The rise of the Saudi perfume market

The rise of the Saudi perfume market
The rise of locally produced Saudi perfumes poses an opportunity for investors no longer restricted to international brands. (Shutterstock)
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Updated 01 October 2024
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The rise of the Saudi perfume market

The rise of the Saudi perfume market
  • Sector mirrors the Kingdom’s opulent lifestyle and its people’s historical connection to scents

RIYADH: Saudi Arabia, with its rich cultural heritage and burgeoning economy, presents a complex study of contrasts and traditions, particularly in its luxury perfume market.

This sector, deeply ingrained in Saudi society, mirrors the Kingdom’s opulent lifestyle and its people’s historical connection to scents.

With the market’s valuation at $1.8 billion in 2023 and anticipated growth to $2.6 billion by 2032, the Kingdom’s perfume industry is a testament to the cultural significance of fragrance. 

According to data from the Ministry of Commerce, exports amounted to SR416 million ($110.9 million) for 10 months of 2023, compared to imports, mostly from European countries, amounting to SR1.1 billion during the same period.

The rise of locally produced Saudi perfumes poses an opportunity for investors no longer restricted to international brands.

The number of commercial registrations granted to practice the manufacturing and bottling of perfumes in Saudi Arabia further demonstrates the rising tendency of citizens to invest in the industry.

According to data from the ministry, the number of existing commercial records for perfume manufacturing activity in the Kingdom reached 1,263 by the end of 2023.

Moreover, the push for female empowerment and increased tourism are expected to buoy the market further, making it an appealing sector for investors and entrepreneurs.

An inclination toward luxury and tradition

In the heart of Saudi Arabia’s scent market lies a preference for luxury and tradition. Premium products dominate the scene, reflecting a societal penchant for high-quality ingredients and prestigious brand associations. 

Chandra Mohan, the assistant vice president at research firm P&S Intelligence, told Arab News that the demand for premium fragrances is increasing due to rising personal disposable income and surging consumer awareness about the benefits of using extravagant perfumes.

Data gathered by his firm revealed that the luxury category held the larger share of the Kingdom’s scent market in 2022, accounting for almost the entirety of the sector at 90.9 percent. 




With their complex profiles and traditional ingredients, Arabic perfumes command a significant market share. (Shutterstock)

“Premium perfumes are made up of high-quality ingredients, which differentiate them from other cheap products. These are also concentrated and long-lasting and are designed to evolve and offer more sophisticated and refined experience,” Mohan explained.

“Nowadays, people are also becoming more conscious about brands and shifting toward quality and premium products, as they have high spending power. Thus, the growing usage of premium products is contributing to the growth of the market in the country,” he added.

The inherent quality and luxury of the Saudi perfume market, driven by the cultural significance of scents such as oud and musk, have contributed to the industry’s success.

With their complex profiles and traditional ingredients, Arabic perfumes command a significant market share. 

Their popularity is a nod to the region’s cultural heritage, where these fragrances are more than just scents: They are a bridge to the past and a celebration of Arab identity.

Demonstrating this, oriental perfumes accounted for the largest revenue share of the Saudi perfume market, accounting for 65.77 percent in 2022, according to a report by P&S Intelligence. 

The report further noted that this category is expected to grow by 6 percent from 2023 to 2030. 

FASTFACTS

• With the market’s valuation at $1.8 billion in 2023 and anticipated growth to $2.6 billion by 2032, the Kingdom’s perfume industry is a testament to the cultural significance of fragrance.

• The number of commercial registrations granted to practice the manufacturing and bottling of perfumes in Saudi Arabia further demonstrates the rising tendency of citizens to invest in the industry.

The craftsmanship behind these fragrances, often passed down through generations, adds layers of depth and sophistication, making them highly sought after locally and internationally.

The inclination toward premium fragrances connects back to deep-rooted cultural practices where perfumes served as an extension of personal identity and social standing, the owner of Saudi perfume brand “Nabdh,” Zaynah Al-Hamza, told Arab News. 

