Saudi Arabia, according to Alpen Capital’s 2013 GCC Food Industry report, is already the biggest food consumer by volume in the GCC region and by 2017, will account for 59 per cent of the food consumption in the region at 29 million tonnes. In addition to this strong growth, changing consumer trends and demographics are playing a key role in expanding Saudi Arabia’s appetite for international flavors.
Food and beverage companies across the region and the globe already have Saudi Arabia in their business development sights with many pursuing diversification, both in terms of geography and product offering to meet the Kingdom’s specific requirements. In the coming months and years, a period of growth and increased investment is expected in the Kingdom as companies scramble to cash in on this lucrative market.
Helping connect companies to this market opportunity is Foodex Saudi, Saudi Arabia’s first and biggest international trade event dedicated solely to the Food and Beverage industry. Taking place at the Jeddah Centre for Forums and Events from 8-11 December, under the patronage of the Ministry of Agriculture, the event is expected to attract more than 20,000 visitors and buyers to the Kingdom.
Here organizers share some of the key trends currently sweeping the industry:
1) Natural and Organic
Organic food has been a hot topic in Saudi Arabia for a number of years and increasing awareness among food producers and growing government support continue to attract new food retailers to the organic food segment. The growing demand for natural food products will be reflected at Foodex Saudi where organic companies such as Bio Ice, Organic Bio Free, Darin, Hasad and Organic Campagnola Soup having a presence.
2) Dietary Shift
While traditional foods and eating habits still dominate, there is a major shift taking place in Saudi Arabia’s food sector as consumption habits change. One such change is a shift towards a protein-rich diet that includes meat and dairy products from a carbohydrate-based one that consists of staple food items such as cereals.
3) Health Foods
While there is a growing awareness and drive about healthy living, obesity rates are high and diabetes is a top health concern within the Kingdom. As a consequence, demand for health food which is high on energy and nutrition is expected to gain traction. This is likely to be a fast growing segment in Saudi Arabia.
4) Expansion of Halal Markets
An increasing number of international companies are beginning to enter the Halal foods market, which is broadening the range of foods available to Saudi customers. For example, there has been a rise in Australian red meat exports to the Kingdom with analysts predicting further growth in the market from other countries such as Brazil.
5) Growing Popularity Of Eating Out
Eating out is becoming increasingly popular in Saudi Arabia, which is increasing demand for fast-food in the Kingdom. A host of casual dining and fast-food restaurants have sprung up over the past decade as richer consumers and a strong eat-out culture drives growth.
6) Increasing Focus on Haj Sites
Between 2-3 million pilgrims travel to Makkah each year to perform Haj, spending billions of US dollars on food and beverages. Saudi Arabia recently announced it would spend US$54bn on projects to expand the capacity of many of the Haj sites over the next 30 years, which will provide a wealth of opportunities for F&B companies.
7) Packaged Food
Packaged food makers might have the most to gain from Saudi Arabia’s current growth boom. According to a report from Research and Markets, the country’s packaged food market will grow at a CAGR of 8.95 per cent over the period 2012-2016. One of the key factors contributing to this market growth is the rising population of the country and, in particular, its youth bulge.
8) Dairy Processing
Saudi Arabia’s bustling dairy industry has been at the forefront of the food industry’s expansion and continues to grow rapidly. However, given the Kingdom’s decision to stop the production of water intensive agricultural practices such as wheat production, producers are highly dependent on imported livestock feed, which, from a purely economic point of view, is the single most important factor affecting the profitability of dairy farms. The dairy industry is expanding to service international demand presenting opportunities for foreign companies to support Saudi Arabia’s production needs.
9) Food Processing
Saudi Arabia’s local processing capabilities are starting to develop with value added production made possible once raw materials have been imported from abroad. The government currently supports the industry by providing financing and subsidies on and through the imposition of tariffs on imports that compete with locally produced equivalents. Increasing urbanization and the presence of multinational food companies are expected to increase the popularity of high-value processed foods among consumers.
Consumers in Saudi Arabia are not only changing their eating habits, they are demanding to know more about their food, how it is made and where it comes from. This hunger for information has led to developments such as tighter regulations on labeling and packaging.
Simon Blazeby is director at Reed Sunaidi Exhibitions.