Saudi Arabia Dairy Products Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Saudi Arabia Dairy Products Market Trends and Insights

Rising consumer interest in convenience and ready-to-eat dairy products

With the acceleration of urban lifestyles, consumers are increasingly opting for quick and reliable dairy options, driving demand for conveniently packaged, ready-to-eat (RTE) dairy products. These include single-serve yogurts, yogurt drinks, cheese snacks, pre-cut cheese portions, and ready-to-use dairy desserts. Urbanization in Saudi Arabia has significantly influenced consumption patterns. In 2023, 84.95% of the population resided in urban areas, according to the World Bank^{[1]Source: World Bank, "World Development Indicators", worldbank.org}, highlighting the role of working professionals and dual-income households in boosting demand for grab-and-go dairy products. The convenience segment is experiencing robust growth, with products like flavored milk, yogurt cups, and cheese snacks recording double-digit sales increases. This trend is particularly prominent among individuals under 25, who value portability and on-the-go consumption. As Saudi Arabia's Vision 2030 drives economic diversification, resulting in longer commutes and busier lifestyles, convenience is becoming a lasting driver in the dairy market rather than a temporary shift in preferences.

Rapid growth of modern grocery retail and cold-chain logistics

Saudi Arabia's retail sector has undergone significant transformation, leading to the establishment of a highly advanced cold-chain infrastructure that facilitates the nationwide distribution of premium dairy products. Hypermarkets and supermarkets now play a pivotal role in driving dairy sales, contributing substantially to the overall market. Prominent retailers such as Carrefour and LuLu have integrated IoT-enabled temperature monitoring systems, which ensure the preservation of product quality and integrity throughout the supply chain, from the farm to the retail shelf. Additionally, the rapid growth of e-commerce platforms, including global players like Amazon Fresh and various local applications, has further accelerated the development of cold-chain logistics. This growth has heightened the demand for specialized refrigerated vehicles to ensure efficient and reliable last-mile delivery. Investments in this infrastructure not only provide a competitive edge for established market players but also support the positioning of premium dairy products and enhance regional export opportunities to neighboring GCC markets.

Rising demand for functional / fortified dairy

As consumers increasingly prioritize digestive health, lactose intolerance management, and nutritional benefits, the demand for products such as probiotic yogurts and lactose-free milk continues to grow significantly. These products are widely regarded as healthier alternatives, offering benefits like improved gut health, enhanced immunity, and superior nutritional value compared to traditional dairy options. In Saudi Arabia, rising health awareness has transformed functional dairy from a niche category into a mainstream market segment. Government-driven health campaigns have played a pivotal role in validating probiotic claims, while the SFDA's streamlined approval process for functional foods has accelerated the introduction of innovative formulations to the market. Local producers are actively collaborating with international enzyme manufacturers to create culturally relevant flavors and formats that cater to local preferences. For instance, Al Safi Danone offers an Arabic coffee-flavored probiotic drink, which successfully combines traditional tastes with modern health benefits. Additionally, policies under Saudi Vision 2030 emphasize the importance of promoting healthier food options alongside ensuring food security, thereby fostering increased investments in the functional dairy sector.

Expansion of school milk and nutrition programmes

The Ministry of Education in Saudi Arabia reported that its nationwide school nutrition initiative, which serves 5.2 million students across 35,000 schools, has created a reliable institutional demand valued at approximately USD 400 million annually in 2024^{[2]Source: Ministry of Education in Saudi Arabia, "Data and Statistics", moe.gov.sa}. This program is designed to address childhood malnutrition by mandating the daily provision of milk to students. Additionally, it supports local dairy producers through preferential procurement policies, ensuring that domestic suppliers benefit from the initiative. The program has evolved to include not only standard milk but also fortified variants enriched with essential nutrients such as calcium, vitamin D, and iron. These fortified options aim to address specific nutritional deficiencies identified in national health surveys, thereby improving the overall health outcomes of students. Regional disparities in the implementation of the program have opened up opportunities for local suppliers to participate. For instance, NADEC has secured multi-year contracts to supply milk in the northern provinces, while Almarai has established a dominant presence in the central and western regions. The program's success has sparked discussions about its potential expansion to include universities and government institutions. If implemented, this expansion could significantly increase the institutional market size, potentially doubling its current value.

Water scarcity and high feed-import costs

Saudi Arabia's arid climate and limited renewable water resources create significant cost pressures, posing challenges to the scalability of its dairy production. On average, dairy farming in the country consumes approximately 1,000 liters of water to produce a single liter of milk. This water usage is notably higher than the global benchmark of 700 liters, primarily due to the cooling requirements necessitated by the region's extreme temperatures. To mitigate these challenges, leading dairy producers are increasingly investing in advanced water recycling technologies and precision irrigation systems. For example, Almarai, a key player in the market, has implemented state-of-the-art treatment facilities, achieving an impressive 56% water recycling rate. Furthermore, the Saudi government has taken proactive steps to conserve water resources by phasing out wheat production and redirecting agricultural support toward cultivating more water-efficient crops. Despite these initiatives, dairy farming remains vulnerable to potential water allocation restrictions in the future. Such restrictions could hinder herd expansion, elevate operational costs, and pose additional challenges to the industry's growth and long-term sustainability.

Growing preference for plant-based alternatives

Urban consumers, particularly health-conscious millennials and expatriates, are driving a significant and transformative shift toward plant-based dairy alternatives. This change is reflected in the increasing popularity of products such as oat milk, almond milk, and soy-based beverages across major metropolitan areas. International brands, including Oatly and Alpro, have strategically penetrated these markets by partnering with local distributors, ensuring their products are accessible to a broader consumer base. At the same time, regional manufacturers are innovating by developing culturally adapted formulations that incorporate locally favored ingredients like dates and nuts, effectively catering to diverse consumer preferences. This trend is most pronounced in premium retail channels and coffee shops, where plant-based options are not only widely available but also command a significant price premium over traditional dairy products. In response to this growing demand, traditional dairy producers are implementing diversification strategies. Many have launched their own plant-based product lines, aiming to capture a share of this expanding market segment while simultaneously safeguarding their core dairy business from potential market share erosion.