KSA Soft Drinks Market Outlook to 2030

KSA Soft Drinks Market Overview

• The KSA soft drinks market is valued at USD 13 billion, based on a five-year historical analysis, supported by growing urbanization, increasing disposable income, and changing consumer preferences towards healthier beverage options. The market is witnessing growth driven by the rising demand for flavored drinks, carbonated beverages, and energy drinks, particularly among the younger population. As Saudi Arabia moves towards diversifying its economy under Vision 2030, the beverage industry, including soft drinks, is set to play a crucial role in catering to the evolving consumer base.

• Major urban areas such as Riyadh, Jeddah, and Dammam are key drivers of market growth due to higher population density, an increasing youth population, and a rising preference for convenient, on-the-go beverages. Rural areas are showing moderate growth as well, with local manufacturers focusing on affordable, yet diverse, soft drink options to cater to price-sensitive consumers.
• The Saudi governments Vision 2030 initiative includes several measures to encourage healthier lifestyles and reduce the consumption of sugary drinks, such as the introduction of excise taxes on sugary beverages in 2017. However, demand for sugar-free and low-calorie soft drinks is rising, with manufacturers adapting their product offerings to meet these new consumer preferences. The market is expected to evolve towards healthier alternatives while maintaining a strong base in traditional soft drink categories.

KSA Soft Drinks Market Segmentation

• By Product Type: The market is segmented by product type into carbonated soft drinks, juices, bottled water, ready to drink tea,and energy drinks. Carbonated soft drinks dominate the market due to their wide availability and established consumer base. However, juices and energy drinks are gaining popularity, driven by increased health awareness and demand for functional beverages. Energy drinks, in particular, are witnessing rapid growth among younger consumers and athletes seeking performance-enhancing drinks, while juice-based beverages are appealing to health-conscious individuals and families.

By Distribution Channel: The market is segmented by distribution channel into supermarkets & hypermarkets, convenience stores, online platforms, and vending machines. Supermarkets and hypermarkets are the largest distribution channel, with chains like Carrefour and Lulu Hypermarket offering a broad range of imported and local soft drink products. Convenience stores and vending machines are particularly popular in urban areas due to their accessibility and convenience for consumers on the go. Online platforms are also gaining traction, especially in major cities, as digital grocery shopping becomes more common.

KSA Soft Drinks Market Competitive Landscape

The KSA soft drinks market is highly competitive, with several domestic and international players offering a wide variety of beverages. Key players include PepsiCo, Coca-Cola, Almarai, and National Beverage Company. These companies are continuously expanding their product portfolios to meet the growing demand for both traditional and innovative beverages in the Kingdom. Strategies such as product diversification, investment in sustainable packaging, and partnerships with local distributors are commonly employed to strengthen market presence and cater to evolving consumer preferences.

KSA Soft Drinks Industry Analysis

Growth Drivers

• Rise in Disposable Income and Changing Consumer Preferences: The Kingdom of Saudi Arabia (KSA) has seen a steady increase in disposable income, reaching SAR 13,000 per household annually in 2023, according to the Saudi General Authority for Statistics. This rise in income, combined with changing lifestyle habits, has led to a growing demand for soft drinks, with per capita consumption reaching 120 liters per year in 2024. Consumers in urban areas are particularly shifting towards premium and flavored beverages, with younger demographics driving the demand for energy drinks and functional beverages.
• Changing Consumer Preferences: The soft drinks market in Saudi Arabia is witnessing a notable shift towards healthier beverage options, driven by changing consumer preferences. In 2024, Saudi Arabia's government has been promoting healthier lifestyle choices in line with Vision 2030, which has encouraged consumers to opt for sugar-free and low-calorie drinks. According to data from the Ministry of Health, there has been a substantial rise in health awareness campaigns focusing on nutrition and diet, contributing to this shift. Consumers are increasingly preferring drinks such as herbal teas, sparkling water, and fortified juices.
• Urbanization and Population Growth: Saudi Arabia has experienced significant urbanization, with over 84% of the population residing in urban areas in 2024. This urban expansion has directly increased the demand for soft drinks, particularly in bustling cities like Riyadh and Jeddah. Government data from the Saudi General Authority for Statistics reveals that the population grew by nearly 2 million people between 2022 and 2024, boosting the consumption of beverages in urban centers. This rapid urbanization, along with a younger population, has enhanced the demand for soft drinks in convenience stores and quick-service restaurants.

Market Challenges

• Excise Tax on Sugary Drinks: The implementation of the excise tax on sugary beverages has posed a significant challenge for the soft drinks industry, increasing prices for consumers and reducing overall demand for sugar-laden drinks. Although the tax has encouraged a shift towards healthier alternatives, it has also strained profit margins for manufacturers heavily reliant on traditional sugary beverages. By 2024, soft drink sales have declined in the lower-income brackets, particularly for sugary sodas and energy drinks, due to their elevated prices. This tax has led to a shift in demand toward lower-cost, healthier alternatives, such as infused waters and herbal drinks.
• High Operational Costs: Rising operational costs in the production and distribution of beverages have been a key challenge for soft drink manufacturers in Saudi Arabia. Energy prices have increased substantially by between 2022 and 2024 due to global supply chain disruptions, which have further strained the beverage industry, according to data from the Saudi Ministry of Energy. Moreover, transportation and logistics costs have risen because of increased fuel prices and higher wages in the logistics sector, creating significant pressure on beverage producers to manage costs while maintaining product affordability.

KSA Soft Drinks Market Future Outlook

The KSA soft drinks market is expected to experience steady growth over the next five years, driven by increasing consumer demand for healthier beverage options, government initiatives promoting healthier lifestyles, and the growing middle-class population. Innovation in healthier product formulations, such as sugar-free beverages and functional drinks, along with investment in sustainable packaging, are expected to play a key role in shaping the future market landscape.

Future Market Opportunities

• Growth in Functional Beverages: The demand for functional beverages in Saudi Arabia, including energy drinks and fortified juices, has been growing steadily. Data from the Saudi Food and Drug Authority (SFDA) shows a substantial rise in energy drink imports in 2024, driven by younger consumers seeking beverages with added health benefits. Similarly, fortified juices with added vitamins and minerals have gained traction as consumers look for functional drinks that offer both hydration and health benefits. This trend is expected to provide significant growth opportunities for companies that invest in product innovation in the functional beverage space.
• Digital Transformation: Digital transformation is reshaping the retail landscape in Saudi Arabia, with e-commerce platforms becoming an essential sales channel for soft drinks. According to the Communications and Information Technology Commission (CITC), online sales of beverages surged remarkably between 2022 and 2024, as more consumers opted for the convenience of purchasing drinks through mobile apps and websites. This digital shift presents an opportunity for manufacturers and retailers to expand their online presence, tap into new customer bases, and enhance direct-to-consumer sales, especially for premium and specialty drinks.