The 50% excise tax and 5% VAT had a significant impact on consumers’ buying behaviour in Saudi Arabia in 2018. Although consumers are used to consuming carbonates with their lunch or dinner, now they are starting to perceive them as expensive and unhealthy beverages.
With the ongoing increase in health awareness and the high price of carbonates in Saudi Arabia, carbonates are expected to continue witnessing heavy competition from other soft drinks. Moreover, the declining number of expatriates in the country, due to the expat levy and Saudisation, is set to restructure the Saudi market with a smaller consumer base.
Lime continues to dominate non-cola carbonates flavours in Saudi Arabia, with PepsiCo’s Mirinda Citrus and 7-Up leading sales of non-cola carbonates. Some consumers find lime flavour more refreshing and lighter tasting than cola carbonates, and they are lower in calories and sugar.
PepsiCo continues to dominate off-trade sales of carbonates, through its flagship brands Pepsi, Mirinda, 7-Up, Mountain Dew, Shani and Tropicana Frutz. The company invested heavily in marketing in 2018.
During the forecast period, it is expected that carbonates will continue to be challenged by consumers’ negative perceptions of carbonates, and the effects of the 50% excise taxes and 5% VAT. However, new product developments, including sugar-free and reduced sugar carbonates, using natural ingredients such as stevia instead of artificial sweeteners, new flavours, packaging innovations, promotional campaigns and wide distribution are set to reduce the impact on sales.
Extensive promotional campaigns supported carbonates in 2018, with the key players participating in mass media and social media campaigns, and offering themed packaging, in-store promotional stands, wider shelf space, an extensive presence across various distribution channels, and price reductions. Examples of price reductions include Coca-Cola, Sprite and Fanta multipacks of 24x300ml cans at a price of SAR50.
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This industry report originates from Passport, our Soft Drinks market research database.