The hospitality sector in the Kingdom of Saudi Arabia has witnessed an unprecedented boom over the last several years. Saudi Arabia’s overall economy shows positive growth in GDP until 2016.
According to the 2012 Economic Impact Report Saudi Arabia published by the World Travel & Tourism Council, the total contribution of the travel and tourism sector to the country’s GDP in 2011 was $43 billion, which equals 5.4 percent, with a forecasted growth of 3.7 percent in 2012 to $44.6 billion.
The latest figures released by Business Monitor International (BMI) predict the number of visitors to KSA will increase to 15.8 million by 2014; approximately 2.8 million more than in 2010, which in turn has translated into a steady increase in demand within all hospitality related sectors, including the food and beverage industry.
According to an eTN Global Travel Industry News report pertaining to the first quarter of 2012, international tourists have spent a total of SR7.1 billion in the Kingdom of which seven per cent was spent on food. The total expenditure of domestic tourists amounted to SR7.4 billion, with a staggering 23 percent spent on food and beverages.
Even though Saudi Arabia is a leading player in regional food production, over $5 billion worth of food and beverage products are currently imported every year to the Kingdom. According to the Middle East Foods Report 2012, Saudi Arabia imports approximately 63 percent of the entire Middle East’s food and beverage imports.
With the increasing demand within the country and the boom in the hospitality sector, there is a new potential for foreign investment in the food and beverage industry.
The Alpen Capital GCC Food Sector Report 2011 recognized that external investments in the food processing sector have ascended significantly, with strong multinational food and beverage companies ready to conquer the Kingdom’s market and, given the significant growth potential, also setting up food processing plants in Saudi Arabia.