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The Kingdom’s expanding food market

Source:Ringier Food

Date Published:3/1/2017 04:03:34 PM

An Al Masah Capital report suggests that around 25% of Saudi Arabia’s consumer expenditure was spent on food in 2015, or US$2,100 per person, which is the highest in the region. 

A RECENT Al Masah Capital report suggests that around 25% of the Saudi Arabia’s consumer expenditure was spent on food in 2015, around US$2,100 per person, which is the highest in the region.

KSA (along with the UAE), holding nearly 77% of the overall GCC population in 2015, were the largest food consumption centers. With a market size of $5.1 billion in 2015, KSA was the region’s largest fast food or Quick Service Restaurants (QSR) segment (43.8% in GCC market).


Major dates producer

THE KINGDOM of Saudi Arabia has always been renowned for its dates and is among the top three global producers. Out of the global harvest exceeding six million tonnes estimated by the Food and Agricultural Organization, the Kingdom produced more than 1.1 million tonnes in 2014. The country grows in excess of 300 types of dates and productive, useful date palms cover 157,000 hectares of national land. According to 2013 figures, only 6.8% of its production is shipped externally as the fruit is in high demand locally.The Kingdom offers unprecedented growth opportunities to food and beverage companies across all categories and sectors, local and otherwise, to target a wide range of age groups and demographics. Its population is currently at 31 million and expected to grow to 40 million by 2050. About 70% will be 30 years or below. Add to that the over 30 million tourists entering both KSA and the UAE annually – these countries account for majority of the GCC’s tourist arrivals.

The country’s food consumption was set to grow by 7.3% in 2016. Total food service sales were estimated at SR33.3 billion ($8.88 billion), equalling nearly half of the total GCC market, which stood at SR70.5 billion ($18.8 billion).

Since the last decade or so, KSA’s casual dining sector has been witnessing very robust growth. This is attracting many international brands and food operators. New brands entering the market have resulted in a 10% increase in the number of chain restaurants.

Recently the Italian pasta brand, Barilla announced its partnership with Mayar Foods to distribute its food products throughout the Kingdom. Saudi’s pasta market size is around 55,000 tonnes with nearly two kilograms consumption per capita annually. Barilla has justified the move in line with the recent shift in eating preferences within the region. 

An example is the Krabload event, a food gathering organized by Marfa Foundation, which saw Saudi youth eager to break the conventional mindset of visitors that Saudi youngsters were also able to offer enjoyable events. Unlike the traditional food festival, the Krabload offered a festive aura and a platform for start-ups and food entrepreneurs to launch their offerings and help locals compete regionally and internationally.


Growth in baby foods

THE FERTILITY rate in 2014 was 2.17 children per woman in the Kingdom and regardless of the social barriers, women are a huge part of the workforce. According to a report by Ken Research Private Limited, since 2010, female employment has expanded to 48%, not just women working in companies but also female entrepreneurs.

Against that background, the baby food market is promising. Baby food is categorized into milk formula, dried, prepared and other miscellaneous baby food. Growth in milk formula sales has driven the overall sales figures of the baby food sector in the country. Saudi Food Industries Co. Limited, operating under brand owner Nestlé SA, is forecast to lead this sector with 19% of retail value sales in 2016. It also has control in the dried baby food vertical with a 77% retail value share in 2016, thanks to its famous Cerelac brand. 


New laws governing the Kingdom

The KSA recently announced new taxes on drinks, tobacco and by-products; 14% of its teenagers and 7% of its women smoke, hence heralding the government’s decision to impost 100% value added tax (VAT) on tobacco and its products, in a bid to dwindle its growing smoking community. This move will be imposed in the second quarter of 2017 to bring prices to international levels, as low prices are contributing to a rise in smokers in the region. – ZAINAB MANSOOR


Obesity a major issue in KSA

NEARLY one-third of the Saudi population is obese, given the lack of physical activity and the tendencies to eat junk or processed food in place of a healthy diet. Cultural and environmental issues such as high temperatures, lack of transportation and a dearth of health clubs in districts hinder the possibility of regular gym sessions, causing people to gain massive amounts of weight.

Dr Rowaidah N. Idriss, executive director of the Nutri Life Centre for Healthy Meals was quoted as saying that the food industry has changed dramatically over the decades that has contributed to the epidemic.

Saudi Arabia stands third, behind Malta and Swaziland in terms of obesity and laziness, according to the British medical journal, The Lancet. It has put the ration of laziness and obesity at a whopping 86%, one of the major factors of diabetes, affecting nearly 25% of the Saudi population. 



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