Required Report - public distribution

**Date:** 10/16/2005

**GAIN Report Number:** SA5016

SA5016

**Saudi Arabia**

**Exporter Guide**

**Update**

**2005**

**Approved by:**

![](media/image1.wmf)Asif J. Chaudhry

U.S. Embassy, Cairo, Egypt

**Prepared by:**

Hussein Mousa, Fred Giles

**Report Highlights:**

**Saudi Arabia is a \$5.8 billion import market for food and
agricultural products, with the U.S. share accounting for 5 percent.
While a substantial portion of U.S. exports to Saudi Arabia are bulk and
intermediate products, U.S. exports of consumer-oriented food products
to the Kingdom reached \$118 million in CY 2004. With a young and
growing population, Saudi Arabia is expected to continue to be a
sizeable market for food products in the years to come. This report
provides guidance to U.S. companies that are interested in exporting
high value products to Saudi Arabia.**

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Riyadh \[SA2\]

\[SA\]

Table of Content

[I. MARKET OVERVIEW 1](#i.-market-overview)

[II. EXPORTER BUSINESS TIPS 4](#ii.-exporter-business-tips)

[Local Business Customs 4](#local-business-customs)

[Client Base and Consumer Preferences
5](#client-base-and-consumer-preferences)

[Food Standards and Regulations 7](#food-standards-and-regulations)

[Shelf Life 7](#shelf-life)

[General Prepackaged Foodstuffs Labeling
7](#general-prepackaged-foodstuffs-labeling)

[Biotechnology Labeling 7](#biotechnology-labeling)

[Certificate of Islamic Slaughter 8](#certificate-of-islamic-slaughter)

[General Import and Inspection Procedures
8](#general-import-and-inspection-procedures)

[Import of Samples 8](#import-of-samples)

[Certification and Documents Requirements
9](#certification-and-documents-requirements)

[Product Inspection 9](#product-inspection)

[Customs Clearance 9](#customs-clearance)

[Banned Products 9](#banned-products)

[III. MARKET SECTOR STRUCTURE AND TRENDS
10](#iii.-market-sector-structure-and-trends)

[Retail Sector 10](#retail-sector)

[Food Processing Sector 11](#food-processing-sector)

[Food Service Sector 11](#food-service-sector)

[IV. BEST HIGH-VALUE PRODUCT PROSPECTS
12](#iv.-best-high-value-product-prospects)

[V. KEY CONTACTS AND FURTHER INFORMATION
13](#v.-key-contacts-and-further-information)

[VI. APPENDICES 14](#vi.-appendices)

[Table A. Key Trade and Demographic Information
14](#table-a.-key-trade-and-demographic-information)

[Table B. Consumer Oriented Foodstuffs Imports
15](#table-b.-consumer-oriented-foodstuffs-imports)

[Table C. Consume-Oriented Agriculture Total
16](#table-c.-consume-oriented-agriculture-total)

# 

# I. MARKET OVERVIEW

The Kingdom has more than 260 billion barrels of proven oil reserves,
more than 25 percent of the world total and up to 1 trillion barrels of
ultimately recoverable oil. Oil and oil derivatives account for up to 95
percent of the Kingdom's export earnings. The country is the leading oil
exporter in the world and the economy depends on oil revenue and is
subject to sharp swings caused by volatile oil prices. Saudi Arabia's
economy is expected to grow by about 9 percent this year, fueled by high
oil prices and production levels, as well as strong private sector
growth. In 2004 and 2003, the economy grew by 5.3 and 7.2 percent
respectively. With rising oil prices and increased production, the total
revenue is expected to be significantly higher than last year's level.
The Saudi government budget is forecast to show \$50 billion surplus
this year against \$26 billion in 2004, due to higher oil prices and
production. Saudi Arabia has outlined a plan to increase production
capacity to 12.5 million barrels a day by 2009 from the current 10
million limit. The Kingdom plans to eventually develop a capacity of 15
million barrels per day.

The Saudi annual population growth rate remains above three percent,
with 70 percent of the population under the age of 30. The Kingdom's
population is expected to double in 20 years from its current level of
24 million to more than 40 million.

Saudi Arabia is the largest agricultural, fish and forestry products
importer among members of the Gulf Cooperation Council (GCC) countries.
In CY 2003, the country imported \$5.8 billion in goods of which high
value products accounted for 50 percent of the total imports while
intermediate agricultural products reached about one billion U.S.
dollars. In 2004, total U.S. agricultural exports to Saudi Arabia
exceeded \$396 million, an increase of 11 percent compared to exports in
2003.

