Cultivating Success: Saudi Arabia’s Bold Investment in Coffee and the Global Market
Saudi Arabia, recognizing the inevitable shift away from the fossil fuel era, is actively diversifying its economy to secure both domestic prosperity and international prominence. In this pursuit, the Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia, introduced the Saudi Coffee Company in May 2022, injecting a substantial $319 million into the national coffee industry over the next decade.
With a keen focus on enhancing arabica coffee production in the southern Jazan region, the government aims to escalate annual yields from 800 to 2,500 tonnes. This mirrors the attributes of the esteemed Yemeni coffee, fostering a strategic alignment with the neighboring coffee-producing region. Ibrahim Saad, co-owner at Torch Coffee Labs, anticipates that the investments will facilitate the planting of 1.3 million trees by 2025, leading to a fourfold increase in national production to an estimated 40,000 bags by 2028.
To fortify this initiative, the government is providing technical and financial aid to farmers and establishing collaborations with international entities. Notably, Saudi Arabia joined the International Coffee Agreement and is committed to offering technical support to farmers in collaboration with IFAD.
Saudi Arabia, renowned for its rich coffee-drinking tradition, has witnessed a surge in the popularity of specialty coffee over the past eight years. In 2022, the branded coffee shop market grew by 18.5%, boasting 3,550 outlets and securing a 40% share of the entire Middle East’s 8,800-plus branded coffee shops. The country houses five of the Middle East’s top 20 coffee chains, with local company Barns operating over 500 stores, making it the second-largest chain after Dunkin’ Donuts.
In an effort to capitalize on this trend, Saudi Coffee Company plans to allocate funds not only to coffee production but also to importing businesses, roasting operations, coffee shops, and barista training academies, establishing a comprehensive supply chain investment.
While acknowledging the challenge of retaining farmers in the agricultural sector due to the allure of more profitable industries like oil and gas, the government remains committed to revitalizing the coffee farms in the southern region. Despite the current modest production volumes, proponents of the initiative believe that, given time, the sector will experience a resurgence.
Saudi Arabia’s broader strategy, encapsulated in Vision 2030, positions it as a key player in the global market. The country aims to become a trade hub for the Middle East, with various social and economic reforms underway, including “giga projects” focused on tourism and hospitality. Although skeptics question Saudi Arabia’s ability to compete globally with its current production volumes, proponents express confidence that sustained investments will yield results in the coming years.
As Saudi Arabia embarks on this transformative journey, its success will hinge not only on meeting domestic coffee demand but also on garnering international support and collaboration. With foreign investment on the rise and global companies establishing a presence in the country, Saudi Arabia remains optimistic about its prospects in the evolving landscape of the coffee industry. The next five years are poised to be a captivating chapter in Saudi Arabia’s quest for prominence in the global coffee market.
