Monday, July 31, 2023

From Tradition to Trend: KSA’s Cafe and Coffee Chain Market Awakening: Ken Research

 The cafe and coffee chains market in Saudi Arabia is flourishing as coffee culture gains traction. The KSA Cafe Market is projected to grow at a CAGR of ~10-15% by 2027, showcasing the industry's promising expansion.

STORY OUTLINE

  • The KSA cafe and coffee chain market is served by both national and international chains, with standalone outlets holding the majority of market share in terms of the number of establishments.
  • Urbanization, a high proportion of urban population, and changing lifestyles are driving the demand for cafes and coffee chains in Saudi Arabia.
  • The growth of the cafe market is fueled by millennials, particularly those aged 24-40, who are driving the trend of socializing in cafes.
  • Government policies, such as the SAR ~1,100 Bn Expenditure Plan and initiatives by the Sovereign Wealth Fund, are driving a surge in consumer spending and promoting economic growth in Saudi Arabia.
  • In March 2023, consumer spending in Saudi Arabia witnessed significant growth, surpassing SAR ~4 Bn per day, reflecting a robust increase in economic activity and expenditure.

In the 1990s, coffee shops emerged, introducing Saudi families to various Italian coffee, pastries like donuts, tiramisu, and cinnamon rolls. Branded coffee shops are set to gain substantial popularity throughout Saudi Arabia. The KSA café and coffee chain market is served by both national and international chains. Standalone outlets hold the majority of market share in terms of the number of establishments. Cafes accounted for ~10% of the total foodservice GMV in 2022.

1. Urban Buzz: Thriving Cafe Culture in Saudi Arabia.

KSA Cafe and Coffee Chain Market

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  • The multicultural ambiance of Saudi Arabia, along with its sizable expatriate community, provides an opportunity for food chains from various countries to extend their reach and cater to diverse tastes.
  • High proportion of urban population ~80% in KSA and resulting lifestyle changes will fuel the demand for cafes and coffee chains.
  • The Kingdom is targeting an ambitious goal of hosting 100 Mn tourists per year by 2030 and increasing tourism’s contribution to GDP to 10%.

2. Millennials Fueling the Coffee Revolution in KSA.

KSA Cafe and Coffee Chain Market

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  • The growth of the cafe market is propelled by a rising working-age population, particularly among individuals aged 24-40, who account for ~55% of the total population.
  • The proliferation of chained cafes is driven by the growing trend of socializing in cafes, particularly among urban Millennials and the younger demographic segments of the population. This trend is contributing to the continued expansion of the cafe market.
  • Large millennial population with high disposable incomes who are willing to spend on health are the attractive cohort of the customer for Acai Bowls.

3. Fueling the Economy: Government Policies Drive Consumer Spending Surge

KSA Cafe and Coffee Chain Market

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  • KSA's SAR ~1,100 Bn Expenditure Plan for 2023 aims to promote growth, enhance spending efficiency, and prioritize investments in education and healthcare, stimulating consumer spending.
  • KSA's Sovereign Wealth Fund launches 3 initiatives to empower private sector businesses, aligning with the nation's vision of diversifying away from oil, fostering local opportunities and economic transformation.
  • In March 2023, consumer spending in KSA experienced remarkable growth as it surged past SAR ~4 billion per day, indicating a substantial increase in economic activity and expenditure.

In conclusion, the KSA cafe and coffee chain market is driven by a combination of factors including urbanization, changing lifestyles, and the influence of millennials. Government policies and initiatives are further fueling consumer spending and promoting economic growth. With the rise of branded coffee shops and the dominance of standalone establishments, the market shows promising potential for expansion and diversification.

KSA Cafe and Coffee Chain Market

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