The Kingdom has remained the leading GCC market for U.S. agricultural
products exports to the region. Under normal political and economic
conditions U.S. origin and brand products have highly favorable consumer
preferences and demand. As such, the long-term outlook for U.S.
agricultural products exports to Saudi Arabia is good.

Saudi buying and eating habits have changed significantly since the
introduction of Western-style supermarkets and restaurants in the late
1970s. Built initially to cater to Western expatriates, modern
Western-style Class A supermarkets are popular in Saudi Arabia and
continue to increase in number in the major urban areas of the Kingdom:
Riyadh (Central Province), Jeddah (Western Province), and Dammam, Al
Khobar, and Dhahran (Eastern Province). Increases in the number of
outlets have made it feasible for many supermarket chains to import a
portion of their stock directly from the United States. Nevertheless,
supermarket chains and other retailers depend enormously on local
importers for sourcing, merchandising, and inventory control.

The Saudi market for imported consumer oriented products increased by 15
percent from 2002 to 2003, reaching about \$3.1 billion in CY 2003
(total Saudi food and agricultural, fish and forestry products imports
amounted to 5.8 billion in 2003 based on U.N. data). According to U.S.
census statistics, exports of consumer-oriented products from the U.S.
to Saudi Arabia decreased from \$121 million in CY 2003 to \$118 million
in CY 2004. However, major local foodstuff importers have indicated a
significant increase in U.S. consumer oriented foodstuffs imports thus
far this calendar year. According to U.S. census for January-July 2005
data, high value products imports from the United States increased by
about 11 percent compared to the same period last year (\$74 million vs.
\$67 million.) A strong euro relative to the U.S. dollar, to which the
Saudi Riyal is pegged (\$1=3.75 Saudi Riyals), is one of the reported
reasons for the increased U.S. agricultural products exports to the
Kingdom in the first seven months of this year.

An increasing threat to the expansion of U.S. foodstuffs exports to the
Kingdom comes from a growing and fierce competition from both locally
produced and imported food products from mainly the EU, and nearby Arab
and Asian countries. The number of food processing companies in the
Kingdom continues to grow. Both local and foreign brand potato chips
(Frito-Lay), snack foods, fruit juices, breakfast cereals, peanut
butter, cheeses, tomato pastes, hot sauce, ketchup, and other products
are produced in Saudi Arabia. Most food processors rely extensively, if
not entirely, on imported raw ingredients.

Saudi consumers are discriminating consumers and they enjoy new food
products. With a young and growing population as well as a significant
increase in retail outlets, U.S. food and agricultural exports to the
Kingdom should continue to expand in the coming years.

The demand for institutional-size food products by the catering sector
remains strong, given the huge number of expatriate third country
nationals working in Saudi Arabia and the increasing number of foreign
pilgrims visiting the two holy cites (Mecca and Madina). There are more
than eight million expatriate workers in the Kingdom, most of whom are
from the Sub Continent of Asia (India, Pakistan, Bangladesh) and the
Philippines. The number of foreign pilgrims coming for Haj and Umra
rituals is estimated at about five million per annum.

Dining at fast food restaurants is popular among Saudi families and
expatriate workers. International fast food chains such as KFC, Burger
King, and McDonald's and local chains such as Herfy import part of their
ingredients from the United States. Large catering companies, especially
those serving Western expatriates, also buy a portion of their
requirement directly from the United States.

The table below provides a summary of advantages and challenges of
pursuing the Saudi market for imported foodstuffs:

