Saudi cold storage market gains as consumer spending rises

Saudi Arabia's cold chain market sector will grow at a CAGR of 11.2 percent by 2023, given the rise in demand for dairy, meat and pharmaceuticals, consultancy firm Ken Research said in a recent report.

The market is increasing largely due to growth in modern retail stores, growth in demand and consumption of perishable products and rising pharmaceutical imports in the Kingdom, it noted.

Due to Saudi Arabia’s arid climatic conditions, 75 percent of its food requirements are met through imports from countries such as Brazil, India, Australia, New Zealand, US and France.

“Increasing imports of meat and seafood and pharmaceuticals and rising consumer retail spending has driven the cold chain market in Saudi Arabia,” the report added.

In the last few years, the market has witnessed an impressive incline in the consumer retail spending in the country. A 2018 GCCA’s Global Storage Capacity Report found that consumer retail spending on grocery rose at a CAGR of 9.5 percent over the 2012-2017 period.

According to Ken Research, the domestic market witnessed a strong demand for full-fledged integrated distribution centers that included logistics’ facilities, cold storage, dry storage and supporting retail facilities.

As a result, demand for new-generation logistics facilities (built-to-suit) increased in the market and growth potential for third party logistics (3PL) companies got a boost, the consultancy said.

Currently, majority of the cold storage warehouses are concentrated in cities such as Riyadh, Jeddah and Dammam. However, now several 3PL companies were planning to expand their operations across other cities as well to exploit the rising opportunities in the Saudi logistics sector.

Meanwhile, the cold chain market of Saudi Arabia is simultaneously witnessing increasing number of new players and existing players expanding their current level of operations, with major players such as Al Faisaliah, Abu Dawood, Tamer, Sunbulah, Al Baik and Flow Progressive entering the market.

“These companies are likely to upgrade and enhance the country’s logistical infrastructure to capitalize on the new opportunities,” the report said.