The vegetable market in Saudi Arabia accounts for approximately USD 1,122,972.2 thousand and is anticipated to increase by 4.7 percent within the year 2023. The individuals residing in Saudi Arabia has increased the demand for high quality vegetables due to rise in the presence of hypermarkets as well as superstores. With the increase in disposable income of the individuals, the demand for vegetables in Saudi Arabia has raised. In the past, the individuals avoided consumption of fresh vegetables due to harsh environment.
As a result, they preferred to live a nomadic lifestyle. The diet of the residents has mostly revolved around cereals as well as dairy products (Ali and Al-Qahtani, 2012). However, the raised concern related to increasing obesity has increased the demand for vegetables in Saudi Arabia. The report will reflect on the demand and supply analysis of the vegetable market in Saudi Arabia. The report has been divided into three parts that will provide an overview regarding how increase in demand for vegetables in Saudi Arabia will influence the other markets that are related to vegetables.
Market 1: The Vegetable Market
The change in taste as well as preference has shifted the demand from traditional low levels of vegetables consumption to higher levels of vegetables consumption. At present, Saudi Arabia has turned out to be the largest as well as purchaser of fresh vegetables.
According to Osman et al. (2010), the vegetable costs has witnessed a rocket high during the first half of 2018 due to diminishing supply from major vegetable supplying countries. As a result, the vegetable price has been on rise due to supply shortages. The shortage in supply has taken place due to high temperature as well as restricted supply from Turkey.
The graph shows that with increase in price that shifts from P to P1 the vegetable market witnessed shortage in supply and the supply curve shifts from S to S1. The demand for vegetables has largely increased due to the individuals who are being educated as well as aware regarding their health and the benefits that are associated with the consumption of high-quality vegetables (Al-Rethaiaa, Fahmy and Al-Shwaiyat, 2010).
In terms of vegetables, the country has always been independent however; it has been exposed to global price fluctuations. The increasing awareness among individuals in Saudi Arabia and rising disposable income of the residents has been the major cause that led to increase in demand in the vegetable market.
The increase in the demand for vegetables has also raised the demand for vegetable juice. At present, vegetable juice has been regarded as the second-largest source of revenue. The local producers are able to generate approximately 24 percent of total revenue. The change in taste as well as preference of the customers has persuaded them to switch from multiple products containing preservatives as well as high sugar to 100 percent natural juice. This in turn improved the juice market thus increasing the demand for premium brand vegetable juice such as Caesar.
On the other hand, standard brands such as Almarai as well as Al Rabie dependent heavily on widespread distribution as well as packaging of product. This has been accompanied by in-store support as well as above the line promotions. In this case, vegetable juice and vegetables acts as complementary goods as the positive change in taste and preference for vegetables has increased the demand for vegetable juice (Al-Hazzaa et al., 2012). Complementary commodities mostly possess a negative cross elasticity of demand as they are linked to each other.
The economy brands make limited distribution to supermarkets that are mostly acquired by low-income as well as middle-income based individuals. Parents who are conscious about the health of their children make the demand for vegetable juice majorly. As a result, the vegetable market has witnessed launch of multiple new products in the form of fruit juice.
Supermarkets and Households
The supermarket as well as households accounts for approximately 51 percent of market share, providing quality storage facilities. On the other hand, a rousingly popular culture of dining out in Saudi Arabia has contributed to on-trade development. As a result, the traditional distribution of vegetables in restaurants has increased the growth of fast-food outlets such as McDonalds as well as Burger King. This in turn provided advantage to the sellers of vegetables thus improving the domestic market. On the other hand, the leading suppliers of vegetable juice producers in Saudi Arabia have also been witnessing a positive development (El Bcheraoui et al., 2015).