+----------------------------------+-----------------------------------+
| **Opportunities**                | **Constraints**                   |
+----------------------------------+-----------------------------------+
| > The Saudi population is        | > Increased competition from      |
| > growing at about 3.5 percent   | > locally produced food products  |
| > annually.                      | > and from imported food from     |
| >                                | > Europe, nearby Arab countries   |
| > The number of upscale          | > and Asia.                       |
| > supermarkets continues to      | >                                 |
| > increase, creating greater     | > Freight costs from the United   |
| > opportunities to display       | > States are higher compared to   |
| > new-to-market American food    | > those from Europe and Hong      |
| > products.                      | > Kong.                           |
| >                                | >                                 |
| > Growing number of fast food    | > Local importers usually prefer  |
| > restaurants, hotels and        | > to start imports with small     |
| > resorts and the thriving       | > quantities while some U.S.      |
| > catering sector depends        | > firms prefer to start with      |
| > heavily on imported            | > larger orders.                  |
| > institutional size food        | >                                 |
| > products.                      | > Arabic labeling, biotechnology  |
| >                                | > labeling and shelf life         |
| > Rapidly growing                | > restrictions.                   |
| > food-processing sector depends | >                                 |
| > on imported ingredients.       | > All consumer ready foodstuffs   |
| >                                | > must arrive at Saudi ports with |
| > Saudi consumers like to try    | > half shelf life or more         |
| > new products and shop more     | > remaining.                      |
| > often at supermarkets.         | >                                 |
| >                                | > Halal certification required    |
| > The increasing positive        | > for all meat and poultry        |
| > attitude of Saudis to mass     | > products exported to Saudi      |
| > media advertisements.          | > Arabia.                         |
| >                                | >                                 |
| > The U.S. is considered a       | > Additional statements on the    |
| > supplier of quality            | > health certificate accompanying |
| > foodstuffs.                    | > poultry and livestock meat      |
| >                                | > shipments to indicate that the  |
| > The potential for agricultural | > animals slaughtered for export  |
| > production is limited in Saudi | > to the Kingdom were not fed     |
| > Arabia due to the lack of      | > animal protein, ruminants and   |
| > arable land and water, hence   | > were not treated with growth    |
| > imports of food will continue  | > hormones.                       |
| > to be strong and will continue | >                                 |
| > to increase in the future.     | > Saudi regulations require that  |
| >                                | > the number of different food    |
| > Young population: Virtually 70 | > items in one container not      |
| > percent are under the age of   | > exceed 25.                      |
| > 30. Younger Saudis prefer      | >                                 |
| > Western-style foods more than  | > Willingness by a significant    |
| > their parents.                 | > percentage of the Saudi         |
| >                                | > consumers to support calls to   |
| > Changing lifestyles: The       | > boycott American products for   |
| > number of workingwomen is      | > political reasons.              |
| > increasing, leading to more    | >                                 |
| > shopping at supermarkets to    | > High prices of U.S. goods       |
| > purchase prepared food items.  | > compared to other sources.      |
| >                                | >                                 |
| > Per capita income of \$10,430  | > The Saudi economy is overly     |
| > in 2004 and this is expected   | > reliant on oil revenue and      |
| > to increase to \$14,133 this   | > subject to sharp swings caused  |
| > year due to high oil prices.   | > by volatile oil prices.         |
+----------------------------------+-----------------------------------+

#  II. EXPORTER BUSINESS TIPS

## Local Business Customs

All food products are imported by the private sector. The vast majority
of food products are subject to a 5 percent import duty. Selected
products produced in significant quantities carry a 12 or 20 percent
import duty. For instance, imported poultry meat, table eggs and ice
cream are charged a 20 percent import duty while peanut butter and
mayonnaise are subject to a 12 percent duty. Rice, coffee, tea and red
meat enter the country duty free. For religious reasons, Saudi Arabia
bans imports of alcoholic beverages, live swine, pork and food
ingredients or additives that contain pork products, including pork fat
and gelatin. Meat and poultry shipments must be accompanied by a
\"Halal\" slaughter certificate issued by an Islamic center in the
country of origin. Additional statements on the health certificate
accompanying poultry and livestock meat shipments must indicate that the
animals slaughtered for export to the Kingdom were not fed animal
protein ruminants and were not treated with any growth hormones.

There are dozens of food importers in the Kingdom, with about 25
accounting for the bulk of food imports from the United States. Each
importer operates differently:

1\. Private labels are becoming common practice in Saudi Arabia. Some
large Saudi importers pack foodstuffs under their own brand names
locally and in foreign countries including in the United States. The
firms have developed private labels, which appeal to Saudis and other
Arabs in the Kingdom. Others use labels with Western‑sounding names to
appeal to British, Americans, and other Western expatriates. Salim
Basamah Company, perhaps the largest importer of grocery products in
Saudi Arabia, places its private label, \"Goody\" on a wide variety of
food products imported from the United States. \"Goody\" appeals to
American, British, and other Western expatriates. Basamah\'s cousin,
also a large food importer, uses an Arabic sounding private label,
\"Al-Alali\" to appeal to Saudis and Arabs, even though a significant
percentage of his products are American origin.

