Saudi Arabia Dairy Products Market- Trend Analysis & Forecasts

Market/ Product Overview

Saudi Arabia’s dairy products market is among the most developed in the GCC, fueled by high per capita consumption, robust local production, and expanding retail networks. As of 2024, the market size stands at US$ ** billion, with key products including fresh milk, laban, yogurt, cheese, and UHT milk. The country produces over ** billion liters of milk annually, accounting for more than 80% of local demand. The remaining is supplemented through strategic imports of processed dairy items, particularly cheese and butter.

Riyadh and Jeddah continue to dominate the retail distribution, with supermarket chains like Panda, Tamimi, and Carrefour leading sales channels. Local players such as Almarai, NADEC, and Al Safi Danone have made significant investments in vertical integration, enabling them to control costs and ensure quality. Almarai alone contributes over **% of the market share and reported US$ ** billion in revenue in 2023, of which dairy and juice contributed US$ ** billion. Innovations in product categories—especially flavored milk, organic dairy, and lactose-free options—are witnessing increased uptake among younger and health-conscious demographics, shaping new consumption trends.

Significance of Saudi Arabia in Global Dairy Products Supply Chain

Despite being located in an arid region with minimal rainfall, Saudi Arabia has emerged as a strategic dairy player in the Middle East due to large-scale government-backed agricultural initiatives and private sector investments. The Kingdom’s significance lies in its ability to supply nearly 60% of GCC dairy needs, making it an export leader in fresh milk and yogurt within the region. In 2024, Saudi Arabia exported dairy products worth over US$ ** million to neighboring countries such as the UAE, Kuwait, Oman, and Bahrain.

Saudi Arabia also hosts some of the world’s largest integrated dairy farms, such as those operated by Almarai and Nadec, with herds exceeding 150,000 cows. These facilities are equipped with high-efficiency milking and cooling technologies, which not only ensure year-round supply but also set a benchmark for regional dairy practices. Furthermore, the Kingdom's role in stabilizing prices within the GCC—through consistent supply even during crises such as the COVID-19 pandemic or regional geopolitical tensions—enhances its reliability as a dairy supplier and underscores its influence on food security in the region.

Saudi Arabia Dairy Products Supply & Demand Trend

Saudi Arabia’s dairy supply chain is largely self-contained, supported by advanced production systems and feed importation from global markets such as Argentina, Sudan, and the U.S. Domestic milk production reached ** billion liters in 2023, an increase of **% from 2022, driven by improvements in herd productivity and genetic breeding programs. However, despite rising local production, consumer demand—particularly for cheese, butter, and specialty dairy—is rising at an average annual rate of **%, necessitating continued imports.

Laban and yogurt represent the highest consumed categories, accounting for nearly **% of total dairy volumes, followed by fresh milk (**%) and cheese (**%). Per capita dairy consumption in Saudi Arabia averages ** liters per annum, significantly higher than the MENA average of ** liters. Urbanization, population growth (expected to reach 40 million by 2030), and health awareness campaigns are contributing to this rising demand. However, volatility in feed prices and high-water costs continue to pressure production margins, pushing producers to increase operational efficiency and diversify sourcing strategies.

Saudi Arabia Dairy Products Market Growth Factors

Saudi Arabia Dairy Products Market Segmentation

The Saudi Arabia dairy products market can be segmented by product type, distribution channel, and end-user demographics. By product, milk dominates the market with a **% share in 2024, followed by yogurt (**%), cheese (**%), butter (**%), and others including cream and flavored milk. UHT milk has gained traction, particularly in rural and small urban centers, due to its longer shelf life and ease of storage.

By distribution, modern trade channels account for **% of total dairy sales, with hypermarkets and supermarkets being key venues. Online grocery platforms now contribute **% to dairy sales, reflecting a sharp rise from **% in 2020. Convenience stores and independent retailers maintain a stable share in semi-urban and rural areas.

