Beverage Industry in Saudi Arabia

The Beverage Industry in the Kingdom of Saudi Arabia is one of the consumer manufacturing industries in Saudi Arabia. It includes mineral water, bottled water, soft drinks, and juices. The value of the food and beverage market in Saudi Arabia is approximately SAR157.5 billion, with an estimated annual growth rate of 3 percent. The Saudi food industry sector relies on an advanced ecosystem that aligns with high-quality standards and aims for an 85 percent localization rate by 2030.

Contribution of the beverage industry to Saudi Arabia’s GDP

Population growth, Hajj and Umrah seasons, and individual visits to Saudi Arabia contribute to the rising growth rates of the beverage industry in Saudi Arabia, making it a value-added component of the Gross Domestic Product (GDP). According to 2016 indicators, the food industry sector accounted for 12 percent of the total GDP.

The beverage industry holds a leading position within the food industry sector in Saudi Arabia. It is one of the vital industries closely linked to lifestyle and living conditions in a hot climate, which increases consumption rates in a growing society that relies on the products of this industry. This has made the juice and beverage sector the second-largest within the food industry, with investments exceeding SAR4.5 billion.

Investment in the beverage industry in Saudi Arabia

With its large population base and broad consumer market, Saudi Arabia ranks first among the Gulf Cooperation Council (GCC) countries in the beverage industry, which is witnessing increasing investments in line with growing demand for its products. In 2010, the volume of investment in the beverage sector across the GCC reached SAR9.7 billion, with Saudi Arabia contributing 77.7 percent of that amount, equivalent to approximately SAR7.5 billion.

Saudi companies ranked first in beverage industry investments, followed by the United Arab Emirates with 10.4 percent, Kuwait with 7.7 percent, Qatar with 1.6 percent, the Sultanate of Oman with 1.4 percent, and finally the Kingdom of Bahrain with 1.1 percent.

These investments reflect the scale of activity among companies and factories operating in the GCC beverage industry. According to statistics from 2010, the GCC beverage industry comprised 231 companies, 48.9 percent of which were headquartered in Saudi Arabia. The United Arab Emirates followed with 27.3 percent, then the Kingdom of Bahrain in third place with 10.4 percent, the Sultanate of Oman with 7.8 percent, the State of Kuwait with 3 percent, and the State of Qatar with 2.6 percent.

Growth of the beverage industry in Saudi Arabia

The beverage industry has continued to grow independently from the broader food production sector, in line with high demand. The number of beverage factories reached approximately 185 in 2012, increased to 198 in 2013, rose to 201 in 2014, and further grew to 217 in 2015.

The capital of beverage factories also increased, reaching around SAR19.874 billion in 2012, jumping to SAR30.168 billion in 2013, slightly decreasing to SAR30.126 billion in 2014, before rising again to SAR31.280 billion in 2015.

The number of factories has grown over the years due to increasing demand for their products. In 2016, the number of licensed production factories reached 229, with total capital investment rising to SAR31.997 billion. In 2017, the number of establishments reached 1,021, including 636 micro enterprises, 245 small enterprises, 119 medium enterprises, and twenty-one large enterprises, with a total of 29,744 employees.

Support for the beverage industry in Saudi Arabia

The beverage industry receives funding from the Saudi Industrial Development Fund, which supported the sector by financing three soft drink and beverage factories in 2017, bringing the cumulative total to ninety-three factories. The value of industrial loans provided by the fund to soft drink and beverage factories in 2017 amounted to approximately SAR280 million, with a cumulative total of about SAR2.666 billion.

Since the launch of Saudi Vision 2030, the food and beverage industry sector has seen an increase in the number of establishments. The Saudi Authority for Industrial Cities and Technology Zones "MODON" increased the number of food and beverage factories in its industrial cities by 200 percent, from 318 factories to more than 915, including both operational and under-construction facilities. The western sector hosts 490 factories, the central sector 315, and the eastern sector 118 food factories.

MODON has worked to develop licensing procedures and provide logistical support to expand the food and beverage industry. It has also offered incentives to its private sector partners, contributing to lower operating costs for investors and reducing the time required to start production operations. As a result, local and global investment inflows to the industrial cities have increased since 2016, the year Saudi Vision 2030 was launched, through the third quarter of 2020.

Developing workforce in the beverage industry in Saudi Arabia

To qualify and develop the capabilities of national human resources and integrate them into the food and beverage industry through scientific curricula, the Technical and Vocational Training Corporation launched, within its specializations, the Food Manufacturing program. This initiative aligns with the strategic objectives of the national economy, which call for diversifying sources of income and enhancing the capabilities of the Saudi workforce in the industrial sector.

The Food Manufacturing program was introduced to prepare qualified and well-trained personnel in this field. It includes training in fundamental skills related to food production lines, food analysis and processing, technical operations associated with production lines, as well as the packaging and filling of processed foods. The program also covers food analysis, adherence to health regulations in food manufacturing, and food quality control.