen Almarai's market position but also supports Saudi Arabia's Vision 2030, focusing on economic diversification and food security.

KSA Food and Beverage Market Segmentation

The KSA Food and Beverage Market can be segmented by various factors such as Product Type, Distribution Channel, and Region.

By Product Type: The KSA Food and Beverage Market is segmented by product type into dairy products, bakery products, and beverages. In 2023, dairy products dominated this subsegment due to the strong demand for milk, cheese, and yogurt, driven by traditional dietary preferences and increasing health awareness among consumers.

By Distribution Channel: The market is also segmented by distribution channel into Supermarkets and Hypermarkets, Convenience Stores, and Online Retail. In 2023, Supermarkets and Hypermarkets held the dominant share, attributed to their extensive reach, wide product range, and the growing trend of one-stop shopping experiences. These large retail chains offer consumers the convenience of purchasing all their food and beverage needs under one roof.

By Region: The KSA Food and Beverage Market is segmented by region into North, South, East, and West. In 2023, the Western region held the largest market share due to its large population, significant number of tourists and pilgrims, and well-established food retail infrastructure. The presence of key market players and the region's role as a commercial hub also contribute to its dominance.

KSA Food and Beverage Market Competitive Landscape

• Savola Group: In 2024, Savola Group, a leading Saudi Arabian conglomerate, has announced its intention to distribute its entire 34.52% stake in Almarai. The distribution will be preceded by a SAR 6.0 billion rights issue, which will strengthen Savola's financial position and fund long-term growth opportunities
• SADAFCO: SADAFCO reported a significant41% increasein net profit for the first quarter of2024, reachingSAR 126.2 million, up fromSAR 89.7 millionin the same period the previous year. This growth reflects the company's strong performance across its product categories, particularly in long-life milk, tomato paste, and ice cream, where it maintains a leading market position.

KSA Food and Beverage Industry Analysis

Market Growth Drivers

• Increasing Demand for Organic Products: The Saudi Arabian food market is experiencing a significant rise in consumer demand for organic products. The Ministry of Environment, Water, and Agriculture has reported a notable increase in the number of certified organic farms, with a 25% rise from 2021 to 2023. This shift indicates a robust movement towards organic farming practices, aligning with global trends that emphasize health and environmental sustainability.
• Growth of E-commerce in Food and Beverage: The rise of e-commerce in Saudi Arabia's food and beverage sector is largely driven by changing consumer behaviors. In 2022, online grocery sales reachedSAR 12 billion, reflecting a30% increasefrom the previous year. More individuals are opting for the convenience of online shopping, particularly for food and beverage products.
• Expansion of Food Service Outlets: The number of food service outlets in Saudi Arabia has been consistently increasing, with approximately 30,000 restaurants and cafes reported in 2023. This growth is supported by a booming tourism sector and a young, urban population seeking diverse dining experiences. The expansion of the food service industry is indicative of changing consumer preferences and a growing economy.

Market Challenges

• Regulatory Compliance and Food Safety Standards: The food and beverage industry in Saudi Arabia faces stringent regulatory compliance and food safety standards that can pose challenges for new entrants and existing players. In 2023, the Saudi Food and Drug Authority (SFDA) implemented new regulations requiring all food products to meet specific safety and quality standards.
• Fluctuating Raw Material Prices: The volatility in raw material prices poses significant challenges for the food and beverage sector in Saudi Arabia, particularly concerning essential ingredients like wheat and sugar. In2023, wheat prices surged by15%compared to the previous year, primarily due to global supply chain disruptions stemming from geopolitical tensions, adverse weather conditions, and logistical challenges.

Market Government Initiatives

• Diversifying the Economy and Reducing Oil Dependence: Saudi Vision 2030, launched in 2016, aims to transform the Saudi economy by diversifying its revenue sources and reducing reliance on oil exports. The food and beverage sector has been identified as a key focus area for growth and investment under this initiative. By promoting the F&B industry, the government seeks to create jobs, attract foreign investment, and enhance the country's food security.
• Investment in Food Technology (2022): The Saudi government has allocated substantial funding to improve agricultural practices and increase domestic food production capabilities. This includes investments in modern farming techniques, irrigation systems, and crop research to boost yields and efficiency. The target is to raise local food production by30% by 2025, reducing the country's dependence on imports and ensuring a more stable food supply.

KSA Food and Beverage Future Market Outlook

The KSA Food and Beverage Market is poised for substantial growth by 2028, propelled by continuous technological innovations and the strategic expansion of local food production initiatives.

Future Trends

• Sustainability Focus: By 2028, the KSA Food and Beverage Market is expected to place increased focus on sustainability, with companies adopting eco-friendly practices in production, packaging, and supply chain management. This trend is driven by growing consumer awareness and stricter government regulations aimed at reducing environmental impact.
• E-commerce Growth and Digital Transformation: By 2028, the rise of e-commerce and online grocery shopping will significantly reshape the KSA Food and Beverage Market. More consumers will turn to digital platforms for their grocery needs, prompting companies to invest heavily in digital infrastructure and logistics to meet the increasing demand for convenience and accessibility.