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Saudi Arabia now holds the largest domestic F&B market in the GCC

Saudi Arabia now holds the largest domestic F&B market in the GCC



Top trends shaping Saudi F&B industry

The $45 billion food and beverage (F&B) industry in Saudi Arabia, which accounted for 10 per cent of gross domestic product (GDP) in 2018, is witnessing new trends

July 2020

Emergence of more ‘home grown’ brands and sustainable eating are among the four top food and beverage (F&B) trends in Saudi Arabia this year likely to shape the growth of the industry valued at $45 billion, according to global consultants JLL.

The Saudi Arabian General Authority for Investment (Sagia) forecasts that spending on foodservice will grow by 6 per cent per annum over the next five years. The Saudi F&B industry accounted for 10 per cent of gross domestic product (GDP) in 2018 according to the report, which also highlights the importance of the industry to the overall economy.

“As the population in the Kingdom reached about 34 million by the end of 2019, Saudi now holds the largest domestic F&B market in the GCC.

With this and the rapidly changing demographics, including a larger younger population with high disposable income, it also highlights the many opportunities available for developing the F&B industry in Saudi Arabia,” said Alexis Marcoux-Varvatsoulis, Foodservice Consulting Lead at JLL Mena.

F&B: strong focus on experience

F&B: strong focus on experience

“Saudi Arabia is changing drastically and we can see this with the current expansion of the tourism and entertainment industry. With this, the Kingdom is expected to result in a huge shift in the retail and F&B landscape as part of the government’s modernization and economic diversification efforts,” he continued.

Looking ahead for the rest of 2020, JLL has examined the following food and beverage trends that are set to lead the way in Saudi Arabia:

 

OVERALL EXPERIENCE

The increased focus on experience is likely to drive a shift in the market dynamic away from fast food to fast casual formats as consumers attach greater weight to quality experience rather than convenience, according to JLL.

“With a strong focus on experience, the Kingdom will likely see a shift from the current food courts found in most malls, to a wider range of food halls, market places and other dining and entertainment options. This shift is something developers will also welcome as units will attract higher average spends,” the report said.

 

SUSTAINABLE EATING

Consumers in Saudi Arabia are becoming increasingly concerned with health and wellness and this has clear implications for their food choices. “Many of the existing fast food chains have responded by introducing healthier menu options while new brands are emerging with a specific focus on health and wellbeing. Capitalising on the health-conscious consumer, local brands such as Sinless and Yogi have established a presence in Riyadh, offering healthy locally produced dishes,” the report said. 

 

‘HOME GROWN’ BRANDS

The Saudi foodservice sector is currently heavily dependent upon traditional local offers and large global brands especially in the fast food sector.

In recent years and as the Kingdom continues to develop its capabilities as an up and coming tourist destination, the market is becoming increasingly appealing to more types of interesting brands as consumers are selective in their desire for more unique experiences.

“There are opportunities for additional local or ‘home grown’ concepts in coming years, particularly for those offering healthy options utilising locally sourced ingredients,” the report said.

 

DARK KITCHENS

While more people will go outside the home to share their eating experience, the market for home delivery will remain sizeable and this is estimated to reach $365 billion by 2022. Another consequence of the growth in food delivery options will be a further separation between the location of food preparation and consumption. “There is already a growing interest in ‘dark kitchens’ (kitchens without dining facilities) across the major cities in Saudi and this interest is only likely to increase over coming years,” the report noted.




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