Economic resilience shapes Saudi FMCG landscape

Saudi Arabia’s FMCG market is being shaped by economic resilience amid huge global challenges, coupled with significant shifts in consumer behaviour. At home, economic focus is being strategically moved away from a dependence on oil production towards more diverse non-oil sectors, including FMCG, helping to spur growth.

Meanwhile, Saudi consumers are reprioritising their shopping budgets, and adjusting their shopping habits. Food and dairy categories dominate FMCG spending, contributing 41.4% and 28.7% respectively to the sector’s total value. They are also benefiting from high purchase frequency – shoppers are buying food and dairy products an average of 15.1 times per month – as well as significant online engagement, with 31.7% of Saudi consumers buying the categories online over the past 12 months. 

Shoppers favour modern trade when purchasing food and dairy, and this channel holds a significant volume share of 71%. Brands and retailers should build upon this preference by enhancing in-store experiences and promotions.

Modern trade and online transform how Saudis shop

Currently, 53.1% of spend on FMCG is made through modern trade and online platforms, with shoppers visiting an average of 4.7 of these channels over the last 12 months. In terms of penetration, modern trade now reaches almost 100% of the population. 

Leading retail giants including Panda, Othaim, and Carrefour are mastering the art of consumer engagement through strategic store placements and marketing tactics. Panda and Othaim are leaders in market penetration, holding 72% and 65% respectively, while Carrefour excels in spend per trip and basket size – mainly driven by purchases of dairy and home care products.

Discounters, which now have penetration of 73.8%, capturing 5.6% of total FMCG spend, are predominantly pushing home care segments with targeted strategies. Retailers in this channel should focus their attention on expat Asians, and catering to their desire for value-driven offers.

Brands and retailers must tailor their marketing and store strategies to align with consumer activities across different channels, boosting presence in favoured stores to spur sales, and targeting frequently visited outlets to deepen market reach.

A diverse socioeconomic canvas

Brands need to understand how people’s age group and income level influence their FMCG spending habits, and create product strategies in line with these trends. For instance, while Saudis within the higher socio-economic levels have slightly reduced their consumption, the middle classes present a potential sweet spot for volume growth.

There is also a contrast between the spending patterns of consumers under 30 and those within the over-40 demographic, emphasising the need for tailored marketing strategies. Younger buyers are willing to pay more for quality FMCG products, while the 40+ group spend more than their fair share due to larger family sizes – contributing 43% of total FMCG value while making up 40% of population. Consistently rising volume among the under-30s indicates surging product engagement, while on the over-40s are showing restraint. This points towards the potential of youth-centric marketing strategies.

Brands and retailers should analyse demographic variations to refine their engagement strategies, marketing efforts and promotion efficiency, and ensure brand presence is optimised for each consumer segment. This might include engaging younger buyers with premium quality ranges, and catering to the 40+ audience with products suited to the needs of larger families.

Further opportunities for growth and innovation are set to emerge across diverse FMCG segments in Saudi as the non-oil sector expands. Strategies such as enhancing in-store experiences, targeting home care products in discount stores, and fine-tuning marketing efforts based on demographic insights will help brands and retailers stay ahead in this rapidly evolving market.