Saudi Arabia Soft Drinks Market, By Product Type, By Flavor Varieties, By Target Audience, By Packaging Type and By Distribution Channel: By Region - Market Size, Industry Dynamics, Opportunity Analysis and Forecast for 2024-2031

Saudi Arabia Soft Drinks Market Forecast till 2031: Set to Reach US$ 21.03 Billion by 2031 with a CAGR of 6.04%

Market Introduction:

The Saudi Arabia Soft Drinks Market is experiencing robust expansion, valued at US$ 13.27 Billion in 2023 and projected to grow at a CAGR of 6.04% from 2024 to 2031.

The Saudi Arabia soft drinks market has undergone significant transformation over the decades, reflecting the country's evolving consumer preferences and economic landscape. Historically, the market began to take shape in the mid-20th century, coinciding with the rapid modernization and urbanization of the nation. As disposable incomes rose and lifestyles shifted, there was a marked increase in the demand for carbonated beverages, juices, and flavored drinks.

The soft drinks sector has been characterized by the presence of both local and international brands, each vying for market share in a landscape that values quality, taste, and innovation. The rise of health consciousness among consumers has further influenced the market, prompting manufacturers to diversify their product offerings to include low-calorie and natural alternatives. Additionally, the government's efforts to regulate and promote healthier consumption habits have shaped market dynamics.

As of today, the Saudi soft drinks market is poised for continued growth, driven by a young population, increasing urbanization, and changing lifestyle trends. With ongoing investments in marketing and distribution, companies are well-positioned to meet the evolving preferences of consumers in this vibrant and competitive landscape.

Growth Influencers:

In Saudi Arabia, the prohibition on alcohol, in accordance with Sharia law, has significantly boosted the soft drinks market. The increasing awareness of the health risks associated with alcohol consumption, including obesity and liver disease, is driving the demand for non-alcoholic beverages. This trend is further supported by the country’s large population, whose religious beliefs discourage alcohol use and foster a stable environment for non-alcoholic drink growth.

Consumers are gravitating towards options like mineral water, fruit juices, and energy drinks for their health benefits, promoting a lifestyle that emphasizes wellness. Non-alcoholic drinks, when consumed in moderation, can enhance physical endurance and focus. However, stringent regulations on energy drinks pose challenges for the market.

With Saudi Arabia's hot climate, the demand for rehydration beverages is particularly strong. These drinks, rich in minerals and vitamins, are appealing to both adults and children and are easily accessible through e-commerce platforms at reasonable prices. Companies are diversifying their offerings to include various flavored fruit juices, cold drinks, and iced teas. As a result, the soft drinks sector, encompassing bottled water, carbonated beverages, and juices, is recognized as one of the most dynamic markets in the region, with increasing consumer interest in innovative products.

Segment Overview:

The Saudi Arabia Soft Drinks market is categorized based on Product Type, Flavor Varieties, Target Audience, Packaging Type and Distribution Channel.

By Product Type

• Carbonated
• Non-Carbonated (Fruit Juices, Flavored Drinks, and Hot drinks (tea & coffee))
• Functional Beverages (functional water and sports drinks)

By Flavor Varieties

• Cola Flavors
• Citrus Flavors
• Fruit Flavors (other than citrus fruits)
• Others

By Target Audience

• Adults
• Children and Teens
• Health-Conscious Consumers

By Packaging Type

• Cans
• Bottles
• Tetra Pak or Cartons

By Distribution Channel

• Offline
• Supermarkets/Hypermarkets
• Wholesalers
• Retail Stores
• Others (specialty stores)
• Online

Flavored and carbonated soft drinks are among the most sought-after non-alcoholic beverages in Saudi Arabia, with a notable preference for non-carbonated options. Many Saudis now favor fruit juices and flavored drinks over traditional hot beverages. The rise of natural fruit juices aligns with government initiatives promoting healthy eating and a growing demand for organic, halal products.

While carbonated drinks are popular among younger generations, the demand for bottled functional water is high among health-conscious consumers. However, strict regulations on energy drinks have limited the growth of the functional beverage segment. Overall, the market is shifting toward cold drinks, with hot beverages losing traction among their core consumers.

Fruit flavors dominate consumer preferences in Saudi Arabia, where strong and sweet flavors are favored to compensate for the prohibition of alcohol. Popular drinks include "Saudi champagne," made from apple juice and Sprite, as well as malt beverages that come in various fruity flavors like mango, strawberry, and lemon. Among carbonated options, cola flavors lead the market, with Coca-Cola, Pepsi, and Sun Top/Sun Cola being top choices. The demand for fruit and citrus flavors is driven primarily by health-conscious consumers who prefer juices over sugary carbonated drinks, as Sugar-Sweetened Beverages (SSBs) make up a significant portion of Saudi diets, especially among young adults.

