Biscuits in Saudi Arabia: Retail expansion makes the market promising

Biscuits in Saudi Arabia – last year, the biscuit category in Saudi Arabia was marked by a rapidly growing retail landscape, a booming young population and aggressive activities by companies. With expected retail expansion in coming years, the biscuit category is expected to maintain a 6% CAGR in constant value terms by 2018, with sandwich biscuits as the strongest performer.

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In 2013, biscuits sales grew steadily registering a similar performance as in the period between 2008 and 2013 at the CAGR (compound annual growth rate) of 13%. The category not only benefitted from a rapidly growing retail landscape and a booming young population but also by aggressive activities by companies. Quaker Oats entered the category with its cookies, while United Biscuits introduced a dark-chocolate coated version of its McVities Digestives during the first half of 2013. Furthermore, various in-store promotions, such as free gifts with McVities Digestives in 2013, also helped boost sales.

Oreo pushes up growth

According to Euromonitor International, sandwich biscuits continued to lead the category in 2013, growing by an impressive 15% in current value terms. A large variety of flavours available within this product category make it a firm favourite among children. Growth largely comes from the leading brand Oreo. Oreo’s brand share jumped to over 30% in 2013, from 28% in 2012, which is also pushing up the overall biscuits category’s growth. The leading companies, such as Nabisco Arabia (NAARCO), and Danone, continued promoting their flagship brands through various media, thus also helping the category to grow steadily.
Cookies also recorded an impressive performance with value sales growth in 2013. This category also benefited from aggressive activities by many companies, such as new and attractive packaging of Butter Cookies by National Foods (Americana) in mid-2013. The entry of Quaker Oats to the biscuits category through its Quaker Oats Cookies, launched in the second quarter of 2013, further helped the growth of cookies.

Notable expansion continues

The retail expansion currently being witnessed in the country is expected to gain pace in the coming years, say experts from Euromonitor International. The government has ambitious plans to attract investors in various categories including retail. In order to keep up with strong population growth, many grocery retailers have chalked out impressive expansion plans. Savola Group, for example, not only plans to increase the number of its leading supermarket and hypermarket outlets for its Panda chain, but has also announced that it will set up a second massive distribution centre in King Abdullah Economic City, with a surface area of 67,000 sq m. Other retailers are also aiming at further expansion in order to meet the growing demand from the population. These factors will prove beneficial to the foods category in general and biscuits in particular.

Boosting value sales

The biscuits category is expected to witness a CAGR to 6% in constant value terms over the forecast period (which will be slightly lower than the CAGR of 7% witnessed between 2008 and 2013). This slight drop is expected as companies, in addition to focusing on new product development and marketing communications, will also engage in various in-store promotions. These in-store promotions are likely to centre on money off promotions, such as extra value packs, or buy-one-get one-free. While these strategies may hamper value growth somewhat, they are expected to boost volume sales, which are set to maintain the same momentum as that witnessed during the review period by maintaining a steady CAGR of 6% during the forecast period . A large young population, which is continuously increasing, is expected to boost the retail industry, a trend that will also contribute to the category’s future growth.

Companies’ activities

Sandwich biscuits is expected to remain the strongest performer in the forecast period with a constant value CAGR of 9%. This product will benefit from a growing young population who are the main consumers of this category. The leading companies, such as Nabisco Arabia (NAARCO), are expected to continue focusing on new product developments, aggressive marketing and advertising strategies as well as investing in production facilities to enable it to cope with the expected to growing demand. Nabisco Arabia (NAARCO) has already built a huge manufacturing facility in 2012, which has specifically increased the production of Oreo. As Euromonitor International predicts, the expansion plans will continue in the forecast period as Oreo is becoming a favourite sandwich biscuit brand among young children. These factors are likely to push the growth of sandwich biscuits.