Hence, a can of American peaches can be marketed in Saudi Arabia under
several different labels:

‑‑under an established U.S. brand such as Monarch or Libbys

‑‑under a Saudi private label: like Goody or Al-Alali.

‑‑or under a U.S. private label: such as Monarch.

2\. Some importers deal with U.S. companies manufacturing and marketing
national brands, such as Kellogg's, Campbell Soup, Budweiser
non-alcoholic beer and usually require sole agency agreements. The Saudi
importers will help build the brand, but request support from U.S.
companies. Assistance offered by the U.S. companies includes promotional
and marketing assistance.

3\. Some companies import a wide range of food products for mass
distribution, employing the use of consolidators in the United States.
Many of the consolidators are sole regional agents of major U.S.
manufacturers or brand owners covering the entire Middle East and
African regions. Most U.S.-based consolidators assist Saudi food
importers by sourcing products from wholesalers, such as Fleming, and
providing services such as placing stickers on labels. Current Saudi
regulations allow U.S. suppliers to place an Arabic language sticker on
the original English language label. The stickers translate key
ingredient and product information into Arabic. Stickering is a
laborious task and most manufacturers do not want to bother with this.
Most U.S. consolidators are based in Houston, New York, Miami and in
other port cities and that have large wholesalers.

4\. The two French hypermarket chains Géant and Carrefour and many local
supermarkets, especially those with the ability to handle large volumes,
are directly importing part of their needs. One local company that owns
a modern supermarket chain imports several containers of American food
products each month for sale in its stores, lending support to a wide
range of brands without a binding agency agreement.

If a product has performed well in the market, a U.S. company may opt to
go beyond the sticker stage and develop a bilingual label in both Arabic
and English. Monarch is one of many U.S. companies, which have developed
bilingual labels for the Middle East. Non-alcoholic Budweiser beer was
launched in the Kingdom in 1999, with a red, white, and blue bilingual
label. However, significant quantities of U.S. origin grocery items
found in Saudi supermarkets have stickers.

Saudi importers are constantly searching for new products, and often
request support from suppliers for promotion and advertising. The Saudi
consumer is a discriminating consumer, closely examining labels and
looking for the best deal. Advertising is considered a necessity to win
Saudi consumers. Two-for-one deals are very popular in larger
supermarkets in moving near expiry foodstuffs. Major Saudi supermarkets
are in the initial stage of introducing category management. As the
system becomes more popular, many product brands are expected to be
eliminated. The entrance of the two French hypermarket chains Géant and
Carrefour in Saudi retail market as well as the opening of Hyper Panda
(local chain) in the same year have launched a new era of retailing in
the Kingdom with the state of the art shopping experience resulting in a
fierce head on competition in the Kingdom's retail sector. Hyper Panda
is owned by

Al Azizia-Panda Inc., the largest local supermarket chain with 50
outlets in major cities of the Kingdom. Local distributors are being
asked for listing fees raging from \$2,000 to up \$27,000 depending on
the size and power of the distributor. The bigger the distributor, the
more power he has to negotiate the least listing fee. In addition to
listing fees, distributors are asked to provide specified percentage
rebate on total annual turn over, contribute to advertising campaigns,
provide at least 60 days payment terms, and reimbursements for expired
items. Distributors authorize retailers to offer special offers to
consumer such as buy one and get one free mainly for products with 60
days shelf life remaining.

## Client Base and Consumer Preferences

Saudi Arabia is located between Europe and Asia. With its large
expatriate population, the Kingdom is a multi-ethnic society.
Consequently, foods from around the globe are found in Riyadh, Jeddah,
Dammam, and other urban areas in the Kingdom. There are two basic
consumer categories in the Kingdom:

Saudi citizens (16 million)

Expatriates temporarily residing in the Kingdom (8 million)

Most expatriates are from South Asia (Indian, Pakistan, Bangladesh, Sir
Lanka) Egypt, Sudan, Yemen, the Philippines, and East Africa. The number
of Western expatriates residing in the Kingdom is estimated at about
80,000, mostly Americans and British. However, the number has been
decreasing significantly due to the continued terrorist attacks
targeting mostly American and other Western citizens in Saudi Arabia,
which intensified in 2004. The American and British living in the
country tend to occupy \"white collar\" or professional positions. Many
Saudi supermarkets hire Americans and British as general managers,
operation managers, and executives.

