Hot coffee brews up investments

JEDDAH — Coffee consumption in Saudi Arabia has reached all-time high as traders import 67,000 tons of coffee worth SR725 million annually through its ports on the Arabian Gulf and Red Sea to meet the growing demand, especially from its young customers. Market analysts believe that if consumption continues at this pace, the total value of coffee sales in the Kingdom would cross SR1 billion in the near future. A cup of coffee is now sold at an average rate of SR8 while some shops sell it for more than SR20. Studies have showed that the coffee consumption of Saudis has doubled. Statistics obtained by Okaz, a sister publication of Saudi Gazette, showed that the value of coffee consumption in the Kingdom touched the profit of a major commercial bank. The amount SR725 million is enough for the Real Estate Development Fund to provide soft loans worth SR500,000 each to 1,450 families and resolve the country’s acute housing crisis. The money is also enough to provide marriage loans worth SR60,000 each by the Saudi Credit Bank to 24,000 young Saudi men and women. It will also enable Saudis to purchase more than 18,000 Korean cars or at least 500 Rolls Royce cars. This huge market reflects the growing demand for coffee in the Kingdom. Foreign investors have taken the opportunity to open shops of international brands, inspired by the government’s incentives. The increased use of coffee by Saudis does not contradict with the country’s culture and traditions but supplement them. But coffee prices have gone up in Saudi Arabia and other GCC countries because of high liquidity of its citizens compared to other countries. Saad Al-Shahri, who has just returned from the US after completing higher studies, said coffee prices in the Gulf are much higher than in some US cities. “I used to take Mocha coffee supplied by a famous company for prices much lower than in Saudi Arabia.” He said the increase in prices has forced him to reduce his coffee consumption. “Think of drinking a cup of coffee for more than SR20,” he asked. “This price is very high when we know that there is no taxes in Saudi Arabia.” In 2007, Saudi Arabia imported 67,000 tons. Starbucks made a turnover of $9 billion (SR33.75 billion). This encouraged multinational companies to compete with one another to grab their share in the global coffee market and open their branches all over the world including China. Saudis consume 41,000 tons of caffeinated coffee annually, according to data issued by the Central Department of Statistics and Information. In 2014, Saudi coffee consumption rose to 67,000 tons and many businessmen have invested in coffee industry in recent years considering the huge demand. Coffee shops are spreading even in small cities in addition to major cities and highways. There are many coffee shops along the Makkah-Jeddah Expressway. Mohammed Al-Ghamdi, a bank employee, said he used to take a coffee at 8.30 am before going to work in north Jeddah. Amran Bin Dhabaan, a post office staff, feared American coffee, which contains caffeine, would make him an addict to it. “I don’t take coffee daily after knowing it is not good for health.” Abdul Rahman, an Indian worker at a coffee shop in old Jeddah, said most Saudis are addicted to Turkish coffee and they prefer to drink it in glass cups. Western coffee shops have sprouted all over Jeddah with young Saudi men and women visiting them to chat while sipping their favorite coffee. In the midst of this Western cultural onslaught, Arabian coffee still reigns supreme as it is popular in special ceremonies like weddings and majalis of men.