The digital age and celebrity branding

The digital landscape has transformed how perfumes are marketed and sold in Saudi Arabia. 

E-commerce, bolstered by the pandemic, has become a critical channel for reaching consumers, with many brands expanding their online presence.

“In recent times, developments in information and communication technologies, particularly social media, have revolutionized the way marketing activities take place. Social media has surfaced as a cost-effective and efficient information exchange platform for all,” Mohan said.

“Celebrities are also promoting several brands on social media and people are increasingly buying those products because of celebrity influence,” he added.

In March 2023, Portuguese influencer Georgina Rodriguez starred in social media adverts for Saudi fragrance brand Laverne, which later collaborated with global supermodel Taylor Hill. 




The push for female empowerment and increased tourism are expected to buoy the market further. (Supplied)

Perfume companies partner with celebrities to increase brand awareness and drive website traffic and sales, the P&S global report said, adding that this tactic also aids in generating engagement, creating a community, and serving as a channel for customers.

This shift has made the Saudi luxury perfume market more accessible and has opened up new avenues for brands to engage with their audience through social media and online marketing.

The interplay between tradition and modernity and embracing digital methods sets the stage for a dynamic future in the Saudi fragrance industry.

The unisex phenomenon

Unisex fragrances, capturing the largest market share, indicate a progressive shift in consumer behavior. This trend underscores a growing acceptance of products that transcend traditional boundaries, with scents like oud, musk, and amber being used for scents that appeal to all customers. 

“Another key trend observed in the market is the rising demand for unisex perfumes. This is because people have different tastes and a large number of individuals are looking for an aroma that is not only feminine but also masculine,” the P&S analyst said. 

“Moreover, anyone can wear them, and it allows sharing and swapping collections among different genders. Furthermore, unisex perfumes are neutral in odor and millennial consumers are mostly choosing products with inimitable fragrances in order to build up their personality and individuality,” he added.

These preferences highlight the changing landscape of the Saudi market, which, despite its traditional foundations, is receptive to modern influences.


Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024

Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024
Updated 05 November 2024
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Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024

Saudi Arabia, UAE invest $26.8m in Pakistan in Q1 of 2024

 

ISLAMABAD: Pakistan’s foreign investment surged by 48 percent in the first quarter of the current fiscal year, according to state-run media reports on Tuesday.

Saudi Arabia and the UAE contributed a total of $26.8 million during this period. In 2023, Pakistan established the Special Investment Facilitation Council, a joint civil-military body aimed at expediting foreign investment decisions in key economic sectors, including agriculture, mining, minerals, and tourism.

This initiative came amid Pakistan’s ongoing economic crisis, which had pushed the country to the brink of a sovereign default. The crisis was mitigated by a crucial $3 billion bailout from the International Monetary Fund last year, preventing further economic collapse.

According to a breakdown shared by Radio Pakistan, China led foreign investments in the first quarter with $404 million, followed by the UAE’s $25 million and Saudi Arabia’s $1.8 million. Other notable contributors included Hong Kong, with $98 million; the UK, with $72 million; and the US, with $28 million.

Radio Pakistan reported: “A significant increase of 48 percent has been seen in foreign investment in Pakistan in the first quarter of the current fiscal year, reflecting the effective strategies of the Special Investment Facilitation Council.”

During a recent visit to Saudi Arabia and Qatar, Pakistan’s Prime Minister Shehbaz Sharif held talks with leaders from both nations to discuss boosting cooperation in trade, investment, and energy. Notably, in October, Pakistani and Saudi businesses signed 27 agreements and memorandums of understanding valued at $2.2 billion.

During Sharif’s visit to the Kingdom last week, the two countries agreed to increase this figure to $2.8 billion.

The UAE remains Pakistan’s third-largest trading partner, after China and the US, and serves as an important export market due to its proximity, which helps minimize transportation costs and facilitates trade exchanges.

In recent months, Sharif has been actively pursuing economic diplomacy in the region, focusing on securing investments, boosting trade, and improving regional connectivity.

