Although the implementation of VAT generally weakened consumer spending patterns across various categories, the implementation of sugar taxes also impacted the consumption of soft drinks in general. However, vending continued to post positive current value growth during the review period, which was mainly attributed to increasing awareness regarding the convenience of using vending machines and wider penetration of the machines in high footfall public locations.
The National Transformation Program, part of Saudi Vision 2030, has set a wide range of economic and strategic goals up until 2020, with tourism as one of the key sectors to diversify. The country is undertaking massive expansion plans such as for the Grand Mosque in Mecca at an estimated cost of USD26.
As local consumers find vending machines convenient, players aim to expand the number of machines to reach out to a higher number of consumers to meet demand for quick fulfilment of snacks and refreshment needs. The opening of the Saudi Arabian society to entertainment and leisure offers potential for vending operators.
As vending machines largely sell soft drinks and snacks, the widespread presence of traditional grocers across various locations in the country provides less encouragement to customers to use vending machines. However, vending machines provide products 24/7 including prayer times, during which traditional shops and baqalas close.
Al Jomaih Bottling Plant retained its share and continued to lead vending in 2018. The company holds countrywide distribution of vending machines representing PepsiCo Inc and features all PepsiCo brands including Pepsi-Cola, Tropicana, Lipton Iced Tea, Aquafina and Mountain Dew.
As various product segments become competitive and other channels such as internet retailing pose challenges for store-based retailers, expansion into new territories and locations has become difficult. Therefore, most players are looking at expansion strategies more cautiously.
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