KSA Non-Alcoholic Drinks Market Outlook to 2028

KSA Non-Alcoholic Drinks Market Overview

The KSA non-alcoholic drinks market is valued at USD 837 million, based on a comprehensive analysis of the past five years. The market's growth is fueled by a rising focus on health and wellness among consumers, leading to increased demand for functional beverages such as energy drinks, fortified water, and herbal teas. In addition, growing urbanization and disposable incomes have contributed to the adoption of premium non-alcoholic products. Expanding distribution channels, especially e-commerce, and new product innovations from key players further bolster market expansion.

The dominance of key cities like Riyadh and Jeddah in the Saudi non-alcoholic drinks market is due to their higher population density, strong presence of supermarkets and hypermarkets, and affluent consumer base that favors premium and functional beverage options. These cities also serve as commercial hubs for multinational brands like Coca-Cola and PepsiCo, making them strategic locations for market entry and expansion

The Saudi Food and Drug Authority (SFDA) has implemented stringent regulations on the nutritional content of beverages, focusing on reducing sugar levels and encouraging healthier formulations. Compliance with these regulations is mandatory for all beverage manufacturers and retailers in Saudi Arabia, which is part of the broader national strategy to improve public health.

KSA Non-Alcoholic Drinks Market Segmentation

By Product Type: The KSA non-alcoholic drinks market is segmented by product type into carbonated soft drinks, juices, bottled water, ready-to-drink (RTD) tea and coffee, and dairy alternatives. Recently, bottled water holds the largest market share within the product type segmentation. The dominance of this segment is attributed to the hot climate conditions in the region, driving a high demand for bottled water. Additionally, increasing awareness regarding health and hydration has led to a surge in consumption of premium bottled water products.

By Distribution Channel: The market is segmented into supermarkets/hypermarkets, convenience stores, specialty stores, online stores, and food service establishments. Supermarkets and hypermarkets are the most dominant distribution channels due to their widespread presence, availability of a diverse product range, and the preference of consumers to physically evaluate products before purchase. Additionally, the presence of prominent retail chains like Carrefour and Lulu Hypermarket contributes to their market dominance.

KSA Non-Alcoholic Drinks Market Competitive Landscape

The Saudi non-alcoholic drinks market is consolidated, with the presence of both international and local players competing across various product categories. The market is led by global giants like PepsiCo and Coca-Cola, along with strong local players such as Almarai and SADAFCO, which dominate the dairy and bottled water segments respectively. The competitive landscape is marked by strategic initiatives, including new product launches and mergers and acquisitions, aimed at gaining a competitive edge.

KSA Non-Alcoholic Drinks Industry Analysis

Growth Drivers

Shifting Consumer Preferences Towards Healthier Options: In Saudi Arabia, the growing emphasis on health and wellness has significantly shifted consumer preferences toward non-alcoholic beverages that offer nutritional benefits. According to the General Authority for Statistics, the Kingdom's population reached 32.2 million in 2024, with a substantial proportion of younger individuals adopting healthier lifestyles. This demographic shift has spurred demand for low-sugar and functional beverages.

Increasing Disposable Incomes and Urbanization: Saudi Arabias urban population has increased substantially, supported by a rise in disposable incomes. The IMF reports that Saudi Arabias GDP grew by 1.7% in the first quarter of 2024, reflecting economic stability and rising consumer purchasing power. The Kingdoms urban population now constitutes over 84% of the total, which, coupled with higher income levels, has enhanced consumer spending on premium non-alcoholic beverages.

Expanding Distribution Channels: The non-alcoholic beverages market has benefited from the rapid expansion of retail channels, including supermarkets, hypermarkets, and e-commerce platforms. In 2024, online retailing has become a major distribution channel due to higher internet penetration rates and a preference for home delivery options. The Saudi Central Bank reported an increase in digital transactions by over 25% in 2024, facilitating easier access to a variety of non-alcoholic drinks for consumers across the Kingdom.

Market Challenges

High Competition and Market Fragmentation: The Saudi non-alcoholic drinks market is highly competitive, with a large number of local and international players. Market fragmentation poses a significant challenge as new entrants continually introduce innovative products. This competitive landscape results in increased marketing costs and pressure on margins for established brands.

Raw Material Price Fluctuations: The cost of key raw materials, such as sugar alternatives and packaging materials, has been volatile. The Saudi Central Bank noted that the inflation rate for non-food consumer goods, including packaging materials, was 1.6% in August 2024. This price volatility affects production costs and profitability for beverage manufacturers, especially in segments focusing on premium and health-oriented products

KSA Non-Alcoholic Drinks Market Future Outlook

Over the next five years, the KSA non-alcoholic drinks market is expected to experience robust growth driven by increased consumer awareness of health and wellness, the introduction of innovative product lines by key players, and the rise of e-commerce channels. As consumer preferences continue to evolve towards functional and organic beverages, new product launches are anticipated to cater to this demand. The growth in online channels will further boost the market by providing greater convenience and accessibility to a broader range of products.

Market Opportunities

Introduction of Functional Beverages: Functional beverages, such as those containing added vitamins, probiotics, and herbal extracts, are gaining popularity among Saudi consumers. With the increase in awareness of immunity-boosting products due to recent health trends, there is a significant opportunity for manufacturers to introduce innovative offerings. In 2024, the General Authority for Statistics reported an increased interest in health-oriented products, which presents a strong growth avenue for functional drinks.

Expansion of E-commerce and Online Retail Channels: E-commerce has emerged as a major growth driver for the non-alcoholic drinks market in Saudi Arabia. In 2024, the Saudi Central Bank reported a 15% year-on-year increase in online sales transactions, highlighting the growing consumer inclination towards digital platforms. The convenience of e-commerce has allowed smaller brands to reach a wider audience and tap into niche market segments effectively.
Please Note: It will take 5-7 business days to complete the report upon order confirmation