Pakistan has sought to leverage its strategic position as a trade and transit hub, connecting landlocked Central Asian countries with the global market while promoting mutually beneficial economic partnerships with Gulf nations.


Saudi Arabia’s CMF Selects holds first-ever market event at LSE

Saudi Arabia’s CMF Selects holds first-ever market event at LSE
Updated 05 November 2024
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Saudi Arabia’s CMF Selects holds first-ever market event at LSE

Saudi Arabia’s CMF Selects holds first-ever market event at LSE

RIYADH: Saudi Arabia’s CMF Selects has successfully concluded its inaugural international market event, hosted at the London Stock Exchange.

The gathering, as announced in a press release, marked a key milestone for CMF Selects, an initiative under the Saudi Capital Market Authority. The event aimed to strengthen strategic partnerships between the Kingdom and global markets.

Organized by CMF Selects, the event attracted more than 245 influential participants, including industry experts and investors from the UK, Saudi Arabia, and other international markets.

CMF Selects is a targeted series of events under the CMF umbrella, focusing on specialized topics that are relevant to Saudi Arabia and its global partners.

Sarah Al-Suhaimi, chairperson of the Saudi Tadawul Group, stated: “The forum has contributed to strengthening the relationships between Saudi Arabia and the United Kingdom, enabling both sides to leverage promising growth opportunities and foster investments between the two markets.”

She added: “We are pleased to continue the journey of success and expand the Financial Markets Forum, aspiring to establish its position as a leading platform for innovation in financial markets. We aim to organize the first Financial Markets Forum in London by 2026.”

Michael Mainelli, the Lord Mayor of the City of London, commented: “The first edition of the event has highlighted the strength of the Saudi-British partnership and their fundamental role in achieving joint Saudi-British visions of growth, as well as strengthening links between the financial markets.”

Discussions throughout the event focused on exploring economic and investment opportunities across a range of sectors, including finance, technology, and sustainable development.

One of the key themes of the event was sustainability and technological innovation—both central to Saudi Arabia’s Vision 2030. Conversations explored how these areas could be advanced through international investment, with the goal of driving economic growth and resilience in both Saudi Arabia and the UK.

Looking ahead, CMF Selects plans to host a series of similar market hub events in other global financial centers, including New York, Tokyo, and Frankfurt.

The press release also revealed that this initiative is part of a broader strategy to position Saudi Arabia as a global financial powerhouse by 2026, supporting the Kingdom’s efforts to diversify and strengthen its economy.


Saudi cabinet approves framework to boost foreign direct investment

Saudi cabinet approves framework to boost foreign direct investment
Updated 05 November 2024
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Saudi cabinet approves framework to boost foreign direct investment

Saudi cabinet approves framework to boost foreign direct investment

RIYADH: The Saudi Cabinet has initially approved the national general framework and guiding principles for foreign direct investment, setting the stage for enhanced economic engagement with international organizations.

The session, chaired by Crown Prince Mohammed bin Salman, addressed significant developments on both domestic and international fronts, according to the Saudi Press Agency.

The Kingdom’s foreign direct investment inflows reached SR96 billion ($25.6 billion) in 2023, marking a 50 percent annual increase from the previous year.

The crown prince briefed the Cabinet on his recent discussions with leaders from several allied countries, focusing on bolstering ties across diverse sectors.

The Minister of Media, Salman Al-Dossary, highlighted that among these decisions the Cabinet authorized Saudi Arabia’s accession to the Cement and Concrete Breakthrough Initiative, launched on the sidelines of the UN Climate Change Conference.

This aligns with the Kingdom’s sustainability goals and commitment to the global climate agenda.

The Cabinet also approved an agreement with Qatar to avoid double taxation and prevent tax evasion.

This move underscores the Kingdom’s dedication to fostering economic cooperation within the Gulf region, facilitating smoother cross-border investments, and enhancing transparency in financial dealings.

In line with advancing Saudi Arabia’s capabilities in science and technology, the Cabinet also endorsed a framework agreement with the US to cooperate in civil aviation navigation and the peaceful exploration of outer space.

