The Saudi food market potentials

Bander AL-Aseeri
EAP 050/020 1/10/08

Food Market Potentials in Saudi Arabia

I was planning to go grocery shopping last weekend , so I went the supermarket grabbed a trolley and began to venture. Moving from one aisle to another, I browsed between racks, which were piled with different items. Looking at some of the food products, I came across Kellogg’s corn flakes, Green Giant canned food, Philadelphia cream cheese, Actinia diary products, and many other products seemed familiar. It was like I were almost walking into a grocery store in Riyadh.
Not far from where I live, there's UNO Grill famous for it’s menu, TJI fridays, Chilis and other famous fast food restaurant chains also available in Saudi Arabia. These are examples showing that the Saudi food market is open to foreign investment in different forms of national and international trade either importing or franchising.The Saudi economy for the last decade has undergone major reforms.1, 2 While witnessing an economic boom as a result of the increase of oil prices, not to mention the overall increase of prices affecting the majority of consumers, the Saudi Riyal is pegged to U.S. Dollar at fixed exchange rate at 1 $ U.S. equal to 3.75 Riyals.2 This could be one of the reasons that inflation wasn't exacerbated and kept steady yet growing annual demands.


Other means that have certainly aided in expanding the consumer base is the changing life style, the fast moving pace of our activities, and the trend of moving to live in big metropolitan and urban cities migrating from rural areas. These factors played a major a role in altering Saudi eating habits, although the awareness of the consumer created a flourishing market, and investors had to respond accordingly by supplying the need for the consumers constantly.

The interest in the Saudi food market is driven by a number of reasons. It got the attention and attracted foreign investors who definitely saw the promising opportunities and sought to invest in this market. That was seen through the new encouraging regulations by the government on food trade and the reduction of taxes. However, the main reasons could be, first the Saudi population is growing at 3% per year which means demand will grow proportionately. In addition huge supermarkets and malls that have food courts the are newly constructed. Finally the Saudi market imports $ 8 billion U.S. worth of food and beverage every year. The Saudi market is the biggest importer of food with a 66 % of all Middle East’s entire annual imports .3

The Saudi food market posseses huge investing potentials and is constantly growing. While the Saudi economy is not the bigest in Asia, it is considered one of the largest consuming markets on the continent and the biggest in the Middle East. The rate of consumption reaches peak during the pilgrimage (Hajj) season. These elements does show opportunities for a rising future of the Saudi food industry and in the midst of the current economic boom it could definitely make it one of the fastest growing markets in the world.


1 www.saudiembassy.net/ReportLink/Reform%20Dec%202003.pdf
2 http://en.wikipedia.org/wiki/Economy_of_Saudi_Arabia
3 www.labia.org.bra/annexes/Brochure_Saudi Food2008_Int.pdf