Saudis and Western expatriates are the largest consumers of American
consumer-oriented products and the principal shoppers in Class A
supermarkets. The Saudi consumer is becoming more enlightened to
quality, nutritional value, price, and packaging. Saudis pay attention
to expiry dates on products. Saudis and Westerners enjoy new products
and supermarket managers acknowledge that those companies offering a
wide variety of products will ultimately succeed in this competitive
market.

A recent trend in the Kingdom has been the decline in canned food
products in favor of fresh or frozen food items. Frozen foods are
perceived by consumers as being fresher than canned foods. Saudis prefer
eating fresh foods, but changing lifestyles and an increasing number of
women entering the workplace have created a demand for prepared foods. A
significant percentage of Saudis continue to purchase a large percentage
of their food at wholesale markets, but more and more Saudis are
shopping regularly at hypermarkets/supermarkets, especially women.
Hypermarket/supermarket shopping is considered a primary form of
entertainment for the Saudi family. The recently introduced hypermarkets
are huge (up to 100,000 square feet), up to 60 check out counters, and
provide more than 55,000 items including foodstuffs, textiles, clothing,
tools, toys, computers, cleaning machines and various electronics. Some
supermarkets have built large play areas for children and are surrounded
by several boutiques, specialty shops such as photo and music shops, and
fast food restaurants.

Corner grocery stores, commonly referred to as bakalahs, are found in
every neighborhood in the Kingdom. They cater mainly to Saudis and third
country nationals. Despite the tremendous increase in the number of
Class A supermarkets and the growing number of hypermarkets, the number
of bakalahs has not decreased, as once predicted. Perhaps the main
reason is that Saudi women cannot drive and the fact that many third
country nationals working in the Kingdom do not own automobiles. Most
compounds, housing expatriates, contain one or two corner grocery
stores. The Saudi company, \"Arabian Food Supplies,\" for example, has
small grocery stores located in many \"Western\" compounds in Riyadh,
Jeddah, Al-Khobar and in SAUDI/ARAMCO compounds. With the continued
growth in private residences in major cities of the Kingdom, corner
grocery stores continue to be built. They are filled with many imported
consumer-oriented products. Most have the capability to store frozen
foods, and all contain refrigerators.

If and when women can drive in the Kingdom and if Saudi-ization results
in the departure of more third country national expatriates from Saudi
Arabia, some analysts expect that the number of bakalahs will decrease
significantly. The Saudi government has put teeth over the past few
years in its long-standing Saudi-ization program by compelling private
sector firms to increase the proportion of Saudis in their workplace by
five percent per year. Saudi Government decreed in 2004 that all check
out counters at hypermarkets\\supermarkets must be manned exclusively by
Saudi citizens. In 2000, the government banned expatriates from working
in fruit and vegetable markets and in 2002 the ban was extended to
bakalahs (corner stores) with less than 40 square meters. There are more
than 50,000 bakalahs in the Kingdom.

In addition to corner grocery stores, there are thousands of ethnic
stores in the Kingdom, catering to Indians, Pakistanis, Filipinos, and
other Asians. Foods from many parts of the world are found in the
Kingdom.

## 

## 

## 

## Food Standards and Regulations

Saudi regulations, which U.S. exporters must pay attention to and adhere
to are as follows:

-   Government-imposed shelf life requirements

-   Arabic labeling

-   Biotech Labeling

-   Halal Slaughtering

-   Animal ruminants and growth hormones certificates for imported meat

## Shelf Life

The Saudi Arabian Standards Organization (SASO) sets shelf life
requirements (production/expiry dates) for all food products.
Production/expiry dates for selected products were reduced or halved in
1993 per Saudi Standard 702/1993 and Gulf Standard No. 150/1993,
however, shelf life for other products was actually increased. For more
detailed information, please refer to SA5011 of July 2005 entitled
\"Saudi Arabia: Food and Agricultural Import Regulations and
Standards.\"

## General Prepackaged Foodstuffs Labeling

Regulations for labeling of prepackaged foodstuffs are found in Gulf
Standard 9/1995. In sum, prepackaged food product labels should be in
Arabic or include an Arabic language translation of the label. At a
minimum, product labels must contain the name of the product, name of
the packer, country of origin or manufacture, listing of ingredients,
consumer instructions, and production/expiry dates.