Additionally, the Cabinet also reviewed regional and international developments, with the crown prince briefing members on recent discussions with various heads of state focused on strengthening ties across multiple sectors.

The meeting highlighted the Kingdom’s efforts in regional peace initiatives, its commitment to global health challenges through the G20 platform, and recent advancements in the tourism sector.

During the session, the Cabinet commended the outcome of the second ministerial meeting of the Saudi-Indian Strategic Partnership Council economic and investment committee, highlighting the progress toward achieving the two countries’ shared goals.

This was mainly in the fields of industry, infrastructure, and technology, as well as agriculture, food security, climate sciences, and sustainable transportation.

Domestically, the Cabinet underlined the Kingdom’s significant advancement of 15 places in the 2023 international tourist revenue rankings compared to 2019, leading the top 50 rankings in an upward movement.

This achievement underscores the country’s global leadership and ongoing success in the tourism sector.


Closing Bell: Saudi main index closes in red at 12,014

Closing Bell: Saudi main index closes in red at 12,014
Updated 05 November 2024
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Closing Bell: Saudi main index closes in red at 12,014

Closing Bell: Saudi main index closes in red at 12,014

RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Tuesday, losing 24.37 points, or 0.20 percent, to close at 12,014.94.

The total trading turnover of the benchmark index was SR5.73 billion ($1.52 billion), as 86 of the listed stocks advanced, while 140 retreated.   

The MSCI Tadawul Index decreased by 4.65 points, or 0.31 percent, to close at 1,507.83.

The Kingdom’s parallel market Nomu surged, gaining 768.81 points, or 2.74 percent, to close at 28,831.58. This comes as 42 of the listed stocks advanced while 32 retreated.

The best-performing stock of the day was Riyadh Cables Group Co., with its share price surging by 6.95 percent to SR117.  

Other top performers included Arabian Cement Co., which saw its share price rise by 4.51 percent to SR25.50, and Al Moammar Information Systems Co., which saw a 4.38 percent increase to SR185.80. 

The worst performer of the day was Wataniya Insurance Co., whose share price fell by 9.96 percent to SR24.04.

Al-Etihad Cooperative Insurance Co. and Shatirah House Restaurant Co. also saw declines, with their shares dropping by 9.34 percent and 5.77 percent to SR18.44 and SR21.22, respectively.  

On the announcements front, Saudi Public Transport Co. announced its interim consolidated financial results for the first nine months of the current year. SAPTCO’s shares dropped in today’s trading session, dipping by 1.01 percent to reach SR21.58.

According to a Tadawul statement, the firm recorded a net loss of SR20.8 million in this period of the year, reflecting a 53.3 percent dip compared to the same term in 2023.

The decline in net profit for the current period, compared to the same period last year, is due to lower operating revenue from reduced public transportation operations, along with higher general and administrative expenses, increased finance costs, and higher zakat and tax, combined with a decrease in finance income.

The Saudi Arabian Cooperative Insurance Co. also announced its interim financial results for the same period ending on Sept. 30. SAICO’s shares dropped in today’s trading session, decreasing by 2.89 percent to SR14.78.

Net profit before zakat attributable to the shareholders for the current period amounted to SR43.2 million compared to SR65 million during the same period of the previous year, which was mainly due to a decrease of 44.9 percent in the net insurance service, which was affected by a decrease in medical business.

​​For the first nine months of this year, Abdullah Al Othaim Markets Co. revealed its results for the first nine months of this year, with total comprehensive income amounting to SR220.6 million – a year-on-year decrease of 30.4 percent.

Abdullah Al Othaim Markets Co.’s shares decreased in today’s trading session by 1.92 percent to reach SR11.24.

Gulf Insurance Group’s income over the same period also dropped – with the SR78.2 million it registered representing an annual fall of 19.7 percent.

GIG’s shares also saw declines by 0.84 percent to reach SR29.50. 

The individual investor subscription for Tamkeen Human Resources’ initial public offering on the Saudi stock market started Nov. 5 and runs until Nov. 6. 

