Saudi food trends: Demographic changes and health issues set to shape consumer spending

This is according to Chaitanya GRK, senior manager at business consultancy firm Farrelly & Mitchell, who spoke at the Gulfood Manufacturing show last month.

The first point he made, was that a favourable demography would drive the demand for food and beverage in Saudi Arabia.

 “The median age of the population is almost 10 years younger than any of all developing countries,”​ he said.

The current median age in Saudi is 29.8 years old and is expected to be 34.7 in 2030.

A young population will drive the expansion of food and beverage product range available in the country, since they will “want to try different products.”​

 “They wouldn’t consistently buy the same brand, but will switch and try the differences between different brands.” ​

On the other hand, consumers spending is expected to increase due to a higher salary and changes in labour policies.

“One million expats have left Saudi between 2017 and 2018 Q2…Between 2016 and 2025, due to regulatory changes in Saudi, around five million expats are expected to leave, creating three million jobs for the Saudis.”​

The number of foreign workers dropped by 6% to 10.2m in the first three months of 2018 as compared to a year ago. The cumulative drop over the past five quarters totalled to about 700,000, the Economic Times​ reported. Creating jobs for Saudis has become a priority for the Saudi government to reduce the country's dependence on income from oil. 

The decrease in population, could however, be seen in a positive light, he opined. 

“On average, the salary of a Saudi national is three times higher than expats and the household spending of a Saudi family is also around 27% higher than household spending of an expat family.” ​

“(Thus), although there is a population displacement, the consumers are going to get stronger at spending.” ​

Product differentiation important​

He added that the Saudi consumers were willing to spend, so long as they understand the value of the product.

“The market is moving towards premiumisation. With a substantial disposable income, consumers will turn hedonistic.” ​

However, he emphasised that businesses would need to highlight the value of the product in order to attract consumer spending.

 “For example, if I am buying a yogurt that is one riyal, and if there is another premium yogurt which is two riyals, but if its value of the product is not communicated to the consumers, including the differences between the products, such as added fortified calcium, extra vitamins or proteins, (then consumers will not buy the product).”​

Health challenges are also shaping consumers’ preferences.

Citing data from the World Health Organisation, he said that Saudi Arabia was one of the countries with the highest obesity rate, with 59% of the Saudi adults physically inactive, 68% overweight, 34% suffering from non-communicable diseases due to obesity, and 14% diabetic.

As such, clean and functional food will be in demand.

Dairy, poultry, bakery and beverage are some of the product categories that would attract more consumer attention, he said.

“Dairy is more towards providing functional benefits, such as providing protein and probiotics. Poultry is mainly about providing clean food, bakery can be about providing clean and functional benefits and beverage (is also) a functional product.”​

To tackle health troubles, the Saudi authorities are working with food firms to introduce healthier options.

For instance, to encourage food manufacturers to produce healthier food, such as containing reduced sugar, salt, and fat content, the Saudi Food and Drug Authority (SFDA) had launched the Healthy Food Strategy​ three months ago.