## Biotechnology Labeling

On December 1, 2001, the Saudi Ministry of Commerce and Industry (MOCI)
implemented the Ministerial decree number 1666 issued on December 11,
2000 regarding labeling of foodstuffs containing biotech animal
products.

Following is the summary of the MOCI's Directive No 1666:

[1. Ban on Biotech Animal Products:]{.underline} One of the main
features of the Ministerial Directive No 1666, is the **[IMMEDIATE AND
TOTAL]{.underline}** ban placed on the imports of foodstuffs containing
genetically engineered animal products to the Kingdom. The directive did
not give reasons for the total ban of animal products. However, ATO
trade sources believe that the decision was taken to make sure all
imported foodstuffs are Halal and do not contain products from swine and
other animals banned for consumption by the Islamic religion.

[2. Positive Biotech labeling:]{.underline} If a product contains one or
more biotech plant ingredients, the information should be clearly
communicated to the consumer by labeling. A triangle should be drawn and
in it the text should read \"**Contains Genetically Modified Product
(s).\"**

[3. Bilingual Labeling:]{.underline} The biotech statement must be
clearly written in both Arabic and English languages with an ink
different from that of the main product.

[4. Health Certificate:]{.underline} Biotech products or genetically
engineered products, which are exported to Saudi Arabia, must have been
approved in the country of origin for human consumption. Each shipment
must be accompanied by a health certificate issued by biotech licensing
government agencies (such as the FDA) stating that the biotech
ingredient (s) used in the foodstuff is approved in the country of
origin (United States) for human consumption. One certificate could be
issued that certifies a list of biotech items used in a foodstuff.

[5. Quality Standard:]{.underline} All biotech foods products should be
in compliance with legal and ethical controls observed in the Kingdom
and must meet pertinent Saudi Arabian standard specifications.

[6. Locally Produced Foodstuffs:]{.underline} The biotech labeling
requirements will also apply to locally produced agricultural products.

For U.S. grains imported to the Kingdom, the Saudi Minister of
Agriculture (MOA) has accepted a USDA Grain Inspection, Packers and
Stockyards Administration's (GIPSA) one-time biotech grain certification
statements submitted to the Ministry by ATO\\Riyadh in May 2003. The
statements certify that the exported transgenic grains are the same as
those consumed in the US. The MOA acceptance of the GIPSA statements
eliminates the need for a shipment-by-shipment positive biotech
certification for U.S. corn and soybean meal shipped to Saudi Arabia.
Until other countries negotiate a similar arrangement with the Saudi
officials, U.S. grain exporters are the only ones who are not required
to obtain official biotech certificates for their grain exports to the
Kingdom.

## Certificate of Islamic Slaughter

Per Saudi Arabia Standard No. SSA 630/1998 (Animal Slaughtering
Requirements According to Islamic Law), a Certificate of Islamic
Slaughter must be issued for all meat and poultry products entering the
Kingdom of Saudi Arabia. This certificate is issued by Islamic
institutions in the United States, which are recognized by the Saudi
Embassy and/or Consulates. Information related to the approved Islamic
institutions may be obtained from the Saudi Embassy in Washington, D.C.
or the nearest Saudi Consulate (New York, Houston, Los Angeles).

## General Import and Inspection Procedures

The majority of Saudi food imports enter the country via Jeddah port on
the Red Sea or Dammam port on the Arabian Gulf. About two-thirds of all
foodstuffs enter Jeddah. Imports from Jordan, Syria, and nearby
countries enter the Kingdom by truck.

King Khalid International Airport in Riyadh and King Abdulaziz
International Airport in Jeddah also receive significant quantities of
food items, particularly fresh fruits, vegetables and chilled meat.
Fresh and chilled products are usually cleared within 24 hours of
arrival.

## Import of Samples 

Samples destined to Saudi importers or for display in food shows are
exempt from Saudi labeling and shelf life regulations, but are subject
to inspection at ports of entry. Samples shipped to Saudi Arabia by DHL
or Federal Express and similar carriers must contain a commercial
invoice specifying that the product is not for sale and has no
commercial value.

## 

## Certification and Documents Requirements 

Saudi Arabia requires the following documents for imported
foodstuffs: 1) Commercial Invoice 2) Health Certificate from the Country
of Origin 3) Halal Slaughter Certificate for Meat and Meat Products 4)
Certificate of Origin 5) Animal Ruminants Feed and Growth Hormones Free
Certificates for imported Meat and Meat Products (6). Biotech
Certificate for products containing biotech ingredients 7) Bill of
Lading 8) Packing List (highly recommended to expedite product
inspection and clearing).