According to a statement from the company, a total of 1.59 million shares, representing 20 percent of the offering, are allocated to individual investors at SR50 per share. 

The deadline for subscription and payment is Nov. 6, with the final allocation announced on Nov. 11. The minimum subscription is 10 shares, and the maximum is 250,000. Saudi Fransi Capital managed the initial public offering, which saw an institutional demand of SR55 billion, with coverage 138.2 times.


China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties
Updated 05 November 2024
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China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

China to issue $2bn bonds in Saudi Arabia amid deepening bilateral ties

RIYADH: China has announced plans to issue dollar-denominated bonds in Saudi Arabia starting the week of Nov. 11, marking its first debt issuance in US currency since 2021. 

The Asian country’s Ministry of Finance disclosed on Nov. 5 that it will sell up to $2 billion in bonds in Riyadh.

This issuance comes as China and the Kingdom are strengthening a multifaceted alliance that extends across multiple spheres.

In recent years, both nations have sought to broaden their economic cooperation, aligning strategic initiatives such as China’s Belt and Road Initiative with Saudi Arabia’s Vision 2030 plan.

“With the approval of the State Council, the Ministry of Finance will issue US dollar sovereign bonds of no more than $2 billion in Saudi Arabia in the week of November 11, 2024. The specific issuance arrangements will be announced separately before the release,” the ministry’s statement read.

This step will positively impact the Kingdom’s financial market, “especially when considering that the Financial Development Program is playing a crucial role in shaping the future of Saudi Arabia’s financial sector,” according to Talat Hafiz, a Saudi-based economist. 

Talking to Arab News, he said such issuance supports one of the main pillars of Vision 2030, to advance the Saudi economy through diversification and enhancing the local financial market.

Strengthening Saudi-Chinese relations

“The issuance is part of China’s efforts to strengthen the relationship between the two friendly countries, which is witnessing huge improvements in several fields,” Hafiz said.

In September,Saudi Crown Prince Mohammed bin Salman and Chinese Premier Li Qiang co-chaired a pivotal meeting of the High-Level Saudi-Chinese Committee, where they reviewed aspects of joint cooperation and addressed regional and international developments. 

The session in Riyadh emphasized opportunities in energy, trade, and investment, as well as well as technology and security, while laying the groundwork for enhanced coordination across these sectors.

Expanding tourism and education links

Tourism has emerged as a significant focus in Saudi-Chinese relations. In October, Saudi officials, including the Minister of Tourism Ahmed Al-Khateeb, engaged with Chinese counterparts to expand travel and investment ties.

The Kingdom received the designation of “Approved Destination Status” from Beijing earlier this year, following participation in key events in China. 

To attract 5 million visitors from the Asian country by 2030, Saudi Arabia has introduced Chinese payment processing options, launched tailored tourism campaigns, and increased direct flights between the two countries.

Growing trade and investment

China has been Saudi Arabia’s largest trade partner since 2014, with bilateral trade reaching $97 billion in 2023. This figure includes $54 billion in Saudi exports and $43 billion in imports from China. 

This issuance will benefit both the Kingdom’s financial market and businesses in Saudi Arabia and China, especially with their strong economic ties and alignment with Vision 2030 and the Belt and Road Initiative, according to Hafiz.

The economist said “the Saudi-Chinese Business Council has a major role to play in promoting business between Saudi Arabia and China.”

He highlighted the trade size amounting to “about $96.5 billion in 2023, representing 18 percent of the total volume of Saudi trade globally.”

Investments between the two nations have also surged, with Chinese investments in the Kingdom rising from $1.5 billion in 2022 to $16.8 billion in 2023. Saudi investments in China are also substantial, totaling $75 billion.

Saudi Arabia and China are exploring new avenues for collaboration, including joint investments in renewable energy, infrastructure, and technology, with a focus on sustainable development. 

The crown prince’s 2019 visit to Beijing set a foundation for this strategic partnership, resulting in 12 agreements and memoranda of understanding that continue to shape bilateral cooperation.