The 100% excise tax on sports drinks, as well as the 5% VAT rate and the declining number of expatriates in Saudi Arabia, are resulting in declining demand for sports drinks. Many consumers perceive them as expensive and unhealthy drinks.
Although Saudis are continuing to engage in sports activities, supported by governmental efforts to promote active lifestyles and reduce obesity, consumers are focusing their expenditure on sports nutrition, like sports protein bars, powder and RTD products, as well as non-protein sports products, which are seeing growing availability in distribution channels, and are being backed by promotional campaigns. As a result, sports drinks are expected to continue witnessing low consumer demand during the forecast period.
Consumers in Saudi Arabia lack awareness of sports drinks, and it remains an immature category, due to the limited number of brands, a lack of promotional campaigns and limited availability in distribution channels in the Saudi market. Sports drinks are mainly found in leading supermarkets, hypermarkets and internet retailers, but in small quantities and not prominently positioned on the shelves.
Gatorade continues to dominate off-trade sports drinks in the Saudi market, benefiting from its well-known brand name in sports drinks, and availability in the Saudi market through key supermarkets, hypermarkets and internet retailers, in different flavours and pack sizes. Other sports drinks brands suffer from limited stock and availability in distribution channels.
During the forecast period, it is expected that sports drinks companies will start to invest in promotional campaigns, including reduced prices and offers through internet retailers, aiming to distribute their products effectively in off-trade channels and trying to achieve greater visibility. Moreover, sports drinks companies are also anticipated to educate consumers about sports drinks, especially through online media, like their social media platforms, to reduce the effect of the excise taxes on sports drinks, and benefit from the growing number of consumers undertaking sports and exercise.
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This industry report originates from Passport, our Soft Drinks market research database.