A Saudi Consulate or the Saudi Embassy must legalize the first six
documents listed above. Some Saudi Consulate/Embassy officials may ask
the documents first attested by U.S./Arab Chamber of Commerce or any
U.S. Chamber of Commerce located in the city or area where the exporting
firm is based as a requirement for their endorsement. It is vital to
note that documents number five and six must be certified by the
appropriate USDA agency to be notarized by the Saudi officials.

## Product Inspection

The MOCI inspects all imported foodstuffs at the port of entry, with the
exception of herbal preparations. The Ministry of Health inspects health
and supplementary foods, while the Ministry of Agriculture tests live
animals, plants, seeds and feed. If a consignment is rejected for not
adhering to Saudi standards, the importer is requested to either
re-export or destroy the product in the country.

## Customs Clearance

As stated earlier, shipments of food products must be accompanied by a
commercial invoice, health certificate, and other selected documents. An
importer is responsible for translating the commercial invoice into
Arabic (per Saudi Customs requirements) and to provide the translated
document to his Customs agent in order to start the clearing process.
Containers are normally cleared in less than ten days provided all
documents are in order and imported products meet Saudi standards and
specifications.

If the Ministry of Commerce and Industry's laboratory at the port of
entry rejects a product, an importer may submit an appeal calling for a
retest. The appeal must be submitted in writing to the Director General
of the Quality Control and Inspections Department of the Ministry of
Commerce and Industry. If an appeal is accepted, the Director General
orders a retest by another laboratory. If the second test verifies
initial results, the exporter is ordered to re-export or destroy the
product.

## Banned Products

For religious reasons, Saudi Arabia bans imports of alcoholic beverages,
live swine, pork, and foodstuff ingredients or additives that contain
pork products, including pork fat, and gelatin. Other banned products
include meat of asses, mules, hinnies (fresh chilled, or frozen), frog
legs, poppy seeds, hemp seeds, opium and hops and swine leather.

# 

# III. MARKET SECTOR STRUCTURE AND TRENDS

## Retail Sector

Currently, there are nine hypermarkets in the Kingdom based in the three
major cities Riyadh, Dammam and Jeddah. In 2006, the number is estimated
to reach up to 15 outlets as the three hypermarkets (Hyper Panda, Géant,
and Carrefour open new braches in Riyadh, Eastern Province and Jeddah.
Class A and B supermarkets in the Kingdom total more than 300 and are
increasing in number. Most are comparable to those in the United States.
Major supermarket chains include Tamimi Markets, Al Azizia-Panda, Giant
Stores (no relation to Giant in the United States), Al Raya, Watani,
Danube, Farm, Al Hamada, Al Sadhan Markets, Universal Marketing Centers,
Marhaba Markets, Bin Dawoud and Star Supermarkets. All of these
supermarkets have modern frozen food sections and handle a number of
food products from the United States. Tamimi Markets and Al Azizia-Panda
import fresh fruit and vegetables directly from the United States, such
as strawberries, apples, celery, lettuce, and other selected produce are
flown in while others are shipped in containers. Tamimi and Al
Azizia-Panda also import a significant percentage of dry goods, chilled
beef, and dairy products directly from the U.S., employing the use of
consolidators.

Tamimi Markets began as a partnership with Safeway USA, but has been
wholly owned by the Tamimi family since late 70s. Tamimi continues,
however, to sell Safeway brand products. All supermarket chains in the
Kingdom are wholly owned by Saudi companies with the exceptions of
Géant, and Carrefour, which are joint ventures between French owners and
Saudi investors. Western expatriates, mainly American and British,
manage a few local supermarkets. Al Azizia-Panda, the largest local
supermarket chain, has grown from a few stores in the early 1990 to more
than 50 stores today, mainly through acquisition of existing supermarket
chains.

The supermarket business has become very competitive. Larger volumes
will enable selected chains to import directly, in an effort to lower
costs. Currently large supermarket chains are importing a percentage of
their stock directly, but the majority of imported foodstuffs continue
to be handled by local importers.

