JEDDAH, 9 May 2004 — The Saudi Arabian packaged food market will continue to be in good health in 2004, following an excellent performance in 2003, experts say.
Many areas of packaged food are expected to do even better this year than in 2003, which produced slightly strong overall growth.
Value sales of packaged food are forecast to be worth more than SR25.6 billion in 2003, with sales increasing by 5.2 percent in current value terms on 2002. A number of factors are driving growth in packaged food in the Kingdom, according to Global Information Inc.
Firstly, the population growth rate is high at 3.4 percent and the total population reached more than 22 million in 2002. On average, the countries in the region have a population doubling time of 32 years, given Saudi Arabia’s current growth rates this would currently take 23 years.
“This results in a demographic skew towards a youthful population,” a Nestlé executive said.
This young consumer base is a keen consumer of many types of packaged food, including chocolate confectionery, a good number of dairy products, ice cream, savory snacks, spreads and baby food. Some of these will be among the best-performing packaged food categories in 2003.
Development of domestic manufacturing drives growth.
Another factor significantly boosting growth in packaged food is the impressive development of local manufacturers. The local manufacturing of food has expanded rapidly.
The Kingdom has assisted food manufacturers by providing attractive financing and subsidies on selected equipment. The government also imposed higher import tariffs on imports that compete with locally made products, including poultry, eggs, baby food and macaroni.
Locally made food products also have an advantage over imported food products in that they can be exported duty free to any country within the Gulf Cooperation Council (GCC).
Companies including Nestle Bestfoods, Kraft Jacobs Suchard, Del Monte, Arla Food, Master Foods, PepsiCo and Danone Group all have licensees in the country producing their brands in order to take advantage of this legislation.
Dairy products, dried food (mainly rice) and bakery products (baked goods) have been the anchors of the market, accounting for more than 66 percent of total value sales of packaged food in 2003. Products like bread, rice, yogurt and milk from the core components of Saudi diets.
Bread is a staple product, regularly consumed during the three meals of the day, while rice, particularly Basmati rice, is the major component of many Saudi dishes such as Kabsah and Sayyadeyah.
Cheese is also one of the major food products in Saudi Arabian daily meals as are yogurt and laban. Regular milk, either fresh or UHT, is consumed on a daily basis by Saudis of all ages, while flavored milk is the preferred choice for children and teenagers.
Underdeveloped areas of packaged food, such as snack bars and ready meals, are unsurprisingly going to show the fastest growth.
However, the main drivers of overall growth will be key larger areas, such as dried food, namely rice, dairy products and bakery products.
