Saudi Arabia is home to a growing food manufacturing sector that benefits from population and income growth, life-style changes, state support, and favorable trade agreements. Demand for packaged foods is growing and more multinational companies are entering the market as a result. In 2021, Saudi Arabia imported approximately $2.8 billion worth of intermediate food products, mostly for further processing. U.S. suppliers provided around 11 percent, or $317 million.

Saudi Arabia, the largest country in the Arabian Peninsula, is a kingdom located in the west of the Asian continent. Saudi Arabia, an Arab country, is located in the south of the Persian Gulf and is the largest country in the Arabian Peninsula. The country bordering Kuwait, Qatar, Bahrain and the United Arab Emirates in the east, borders Oman in the southeast, Yemen in the south, Jordan in the northwest, and Iraq in the northeast. The Persian Gulf is located in the northeast of the country, while the western coast is surrounded with the Red Sea. Known as the land of its two holy mosques, the country hosts the cities of Mecca and Medina, which are considered sacred in Islam. Saudi Arabia is among the rapidly developing countries like the other Gulf countries in the Middle East.

According to official data, about 37% of the country’s population, which exceeds 35 million, consists of foreigners. The population of the country is concentrated in Mecca, Medina and Jeddah on the Red Sea coast in the west; the capital Riyadh in the middle and Ed-Dammam in the east. Almost all of the population lives in cities. In Saudi Arabia, you can shop from world-renowned chain brands in shopping centers, as well as from local bazaars and shopkeepers. Extremely luxury and top model cars, bags, shoes, phones and accessories are quite widespread. You can see almost all the world famous restaurants here. One of the biggest livelihoods of Saudi Arabia is oil and the other is Hajj and Umrah tourism. It has become a tourism center by hosting millions of people every year with cities that are considered sacred in Islam. 

Within the framework of its 2030 vision, Saudi Arabia plans to reduce its dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. Their goals are strengthening economic and investment activities, increasing non-oil industry trade between countries through goods and consumer products, and increasing government spending on production equipment.

Food Processing Ingredients

Saudi Arabia is the largest economy in the Arab world and home to a growing food manufacturing and processing sector. Total investments in the sector are projected to reach $70 billion in 2030, an increase of approximately 59 percent over total investments in 2016. Most Saudi food manufacturers depend on imports for food ingredients and subsequently imported a total of $2.8 billion ($317 million from the United States) worth of intermediate food products in 2021. While the United States continued to thrive on traditional exports, Post anticipates healthier foods will be a major driver in Saudi Arabia over the next several years. In 2021, the United States exported approximately $1.34 billion in agricultural products to Saudi Arabia.

Saudi Arabia is a significant market for U.S. food and agricultural products. In 2021, Saudi Arabia’s GDP was estimated at $790 billion, positioning the country as the largest economy in the Arab world. Total investment in the Saudi food manufacturing sector is expected to exceed $70 billion by the end of 2030, making it a major producer of high value food products in the region. In 2021, the United States exported approximately $1.34 billion in agricultural products to Saudi Arabia. As noted in the pie chart, below, in 2021 the United States was the third largest exporter of agricultural products to Saudi Arabia behind Brazil and India, respectively.

Imports of Consumer-Oriented Products

U.S. exports of consumer-oriented food products to Saudi Arabia declined from $559 million in 2020 to $535 million in 2021 due in part to the unavailability of cargo ships or high freight costs from the United States.

Food Processing Industry

Saudi Arabia is home to a growing food manufacturing sector that benefits from population and income growth, life-style changes, state support, and favorable trade agreements. Demand for packaged foods is growing and more multinational companies are entering the market as a result. In 2021, Saudi Arabia imported approximately $2.8 billion worth of intermediate food products, mostly for further processing. U.S. suppliers provided around 11 percent, or $317 million.

Food Retail Industry

In 2021, total retail sales in Saudi Arabia were estimated at approximately $40 billion, and 55 percent was generated through traditional grocery stores. The other 45 percent passed through modern retail channels. Traditional grocery stores are declining due to rapid expansion of new urban centers throughout the country.

Saudi Arabia is home to a growing food manufacturing and processing sector. While official production data is unavailable, the sector benefits from population and income growth, life-style changes, state support, and favorable trade agreements. Investment in the sector is expected to reach $70 billion by the end of 2030, which is up from $44 billion in 2016. Support from the Saudi Government takes many forms and includes direct subsidies for equipment, low land rents, long-term soft loans offered by the Saudi Industrial and Agricultural Development banks, duty-free imports of raw materials, and highly subsided utilities.

Saudi based exporters do not face tariffs on exports to the six Gulf Cooperation Council (GCC) countries or to the members of the Greater Arab Free Trade Area (GAFTA). This Pan-Arab free trade zone was created in 1997 and has 22 members. As a result, several major companies have built facilities in Saudi Arabia since it accounts for more than 50 percent of the GCC market. In 2021, Saudi Arabia exported approximately $1.1 billion worth of food products to the region, which is an increase of nearly two percent since 2020. The main products consisted of dairy, snack foods, processed foods, processed dates, processed fruit and vegetables, sugar and sweeteners, and poultry meat.

Demand for packaged foods is growing due to changing lifestyles and diets as well as the expansion of the food retail and food service sectors. Saudi women are entering the workforce in larger numbers and driving demand for prepared and simpler-to-prepare foods. As a result, the retail sector has rapidly shifted from traditional markets to hypermarkets driving demand for packaged foods. Some locally produced food products particularly livestock/poultry meat and products as well dairy products benefit from the perception that they abide by higher halal standards than imported ones. 

In recent years, several multinational companies have entered the Saudi food processing sector to overcome the constantly changing and tighter imports regulations and requirements as well as because of more local demand for packaged food and the opportunity to export duty free to other Arab counties. Most of these companies entered the market via joint ventures with Saudi companies, co-packing agreements with Saudi food manufacturers, licensing agreements or by taking over existing Saudi food processing companies. Multinational companies with a presence in the food processing industry include Mars Inc., Mondelez International, Cargill, Del Monte, PepsiCo, Heinz, Danone Ltd., Arla Foods Amba, Fonterra’s, United Biscuits (UK) Limited, Coro Foods, Unilever, Ülker and the Lactalis Group.

Saudi Arabia pasta export quantities

Baking Ingredients market in Saudi Arabia registered a positive compound annual growth rate (CAGR) of 2.57% during the period 2015 to 2020 with a sales value of SAR 759.07 Million in 2020, an increase of 3.42% over 2019. The market achieved its strongest performance in 2020, when it grew by 3.42% over its previous year and its weakest performance in 2017, when it increased by 2.10% over 2016. Saudi Arabia Bread Improvers Market is projected to grow at a strong CAGR over the next five years owing to rising economic growth, growing product innovation in bakery products and rising demand for fast food products. Based on form, in 2021, the Powdered bread improvers are most widely used as compared to liquid & granular forms, since it is easier to handle.