Coffee and tea benefit from being popular drinks in the Kingdom, with these being beverages which are offered as part of traditional hospitality and generosity. Growth is also being boosted by a number of government initiatives, from festivals to programmes to support local smallholder farmers and educate youth.
While demand for tea and coffee continues to grow in 2023, sales of other hot drinks continue to post a steep decline in retail volume terms. These products are suffering from an unhealthy image and the impact of the Kingdom’s high sugar tax.
Saudi Coffee Co was established by the Kingdom’s Public Investment Fund (PIF) in 2022 to develop Saudi’s national coffee industry. According to PIF, the new Saudi Coffee Company will provide support to the national coffee industry through the entire supply chain, from bean to cup, and will also play a key role in developing production in the Jazan region, which is home to Coffea Arabica.
Supermarkets and hypermarkets continue to lead the distribution of hot drinks despite aggressive competition from other distribution channels. This is mainly due to their ongoing expansion of these two channels, the strong use of promotional campaigns, and other developments.
Foodservice sales of hot drinks are outperforming retail growth rates in most hot drinks categories in 2023 which is largely due to consumers returning to busy lifestyles away from the home. With life in the Kingdom normalising now that the pandemic is over people are also spending more on leisure and entertainment, which often includes enjoying a cup of tea or coffee with friends and family in cafés and specialist coffee shops.
Saudi Arabia plans to attract over 100 million visitors to the Kingdom annually by 2030 as part of its ambitious Vision 2030 strategy. Along with religious tourism, public and private sector entities in Saudi Arabia are working collaboratively to boost tourist numbers through driving leisure and entertainment, particularly sports entertainment all of which is aimed at diversifying the Kingdom’s economy.
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Hot Drinks
This report originates from Passport, our Hot Drinks research and analysis database.
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