Saudi Arabia is a major market for drinking milk products, with milk seen as an essential product by Saudi Arabian consumers. As a result, retail sales received a significant boost from consumers being forced to prepare meals and drinks at home during the COVID-19 crisis due to home seclusion and the closure of foodservice outlets.
Local production of milk is increasing significantly in Saudi Arabia thanks to efforts on the part of the government, which is working to facilitate the development of the local dairy industry. The government has imposed VAT of around 20% on imports, though any imports that are used in the local production of milk will be exempted, illustrating the strong focus on developing and strengthening local production in Saudi Arabia.
Almarai will retain a strong lead over its nearest rivals, Saudi Dairy & Foodstuff Co Ltd (SADAFCO) and Nestlé Saudi Arabia LLC, in 2021 thanks to the strength of its brand name and its widespread and established distribution network. Nevertheless, Almarai will continue to face growing competition, with some consumers switching to more affordable options.
In line with the health and wellness trend, the other milk alternatives category is expected to continue to see strong growth into the forecast period, albeit from a low base. As part of a global trend, there is growing interest in products such as almond milk and coconut milk which are attracting consumers following lactose-free and vegan diets, as well as those looking for alternative sources of protein.
Milk’s essential status means that it provides particularly strong conditions for the development of the private label segment. With consumers’ budget-consciousness heightened by the lasting economic impact of the COVID-19 crisis and the imposition of 15% VAT, they are likely to cut some products out of their shopping and opt for cheaper options in essential product areas, such as milk.
Flavoured milk drinks has been amongst the drinking milk products most adversely affected by the COVID-19 crisis, with retail volumes falling in both 2020 and 2021 due to the closure of schools and home seclusion, which have undermined sales for lunches and on-the-go consumption. The return of away-from-home activity and the reopening of schools are reviving flavoured milk drinks sales opportunities.
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This report originates from Passport, our Drinking Milk Products research and analysis database.
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