Consumption of coffee decreased in recent years, due to the effect on the economy – and thus consumer spending – of lower international oil prices. However, with the help of austerity measures and the implementation of VAT, the Saudi economy pulled itself out of an economic slowdown in 2017 and 2018.
As travelling abroad continues to become more affordable, and social media penetration among young Saudis continues to rise, demand for international speciality brands and flavours at home in Saudi Arabia is expected to continue to rise in the forecast period. Although disposable incomes have decreased over the past few years, brought about by lower oil prices and a rising cost of living, a large portion of Saudis remain willing to spend on new coffee experiences, as they enjoy leisure time at neighbourhood coffee shops and cafés.
Over the past few years, the number of cafés and coffeehouses has risen, with key players such as Starbucks Coffee, Dr Café and Java Time having increased their presence across the country. In addition, new independently owned cafés have popped up in malls and shopping centres in many neighbourhoods.
Nestlé SA maintained its leading position in coffee in 2018, ahead of Al Soukya International in second place and El Farouki Coffee Center in third. Nestlé SA continues to benefit from its flagship brand of instant standard coffee, Nescafé, which is available in a variety of formats, including Red Label, Gold, My Cup 2-in-1 and Nescafé 3-in-1 instant mixes.
In the latter part of the review period, coffee saw increased competition in the off-trade, as new players and brands entered the market. At the end of 2017, Lavazza Coffee Ltd and Jacobs Douwe Egberts each launched new instant coffee brands in an effort to increase their sales in instant mixes.
Instant coffee mixes continue to grow in popularity, owing to their convenience and ease of preparation. Both young and middle-aged consumers are seeking easier ways to prepare coffee for gatherings and social events, instead of the time-consuming traditional method of preparing Arabic or fresh ground coffee, which typically takes 30 minutes to an hour to prepare in a coffee maker or boil on the range top.
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This industry report originates from Passport, our Hot Drinks market research database.