Sugar-Sweetened Beverages (SSBs) contribute significantly to Saudi Arabia's sugar intake, with over 70% of the population, particularly young adults aged 18-30, consuming them. This trend reflects a shift from traditional homemade juices to fizzy drinks. Saudi Arabia ranks as the fifth largest consumer of calories from SSBs globally. While children and teens tend to avoid carbonated drinks, creating a weaker market segment, health-conscious consumers present a potential opportunity for companies aiming to reduce sugar content. The high tax on sugary drinks encourages manufacturers to label their products as healthier options. Despite health concerns, sweetened soft drink consumption remains prevalent among the Saudi populace.

Bottled beverages are highly sought after in Saudi Arabia, with consumers favoring soft drinks in convenient, reusable packaging. Most beverage bottles are made from glass and plastic, particularly polyethylene terephthalate (PET), which is widely used for soft drinks. While glass bottles offer safety for food packaging, they are costlier than PET options.

Notably, Almarai has strengthened its position as the Middle East's largest soft drink producer through strategic investments, including new PET production lines. Compliance with regulations from the Saudi Food & Drug Authority (SFDA) and the Gulf Standardization Organization (GSO) is crucial for all food and beverage products, simplifying adherence for soft drink manufacturers.

The soft drinks industry in Saudi Arabia faces significant distribution challenges. While supermarket chains are growing, the retail landscape remains fragmented, populated by countless small neighborhood shops that are difficult to reach. Offline channels, particularly supermarkets and hypermarkets, dominate the market, experiencing stable growth in recent years. Conversely, high-end on-premise distributors are scarce, with wholesalers serving primarily the commercial sector. Though wholesalers occupy a small market share, online sales channels are expected to grow rapidly due to the increasing adoption of e-commerce and digitization within the country.

Competitive Landscape:

The Saudi Arabia Soft Drinks market is characterized by a vigorous competitive landscape, with prominent entities Aujan Coca-Cola Beverages Company, PepsiCo, Al Jomaih Bottling Plants, Al-Amoudi Beverages Industries among others at the forefront, collectively accounting for approximately/ more than 33% of the overall market share. This competitive milieu is fueled by their intensive efforts in research and development as well as strategic partnerships and collaborations, underscoring their commitment to solidifying market presence and diversifying their offerings. The primary competitive factors include pricing, product caliber, and technological innovation.

As the Saudi Arabia Soft Drinks industry continues to expand, the competitive fervor among these key players is anticipated to intensify. The impetus for ongoing innovation and alignment with evolving customer preferences and stringent regulations is high. The industry's fluidity anticipates an uptick in novel innovations and strategic growth tactics from these leading corporations, which in turn propels the sector's comprehensive growth and transformation.

Report Insights:

• The Saudi Arabia Soft Drinks market is projected to grow from US$ 13.27 Billion in 2023 to US$ 21.03 Billion by 2031, at a CAGR of 6.04%.
• Alcohol is banned in Saudi Arabia, driving demand for soft drinks as non-alcoholic alternatives.
• Increasing awareness of health risks from alcohol, such as obesity and liver failure, is boosting the non-alcoholic drinks market.
• Traditional consumption of hot beverages is declining, with more emphasis on fruit juices and flavored drinks.
• While carbonated drinks are popular among younger consumers, there is a growing trend toward health-conscious bottled functional waters.

Questions to be Answered:

• What is the estimated growth rate of the Saudi Arabia Soft Drinks market?
• What are the key drivers and potential restraints?
• Which market segments are expected to witness significant growth?
• Who are the leading players in the market?

Executive Summary:

The Saudi Arabia Soft Drinks Market is poised for substantial growth, projected to rise from US$ 13.27 billion in 2023 to US$ 21.03 billion by 2031, at a CAGR of 6.04%. This expansion is fueled by the prohibition of alcohol under Sharia law, increasing health awareness regarding the risks associated with alcohol consumption, and a young, urban population. The market reflects a shift in consumer preferences towards non-alcoholic options, particularly fruit juices and flavored drinks, while carbonated beverages remain popular among younger consumers. The rise of health-conscious choices has led to an increased demand for functional waters and low-calorie alternatives.

Additionally, the market is characterized by a competitive landscape dominated by key players such as Aujan Coca-Cola Beverages Company and PepsiCo, focusing on innovation and quality. Distribution channels are evolving, with offline sales through supermarkets leading but online sales gaining momentum. Overall, the Saudi soft drinks sector is dynamically transforming, aligning with consumer trends and regulatory standards, ensuring robust opportunities for growth through 2031.