Saudi Arabia's F&B Industry

Saudi’s Technology Sector: Harnessing Foodtech to Reshape the F&B Industry 

Innovation is increasingly permeating traditional sectors in Saudi Arabia, including the food and beverage (F&B) industry, with technology being a catalyst for seismic changes in the sector amid shifting market dynamics and evolving consumer demands.

The sector’s growth prospects primarily hinge on the country’s expansion of tourism, amid the government’s aim to attract 150 million visitors annually by 2030. The trajectory of the tourism market paints a narrative of growth across the F&B sector, currently valued at $45 billion, presenting lucrative business opportunities across its segments and subsegments. 

As the Kingdom is increasingly becoming a compelling destination for tech companies across the globe, the local food technology (foodtech) space has been drawing global innovators working to fuel advancements and digitization in the sector’s long tail. 

Key Highlights 

  • Consumer spending on food services is expected to increase by 6% per year over the next five years.
  • The food delivery aggregators sector accounts for 16% of the total foodservice market and creates more than roughly 150,000 jobs.
  • In 2023, the food delivery market was valued at a staggering $10 billion and is expected to surge to $14.9 billion by 2028.
  • At the Saudi Food Show, Saudia Dairy and Foodstuff Company (SADAFCO) signed a long-term lease contract with MODON to establish a new warehouse in Jazan, as part of SADAFCO’s expansion strategy.

F&B has the Largest Share of POS Transactions in Saudi

As part of its Vision 2030 program, Saudi Arabia allocated $64 billion to invest in leisure and entertainment to stimulate tourism and increase local expenditures. 

The Saudi entertainment and leisure sector is expected to reach $3.9 billion by 2027, as per recent market reports. The F&B sector stands as both a beneficiary of and contributor to the expansion of the entertainment industry and a core tenet of the country’s overall economic progress. Aiding this positive momentum is the rising consumer spending on food services, which is expected to increase by 6% per year over the next five years.

Growth in the foodservice sector can also be attributed to extensive internet access and increased adoption of cashless payments. There’s been a paradigm shift towards contactless payments among consumers in Saudi Arabia, leading more restaurants to implement modern POS systems.

For instance, beverages and food, restaurants, and cafes held the share of Saudi spending processed by POS systems in 2023, with both segments representing 16% and 15%, respectively.

Food Delivery is at the Heart of Digital Transformation in Saudi Arabia’s F&B Industry

The proliferation of fintech services has largely powered the growth of emerging technologies like online ordering, which facilitates home deliveries of food items. 

The food delivery aggregators represent a critical part of the food sector and a major economic engine for growth, accounting for 16% of the total foodservice market and employing more than roughly 150,000 jobs, amounting to 1% of the total workforce in the Kingdom. 

In terms of market size, the food delivery market in Saudi Arabia was valued at a staggering $10 billion in 2023 and is expected to surge to $14.9 billion by 2028. 

Moreover, food delivery is the best-funded space vis-à-vis foodtech. Of the $555 million in funding raised by Saudi Arabia-based foodtechs over the period of 2019–2023, food delivery startups secured 48% of that total funding ($266 million), indicating significant future prospects within the sector. 

The advent of a digital food landscape has spawned opportunities for new delivery systems, including cloud kitchens, a fast-growing segment that is rapidly gaining popularity in the Kingdom. The space has been further revitalized by the entry of global cloud kitchen operator Kitopi, which boasts a valuation of over $1.5 billion and a presence across eight countries.

The global foodtech player expanded to the Kingdom with the help of AstroLabs’ on-ground team, which has enabled the company to speed up its time to market, thereby amplifying its impact and strategic growth.

The ongoing digitization of the food delivery space reflects a dynamic scene with potential shifts and heightened business activities, contributing to the development of the Saudi tech sector and the actualization of the Vision 2030 objective to localize 85% of its food industry at the turn of the decade. 

Major F&B Events Shaping the Future of Innovation

Saudi Arabia’s F&B industry is further transforming with the increase in the hosting of international events such as the Gulf Food and Saudi Food Show, offering one of the most attractive avenues for long-term investments and partnerships. Held recently in Riyadh, the 2nd edition of the Saudi Food Show attracted over 1,000 exhibitors from 97 countries, showcasing over 10,000 innovative products. 

During the Saudi Food Show, a series of strategic partnership agreements were concluded; for example, the leading dairy producer and seller, Saudia Dairy and Foodstuff Company (SADAFCO), signed a long-term lease contract with the Saudi Authority for Industrial Cities and Technology Zones (MODON) in the city of Jazan to establish a new warehouse with an area of more than 15,000 square meters. This follows SADAFCO’s recent inauguration of a depot in Makkah. 

Looking ahead, the country is set to host the 24th Saudi Manufacturing Show this month and the Saudi Food Expo, slated for August of this year. 

Being a leading hub for global events and a springboard for innovative foodtech solutions, the Kingdom is poised to retain its leadership position as a vital F&B market and an attractive destination for global companies looking to sharpen route-to-market strategies and expand their reach in the Middle East’s most vibrant market. 

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