SAUDI Arabia's expanding entertainment and leisure sectors have drawn much attention over the past year. And, while their impressive growth stories are most definitely worthy of note, it is the stimulating effect that they are having on other industries that provides real depth to the narrative that Saudi society is indeed evolving. The F&B industry is one that has undoubtedly been influenced by the nation's investment in its new entertainment landscape. However, this sector is also experiencing a transformation of its own, being driven not only by emerging global trends but also by local success stories. Figures from Oxford Economics and the General Authority for Statistics reveal that approximately 46% of the average KSA household expenditure is spent on retail, with food and beverage sales contributing to an increasingly large share of this retail spending. Recent data by Statista reveals that revenue in the Kingdom's F&B segment is expected to grow annually by 11.5% (CAGR 2019-2923), resulting in a market volume of $224m by 2023. And while retail spend is certainly increasing, how and where consumers are spending their riyals is also shifting. Saudi Arabia boasts one of the world's youngest populations, with 70% of the country's citizens under the age of 30. Especially receptive to the newest technology and lifestyle trends, the youth are often viewed as the most malleable when it comes to change, and this is particularly true of the evolving F&B sector. However, while undeniably influential, this growth is not one that is being solely driven by youth. The government's commitment to enhancing the quality of life of its citizens is also proving instrumental in further growing this sector. Recent changes to legislation, including rules which have enabled women to drive and have brought cinemas back to the Kingdom, will also transform social dynamics, which will in turn impact a number of industries – F&B included. A central part of Vision 2030 is caring for one's health. In line with the government's long-term plan to ensure a healthy population, there has been an increased focus on healthy eating and wellness. In the short-term, various health food brands and chains – both international and homegrown concepts – are expected to enter the KSA market, from quick eats and casual dining options to full-scale restaurants. We also expect to see more traditional brands introducing new concepts and menus to cater to those seeking healthier eating options. Another global trend that will play a key role in the country's F&B sector is technology, and the incorporation of data and automation. Not only can digital solutions control rising costs and limit consumer price hikes by streamlining operations, but they can also be used to enhance the customer experience through quicker delivery and the ability to more readily customize orders. While digital table managers and recognition tools still sound somewhat futuristic, a number of brands are already considering how to incorporate such technology into their offering to improve the quality of their service and create a new experience for their customers. Although e-commerce continues to impact brick-and-mortar outlets in the retail sector, F&B is one sector which continues to provide value and excitement in a traditional physical environment. In KSA, and in the wider region, malls are an extremely popular place to socialize and are deeply ingrained in the nation's leisure culture. The incorporation of F&B outlets and restaurants within these malls has increased tremendously, providing a lively and communal atmosphere for customers and increasing visitor dwell times within malls. These food outlets are expected to continue occupying a growing proportion of retail space over the next few years, further complementing the retail proposition as entertainment and leisure destinations, following the recent re-introduction of cinemas to the Kingdom. The F&B industry is an extremely interesting one to watch, particularly given its intrinsic link to wider developments in KSA society. The sector is of key importance to the nation's growing leisure and entertainment landscape and has a unique ability to positively influence brick-and-mortar retail locations. As the demand for quicker delivery and even fresher produce continues, the logistics and warehousing sectors are also expected to experience a positive spillover effect, with greater requirements for space related to food production and storage – especially those facilities which can be customized to meet brands' needs and are strategically located to ensure optimal transportation times. KSA has the potential to redefine the food and beverage industry, supported by the country's dedication to exploring and incorporating new technology and its willingness to promote local, SME's and homegrown concepts. The strong purchasing power of its citizens and the government's commitment to providing a world class tourism, leisure and entertainment infrastructure are also key elements which will prove critical in further enhancing this already influential sector in the economy and in the lives of Saudi citizens. * The writer is director, Strategic Advisory at CBRE MENAT