The leading suppliers of vegetables have also been able to diversify their market. This persuaded them to invest largely in marketing mostly by advertising through outdoor media. On the other hand, the supermarkets have also been able to introduce variation in terms of packet sizes as well as differentiate in terms of product flavors. This has helped to raise business-to-business transactions of vegetable supply chain that has captured approximately 59 percent of the market share. The widespread distribution network has benefitted the vegetable market to a large extent thus having a strong supermarket presence. The demand for vegetables is also anticipated to increase in the upcoming years that have also been accompanied by rich oil-based economy of the country. The increasing disposable income of the household as well as increasingly developed retail trade has stimulated fiscal consumption of vegetables.
The introduction of new products such as multi-vitamin juice has also been initiated due to growth in the vegetable market. The improvement in packaging that eventually expanded product lifecycles. A different trend that has been increasing demand for vegetables includes greater employment of young individuals as well as rousing westernization of the country. The supermarkets will also be benefited, as the sales of frozen as well as canned vegetables will rise. These products will provide the households with an easy solution of getting access to home-prepared meals. As a result, the overall turnover is likely to increase by 11 percent that will reach a target of 3.8 billion. The increase in export has also provided benefit to the supermarkets.
The graph shows that export was initially high during the year 2012 however; it witnessed a little downfall during 2013 that has been adjusted with increase in vegetable exports by 2015. There are hardly any countries that dominate the vegetable market in Saudi Arabia.
There has been multiple non-EU countries that has been presently exporting huge volume of vegetables to Saudi Arabia. The countries include Philippines, South Africa, Turkey, Ecuador, China as well as the United States and India. This has however increased competition within the national market regarding the sale of fresh vegetable juice (El Bcheraoui et al., 2015). A further challenge has been related to the supply chain that has been accompanied with large expenses. It has been challenging to secure a dependable independent scale provider in order to diminish transportation as well as storage costs.
Conclusion
It could be concluded that the increase in disposable income of the individuals, has raised the demand for vegetables in Saudi Arabia. The economy brands make limited distribution to supermarkets that are mostly acquired by low-income as well as middle-income based individuals. Increased health awareness of customers in Saudi Arabia has been positively influencing the demand for fresh vegetables.
It could be inferred that the leading suppliers of vegetable juice producers in Saudi Arabia have also been witnessing a positive development. The change in taste as well as preference of the customers has persuaded them to switch from multiple products containing preservatives as well as high sugar to 100 percent natural juice. The leading suppliers of vegetables have also been able to diversify their market. The raised concern related to increasing obesity has increased the demand for vegetables in Saudi Arabia.
References
Al-Hazzaa, H.M., Abahussain, N.A., Al-Sobayel, H.I., Qahwaji, D.M. and Musaiger, A.O., 2012. Lifestyle factors associated with overweight and obesity among Saudi adolescents. BMC public health, 12(1), p.354.
Ali, M.H. and Al-Qahtani, K.M., 2012. Assessment of some heavy metals in vegetables, cereals and fruits in Saudi Arabian markets. The Egyptian Journal of Aquatic Research, 38(1), pp.31-37.
Al-Rethaiaa, A.S., Fahmy, A.E.A. and Al-Shwaiyat, N.M., 2010. Obesity and eating habits among college students in Saudi Arabia: a cross sectional study. Nutrition Journal, 9(1), p.39.
El Bcheraoui, C., Basulaiman, M., AlMazroa, M.A., Tuffaha, M., Daoud, F., Wilson, S., Al Saeedi, M.Y., Alanazi, F.M., Ibrahim, M.E., Ahmed, E.M. and Hussain, S.A., 2015. Fruit and vegetable consumption among adults in Saudi Arabia, 2013. Nutrition and Dietary Supplements, 7, pp.41-49.
Esper, T.L., Ellinger, A.E., Stank, T.P., Flint, D.J. and Moon, M., 2010. Demand and supply integration: a conceptual framework of value creation through knowledge management. Journal of the Academy of marketing Science, 38(1), pp.5-18.
Osman, K.A., Al-Humaid, A.M., Al-Rehiayani, S.M. and Al-Redhaiman, K.N., 2010. Monitoring of pesticide residues in vegetables marketed in Al-Qassim region, Saudi Arabia. Ecotoxicology and Environmental Safety, 73(6), pp.1433-1439.
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