In 2020, the widespread closure of foodservice establishments as a result of the COVID-19 pandemic led to a channel shift and an increase in at-home consumption. In early March, the Saudi government implemented shutdown orders for malls, shopping centres, airport halls, mosques, restaurants and cafés.
Consumer retail behaviour in 2020 included stockpiling and bulk-buy purchases of soft drinks. While there has been no evident shortage of carbonates as a result of the measures introduced to contain the COVID-19 virus, consumers have continued to stockpile cans and multipacks, partly because of Ramadan seasonal purchasing habits and the work-at-home orders that were implemented by the Saudi government in early March, but also because it is more convenient to do so as there are now strict social distancing and hygiene measures within all retail outlets and consumers remain wary of frequenting public places.
In 2020, Al Jomaih Bottling Plant’s flagship brand Pepsi continued to dominate regular cola carbonates, while its Diet Pepsi brand also dominated low calorie cola carbonates. The company’s brands 7-Up and Miranda Citrus also led in the lemonade/lime category, while Miranda led in orange carbonates.
Over the forecast period, total volume CAGR in carbonates is expected to exceed review period CAGR, gradually rising despite expected further waves of COVID-19, a sugar tax, and an increase in VAT. This will primarily be thanks to the growth in popularity of e-commerce platforms that include sales of off-trade carbonates with foodservice meals.
As Saudi Arabia continues to grapple with austerity measures, job losses, a VAT increase from 5% to 15% and private sector salary cuts of up to 40%, it is expected that consumers will opt to buy more multi-packs and discounted off-trade carbonates in retail stores. Some consumers may trade down for more affordable brands; however, the majority of consumers in Saudi Arabia are brand loyal when it comes to carbonates, and the main players will continue to perform well.
Due to the ongoing health and wellness trend in Saudi Arabia, which has deepened as consumer concerns about immunity and wellbeing grow, carbonated drinks face tough competition and challenges from soft drinks that are perceived as healthier and more affordable, such as pure juices, bottled water and RTD tea. The Saudi government is continually seeking to educate the local population about the benefits of reducing sugar intake, whilst making people aware of the health risks associated with excessive consumption of sugary drinks.
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