Basmati Rice Market Overview: Saudi Arabia

Basmati rice, which comes from the Hindi word basmati, meaning fragrant, is distinguished by its unique, almost floral aroma and taste. It has become one of the most popular types of rice in many countries around the world due to its quality and reputation as being one of the finest varieties of aromatic rice available. However, it wasn’t always this way – in fact, basmati rice was only introduced to India from Iran via Pakistan some 3,000 years ago!

Basmati Rice Consumption in Saudi Arabia

In recent years, consumer demand for Basmati rice has grown as a result of increasing awareness of Indian food within Saudi Arabian culture. Food suppliers and restaurants that offer Indian cuisine now import Basmati Rice from India to accommodate their growing customer base. This rise in popularity is also partly due to popular television series focusing on South Asian culture which is produced in the country. In 2015, demand for Basmati reached 32,000 tonnes which were valued at USD 50 million. However, over 70% of total consumption came from imports to satisfy local demand.

Rising Middle-Class Population to Drive Consumption Of Products

In 2022, per capita GDP rose 1.5% to US$17,800 (at current prices) from its 2021 level. A substantial increase in oil prices could raise production costs and government revenue, which would have a positive impact on real GDP growth. Although energy subsidies are expected to continue due to political pressures, limited economic gains should offset these effects. With expectations of an inflation rate of 4% and a sustainable current account surplus of 15%, it is forecast that gross international reserves will increase by 24%. This will contribute to bringing down interest rates, reducing government debt-to-GDP ratios, and boosting private sector credit demand in addition to supporting foreign direct investment inflows. Importers in Saudi Arabia are looking for new ways to import basmati rice to satisfy their growing basmati rice consumption. Many of them are switched to Tradologie.com which is the best place to buy rice online in bulk.

Limited Cultivation Area Restraints Growth

Basmati rice is cultivated in limited areas. For instance, India accounts for 95% of basmati production and over 90% of exports. During 2012-17, demand for rice increased, due to the rising popularity of rice consumption in various countries around the world. Owing to low import duties, superior taste, and high prices of Indian Basmati rice, it has become an essential part of meal consumption in Saudi Arabia. Thus, growth opportunities for basmati rice exporters are high in the coming years.

Competition From Other Countries Hinders the Market Growth

Although basmati rice is one of India’s leading agricultural export, numerous issues have arisen in recent years. Firstly, a large quantity of basmati rice continues to be sold and traded illegally within India itself. In fact, 40% of all Indian rice exports are actually unlicensed rice traders using forged licenses or no license at all. Apart from that, high production costs and low prices due to many middlemen involved in the supply chain have made it difficult for importers to gain a profit on bringing basmati rice from India. For example; middlemen purchase high-quality imported farm products from agriculture companies in Jeddah at very low prices compared with local products.

Government Support to Agriculture Sector Expands Market Size

Saudi Arabia has been producing rice on a large scale, which led to its self-sufficiency in rice production and export of rice to other Middle Eastern countries. The government is expected to increase its funding to the agriculture sector and give subsidies on chemicals and machinery inputs. These inputs are used in growing crops. It will facilitate the higher production of crops in Saudi Arabia. India is a major exporter of basmati rice to Saudi Arabia, followed by Thailand and Pakistan.

Strong Distribution Channels Facilitate Trade Expansion

Basmati rice imports have grown rapidly in recent years, mainly due to strong demand from consumers and favorable purchasing conditions. In 2013, rice imports totaled US$973 million, of which bulk imports accounted for 88% or US$847 million. The market is dominated by India’s Basmati rice and Pakistan’s Patna rice (known as Pakistan medium grain Basmati). Nearly 80% of total imported basmati came from India. Traders rely on strong distribution channels to import basmati into Saudi Arabia. Most imported basmati is distributed through commission agents or trading houses that belong to Indian and Pakistani business families; these companies frequently operate warehouses, retail outlets, or both in major cities in Saudi Arabia.

Positive Outlook in the Future Drives the Growth Of The Market

Basmati rice market in Saudi Arabia to 2020 – Market Size, Development, and Forecasts – New Market Report by Knowledge-Based Consultants offers a comprehensive analysis of the Basmati rice market in Saudi Arabia. The report provides market size (value 2010-2015, and forecast to 2020). The study offers key insights into segments of the Basmati rice market in terms of the type of product sold, end-use segment, and distribution channel. Historical data (2010-2015) is presented for each segment and end-use segment covered in the report. This data includes local sales data, supplier shares, and distributor details. Our research team can derive key conclusions about prospects for markets in various regions of the world; these can then be used to develop an effective business strategy that complements your existing business model.

Report Methodology

Importing rice from India to sell online in Saudi Arabia is the common business model. This report on Basmati rice market share was done using extensive primary and secondary research that led to the development of many insights which have been used to calculate various metrics used to measure market attractiveness. Extensive secondary research helped in providing greater insight into the competition, market size, and trends within each sub-segment. In addition, primary research helped validate findings from secondary research and served as a guide for selecting companies for detailed interviews (including their competitors). It also ensured that our findings were validated by industry experts across different geographies, sectors, and territories. It is vital for us to understand how companies perceive themselves and define success because how they define success will be different from ours.

Original Source: https://blog.tradologie.com/basmati-rice-market-overview-saudi-arabia/