In terms of demographics, families with young children and health-focused consumers are the primary demand drivers. Over **% of households in Riyadh and Dammam purchase yogurt and laban weekly. The demand for fortified and functional dairy products is higher among the 25–40 age group, while traditional products like ghee and laban retain popularity among older generations and conservative consumers.

Notably, cheese consumption has shown a compound annual growth of **% between 2020 and 2024, with cheddar and processed slices leading demand in the QSR and food service sectors. Specialty dairy products such as kefir and probiotic drinks are emerging segments with strong potential, driven by health trends and premiumization.

Saudi Arabia Dairy Products Trade (Export & Import) Trend

In 2024, Saudi Arabia imported over US$ ** billion worth of dairy products, primarily cheese, butter, infant formula, and specialty milk powders. The leading import partners include New Zealand, France, the Netherlands, and Ireland, with New Zealand accounting for **% of total dairy imports.

Exports, on the other hand, reached US$ ** million, with the UAE, Kuwait, Bahrain, and Jordan being the largest buyers. The majority of exports consist of fresh milk, laban, and yogurt, primarily from Almarai and Nadec, which have robust cold-chain capabilities and long-standing distribution networks across the GCC.

Saudi Arabia applies a **% import tariff on most dairy products under the GCC Common External Tariff regime. However, exemptions and subsidies are extended for critical items like infant formula and powdered milk to ensure food security. The Kingdom also benefits from favorable bilateral trade agreements with key partners in the region and participates actively in trade facilitation through the Saudi Food and Drug Authority (SFDA).

To support export expansion, Saudi Arabia has introduced incentives for halal-certified and value-added dairy producers. However, compliance with export standards—including product labeling, traceability, and shelf-life requirements—remains a logistical challenge for small and medium-sized dairy businesses.

Influence of Saudi Arabia in Global Dairy Products Price

While Saudi Arabia is not a global price setter for dairy, its role in stabilizing GCC prices is significant. As the largest producer and exporter within the region, fluctuations in Saudi dairy production directly affect regional wholesale and retail pricing. For instance, during the 2022 feed crisis, the Kingdom's decision to maintain subsidized domestic supply prevented regional price inflation.

Import price trends show moderate volatility, with average cheese import prices rising from US$ 2,050 per metric ton in 2020 to US$ 2,360 in 2023. Wholesale prices for fresh milk have remained relatively stable, averaging US$ 3.5 per liter in 2023, due to government price caps and subsidy schemes.

Saudi Arabia’s investments in export capabilities have started influencing price negotiations with key buyers in the Gulf. The country’s ability to offer consistent supply with halal certification gives it a premium edge, particularly in markets like the UAE and Oman. While it may not influence global dairy indices, its influence in regional trade pricing mechanisms continues to grow.

Market Competitive Landscape

Future Outlook

The Saudi Arabia dairy products market is poised for sustained expansion through 2032, driven by Vision 2030, evolving consumer preferences, and export ambitions. The market is projected to grow from US$ ** billion in 2024 to US$ ** billion in 2032, with a compound annual growth rate of **%.

New product innovations, especially in lactose-free and functional dairy, are expected to grow by over **% CAGR. Urbanization, digital retail expansion, and rising health awareness will reshape distribution and product development. Additionally, increased public-private partnerships and investments in sustainability (such as solar-powered dairy farms and water-efficient irrigation) will redefine the production landscape.

As Saudi Arabia continues to assert itself as a reliable supplier in the GCC, the emphasis on value-added exports, compliance, and halal certifications will further strengthen its position. For investors, stakeholders, and policymakers, the next decade represents a strategic window to harness growth, innovation, and sustainability in one of the region’s most dynamic food sectors.

Summarize the above content & keep datapoints in each paragraph (avoid bullets): Rephrase & Shorten in headings given below: Market Overview, Market Growth Factors, Market Restraints & Challenges, Market Segmentation, Competitive Landscape, and Outlook