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Confectionary sector in Gulf market
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Wednesday, 01 February, 2023, 15 : 00 PM [IST]
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Yasmin Basheer Ahmed & Dr PA. Raajeswari
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Chocolate is one of the foods the consumption of which is growing rapidly across the world. As per the data published by the annual production of cocoa beans were 3,931 thousand tons against an estimated demand of 4,091 thousand tons in 2013, which is an increase of 11% from 2012.
Most of this growth is fueled by the Middle Eastern countries, such as UAE and Saudi Arabia and Southeast Asian countries, such as China and India. Currently, the chocolate market size in Saudi Arabia is estimated to be of $1.2 billion. Chocolate makes up 55%of the total confectionary market in Saudi Arabia.
The total market size was $596 million in 2011, but within last four years the market has more than doubled. Mars, an American chocolate company, holds the largest market share in Saudi Arabia. It has 45% market share in the country. The chocolate market is predicted to grow at a rate of 43% by the end of 2016. Switzerland leads the market in terms of per capita consumption of chocolate with 12 kgs.
The annual chocolate spend per person in Saudi Arabia is $41, which is substantially higher than the average outlay on the same in the Middle Eastern countries is $4. The demand and consumption of chocolate are predicted to grow at a rate of 31.5% in Saudi Arabia for the next three years. The total demand for chocolates in Saudi Arabia is estimated to be close to 1,230 tons in 2014.
Even for the fifteen years back, Saudi Arabia had no big chocolate factory within the kingdom. Currently, apart from small size chocolatiers, there are about 20 medium and large size chocolate factories in Saudi Arabia. These factories produce approximately 30 tons of chocolates per year with Mars being the largest in-house producer.
Mars produces mainly Galaxy brand and imports other brands, it is planning to invest $140million in the next 3 years to build new manufacturing facilities. The total demand of chocolate in Saudi Arabia is 1,230 tons and only 30 tons of chocolates are produced within the country. Therefore, there is a huge supply and demand gap of about 1,200 tons, and this gap is fulfilled by importing chocolates. In 2013, Saudi Arabia imported 62,480 tons of sweetened cocoa, chocolate and other products made of chocolates.
Saudi Arabia is one of the largest importers of chocolate. In 2014, Saudi Arabia imported 1,167 tons of chocolate from outside the country, 250 tons of the total import was Swiss chocolates. The total value of imported chocolate is estimated to be $950 million in 2014. Saudi Arabia does not export any chocolate product to other countries as demand far exceeds supply.
Biscuit Market Although chocolate is one of the fast-developing markets in Saudi Arabia, biscuit forms a market larger in size in terms of sales volume in Saudi Arabia. The overall biscuit market sales were 86.7 thousand tons in 2009.It has seen a 5.6% year on year growth, and in 2014 the overall market size has increased to 114.1 thousand tons. The overall biscuit market in terms of value has increased from $457.6 million in 2011 to $549.6 million in2014.
It is estimated that the demand of biscuit will continue to grow at a rate of 7.7% for at least next five years, by 2019, the overall market demand of biscuits will rise to 114.3 thousand tons. New varieties of biscuits such as McVities Digestive and chocolate sandwich biscuits are scaling up the demand. Additionally, a growing population of youth is also attributing to the growth of the biscuit segment. Biscuit segment is well-developed in Saudi Arabia.
The major market share in the biscuit market is enjoyed by local players, such as United Food Industries, National Biscuits and Confectioners, and Al Jazira Food Processing. International players, such as Nabisco and Danone, also have biscuit factories based in Saudi Arabia. Saudi Arabia fulfils almost 70% of its demand from local production. The current production capacity is approximately 86,000 tons with some of the manufacturers planning to swell their production capacity in the coming days.
In the biscuit industry, there is no gap between demand and supply. We found that the main snack consumers are school children, university students and young working adults with various income levels. Price and part size were the main elements shaping the demand for wafer products on all brands. High demand is for the low priced more filling brands like Lambada and Samba.
Main consumers are of these brands are low-income adults and university students. School children prefer sweeter tastes (Shamadan). Some vendors promote Bisco Misr wafers as suitable for diabetics. Medium to high-income consumers prefer KitKat and Loaker. Also, Metallic packaging of chocolate has been prioritised than any other packaging.
Hence, producers can give variety and changes on metallic packaging of their products. Since purchasers consider value of received chocolate in view of receiver of chocolate, producers should pay due attention to this point that the chocolate which they offer to someone should associate with its price.
(Ahmed is lecturer, University of Hafr Al Batin, Clinical nutrition department, Saudi Arabia. Dr Raajeswari is associate professor, Avinashilingam University, Coimbatore. They can be reached at ybahmed.uhb.edu.sa)
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