The global non-alcoholic drinks industry experienced consistent growth in recent years, with a significant contribution from increasing health consciousness among consumers. In Saudi Arabia, this trend has been particularly pronounced due to the country's strict alcohol prohibition laws, cultural factors, and a rising preference for healthier beverage options.
Saudi Non-Alcoholic Drinks Industry Size and Structure in 2019-2023
The non-alcoholic drinks industry in Saudi Arabia increased at a compound annual growth rate (CAGR) of 6.79%. As a result, it reached 10.00 billion USD in 2023.
The consumption per capita of non-alcoholic drinks in Saudi Arabia showed an overall increase in the period 2019-2023. Until 2023, it grew at a CAGR of 5.00% to reach 279.198 USD per capita.
In 2023, the non-alcoholic drinks industry in Saudi Arabia was dominated by soft drinks, which accounted for 66.9% of the total value. It was followed by bottled water, juice, and RTD coffee and tea with shares of 22.7%, 9.1%, and 1.3%, respectively.
Broken down by retail distribution channels, the non-alcoholic drinks industry in Saudi Arabia was led by supermarkets and hyper markets. In 2023, they accounted for 46.8% of the total volume. That left 53.2% to all other retail distribution channels in the same year.
Imports and Exports of Non-Alcoholic Drinks in Saudi Arabia
The imports of non-alcoholic drinks to Saudi Arabia in the period 2019-2023 grew at a CAGR of 5.39% to reach 428.65 million USD.
The exports of non-alcoholic drinks from Saudi Arabia in the period 2019-2023 grew at a CAGR of 0.31% to reach 479.43 million USD.
As a result, the trade balance of non-alcoholic drinks in Saudi Arabia was positive and recorded an overall decrease during the analyzed period. Until 2023, the trade balance decreased at a CAGR of -20.33% to reach 50.78 million USD.
Key Trends in the Non-Alcoholic Drinks Industry in Saudi Arabia
Alcohol Ban in Saudi Arabia
Saudi Arabia is among the few countries where alcohol consumption is officially prohibited, fostering an ideal environment for the expansion of the non-alcoholic beverage sector. While the country witnessed a historic shift in 2024 with the opening of its first alcohol store since 1952, access remains restricted to non-Muslim diplomats.
Consequently, most of the population continues to rely on non-alcoholic alternatives, leading to a thriving industry for soft drinks, bottled water, and other non-alcoholic beverages. Thus, the absence of alcohol in social and dining settings promoted the development of sophisticated non-alcoholic drinks. Premium non-alcoholic spirits brands, such as Lyre’s, gained popularity, achieving significant distribution in Saudi Arabia and the broader Middle East.
Bottled Water Leads the Market
Bottled water consumption in Saudi Arabia reached 4.02 billion liters in 2023, representing the largest share of the non-alcoholic drinks industry (48%). Health consciousness, convenience, and the hot climate contribute to the growing demand for bottled water.
Investments in bottled water production surged, with companies like Pure Beverages Industry Company (PBIC) establishing new facilities with high-capacity production lines. Similarly, Saudi Jasmine Water and Beverages Factory (JWBF) launched a state-of-the-art bottling plant to cater to increasing demand. These developments underscore the importance of bottled water as a key segment in the industry.
Soft Drinks Follow Closely
Soft drinks are the second largest segment of the industry, with consumption reaching 3.97 billion liters in 2023 (47% of total non-alcoholic beverage consumption). These drinks are popular in social settings and gatherings, contributing to their widespread appeal, particularly among consumers aged 24-44.
The pandemic caused a temporary downturn in sales, with the HoReCa segment experiencing a 29% decline in 2020. However, the industry rebounded in subsequent years, supported by economic recovery and an increasing preference for flavored beverages. Carbonated drinks dominate the category, accounting for 55% of total soft drink consumption.
Juices Enjoy Some Benefits
Health-conscious consumers increasingly turn to juices, which constitute approximately 4% of the industry. Unlike carbonated drinks, 100% fruit juices are exempt from Saudi Arabia’s excise tax on sweetened beverages, further driving their popularity. Orange, pineapple, and apple juices remain top choices due to their nutritional value and natural sugar content.
Tourism Goals Impact Beverage Consumption
Saudi Arabia’s efforts to attract international tourists play a significant role in shaping beverage consumption trends. With the introduction of a new visa regime in 2019, the country set ambitious goals to attract 100 million visitors by 2030. Investments in sports and entertainment, such as acquiring Newcastle United and signing high-profile football players, further support the country’s tourism drive.
As more international visitors arrive, demand for non-alcoholic beverages is expected to rise, particularly bottled water and functional drinks. That leads the hospitality sector to continue expanding its beverage offerings to cater to a diverse audience.
Sugar Concerns Force Shift to Healthier Beverages
Health concerns over high sugar consumption led to regulatory changes and shifting consumer preferences. Saudi Arabia is among the largest consumers of sugar-sweetened beverages (SSBs), contributing to rising rates of diabetes and obesity. In response, the government introduced a 50% excise tax on carbonated drinks in 2017 and a 100% tax on energy drinks. In 2019, the tax was expanded to include sugar sweetened beverages.
These measures led to a gradual decline in sugary drink consumption and a growing preference for bottled water, juices, and other healthier alternatives. Major beverage companies responded to the new regulations by launching zero-calorie and fortified drinks to align with consumer demand.
Functional and Probiotic Drinks Gain Traction
Globally, there is a rising demand for beverages that promote digestive health, including probiotic drinks, kombucha, and fortified waters. While still a niche segment in Saudi Arabia, the trend is expected to gain traction as consumers become more educated about gut health and wellness.
Sustainable Packaging Garner Attention
Environmental concerns led to increasing interest in sustainable packaging solutions. As part of Vision 2030, Saudi Arabia focused on reducing its carbon footprint and promoting eco-friendly alternatives. While plastic remains the dominant packaging material, regulatory pressures may push companies to adopt more sustainable options such as glass bottles and aluminum cans.
Input Costs Rise
The industry faces challenges related to fluctuating raw material costs, particularly in packaging. Potential taxes on plastic packaging could further impact prices, forcing companies to seek cost-effective and sustainable alternatives.
Forecast for the Saudi Non-Alcoholic Drinks Industry
Under the base forecast scenario, the Saudi economy is expected to show steady growth in the medium term. As a result, the Saudi non-alcoholic drinks industry is expected to reach 12.66 billion USD by 2029.
If the Saudi economy does not reach expectations, it will show declining rates in the medium term. In this case, the non-alcoholic drinks industry in Saudi Arabia will fall to 8.33 billion USD by 2029.
If the Saudi economy exceeds expectations, the non-alcoholic drinks industry in Saudi Arabia is forecast to reach 14.59 million USD by 2029.
