Saudi Arabian packaging sector set to soar

By Noel Ebdon

- Last updated on GMT

Related tags: Saudi arabia, Arabian peninsula

Saudi Arabian packaging sector set to soar
In a recently released report, analysts TechNavio have forecast the Saudi Arabian packaged food market to grow at a CAGR of 8.95% from 2012 to 2016.

The analysts put some of this growth down to the Kingdom’s growing population. Saudi Arabia has a larger population than the rest of the GCC combined (almost 70%), making it by far the largest market for consumable goods in the region. However, they also urged some caution as rising inflation in the country could adversely affect some of that growth.

A range of industry experts and food companies were involved in the report, which also includes the market landscape and the views of the market’s key players. The report also covers trends, key drivers, challenges, opportunities and threats, as well as who dominates this lucrative market.

The market relies almost entirely on external suppliers, although locally based companies have been building their resilience by updating packaging equipment and processes to ensure they are as self-sufficient as possible.

“We’ve seen very strong investment in new machinery in Saudi Arabia,”​ said Ian Barker, managing director of UAE-based Al Thika Packaging LLC. “Previous customers are coming back regularly to replace older machinery, either to increase production capacity, or due to changes in the technology available, and in their customers’ demands.”

Saudi Arabia’s recently publicised crackdown on illegal workers has also had an impact on the food industry, which often employs large workforces to operate its factories.

“We’ve also seen growing demand for automatic equipment to perform routine processes, jobs which previously would have been carried out by low paid labourers. Employers are realising that there’s no such thing any more,”​ added Barker.

With a population approaching 29 million, the country’s food and beverage imports are worth around $14.2bn per annum, with four-year growth predicted at more than 50%.

The retail grocery market alone is expected to grow at a CAGR of about 4% to reach $28.2bn by 2017, according to Glasgow Consulting Group.

This creates a major opportunity for food packaging suppliers, operators and downstream manufacturers in the Kingdom over the next few years. Viewed from any angle and taking into account the challenges of supply security, the Saudi Arabian packaging market is only heading in one direction.

The Saudi Arabian packaged food market report can be found at: http://www.technavio.com/​.

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