Strict shelf life regulations imposed by the Saudi Arabian Standards
Organization makes inventory control a challenge. Saudi supermarket
chains get reimbursed from distributors for products expired on the
shelf. If unopened cartons of products stored with retailers expire,
distributors do not have the obligation to take them back. Supermarkets
also depend on merchandising services offered by importer/distributors,
i.e., stocking shelves and keeping inventory. Many supermarkets also
earn significant revenues from suppliers in the form of listing fees,
gondola/shelf space rentals and various fees and discounts. It is not
unusual for major supermarket chains to receive up to 90 days credit
terms from their suppliers.

The recent introduction of hypermarkets and continued increase in the
number of supermarkets in the Kingdom have produced stiff competition
among retailers as each hypermarket and supermarket chain strives to
gain a larger client base. Managers are looking to cut costs and expand
product range. Competitive pricing is essential, but promotional and
advertising support are key as well as the ability of a vendor to offer
a wide selection of products. Advertising is often geared toward women,
who play a greater role in purchasing decisions.

Many countries including the European Union, China, India, Australia and
New Zealand are active in offering promotional assistance to local
importers. Most suppliers offer attractive credit terms and price
discounts on bulk purchases. Many provide promotional materials and
assist with advertising. France and Brazil dominate the frozen poultry
trade through attractive financing and pricing. Australia and New
Zealand provide \"point-of-sale\" material to retailers to promote
mutton and sheep meat. Until late 2000, ATO Riyadh regularly sponsored
the American Food Festivals but the activities were put on hold due to
the strong anti-U.S. sentiments in the Kingdom following the second
Palestinians uprising (Intifadh) in fall 2000 and the U.S. invasion and
occupation of Iraq in 2003, which exasperated the sentiments further.

## Food Processing Sector

Local manufacturing of food products has expanded rapidly over the past
few years. The Saudi government has assisted the food industry by
providing attractive financing and subsidies on some equipment and by
imposing higher import tariffs up to 20 percent on selected imports that
compete with locally produced products (poultry meat, table eggs, sugar,
macaroni and similar products, etc.). Locally-produced food products
also have an advantage over imported food products because they can be
exported duty free to other countries in the Gulf Cooperation Council
(GCC): Kuwait, Oman, Qatar, Bahrain, and the United Arab Emirates.
Hence, the market for locally manufactured products consists of the
entire Arabian Peninsula, including Yemen. The expanded market has
prompted many international companies to set up licensing agreements
with local manufacturers in Saudi Arabia to produce their brand. Such
companies include Kraft/General Foods, Frito Lay, Delmonte, Pepsi, and
Coca-Cola.

Potato chips, snack foods, juices, biscuits, peanut butter, hot sauce,
cookies, cereals, and ice cream are all produced in the Kingdom.
However, processed food products \"produced\" in Saudi Arabia depend
heavily on imported ingredients.

## Food Service Sector 

About 70 percent of Saudis are in their teens. Dining at fast food
restaurants is popular and is a major form of entertainment for the
Saudi family. International fast food chains such as KFC, Burger King,
McDonald's, Chili's, Fuddruckers, T.G.I. Fridays, Pizza Hut, Dominos,
and local chains such as Herfy, Al-Beck, Taza, Dajen, and Kudo continue
to expand and are found in major urban areas. Many of the international
fast food chains and selected local outlets such as Herfy import a
significant share of required ingredients directly from the United
States.

The demand for institutional-sized food products by the catering sector
remains strong because of the large number of ex-pats (8 million) and
the huge number of pilgrims visiting the Kingdom to perform Haj or Umra
(more than five million annually). The Muslim pilgrims usually stay from
two weeks to up to two months in the cities of Mecca, Medina, and Jeddah
and require room and board. Also, with the new Saudi Government emphasis
on tourism, Muslim pilgrims are allowed to visit other cities and stay
up to two months in the Kingdom. This will further increase demand for
food products.

A recent trend has been an increase in the number of resorts in the
Kingdom, catering mainly to Saudis and other Arabs. Many are being built
on the Red Sea and the Arabian Gulf.

# 

# IV. BEST HIGH-VALUE PRODUCT PROSPECTS

The following is a list of some consumer ready food products with high
export potential.

Potato chips and savory snacks

Mayonnaise, tomato ketchup, and sauces

Beverage ingredients

Non-alcoholic beer

Cheese

Tree nuts

Milk products, including infant formula

Red meats

Fresh apples and pears

Processed fruits and vegetables

Jams and jellies

Fruits and vegetable juices

Honey

Sweet pastry and biscuits

Dietetic foods

# V. KEY CONTACTS AND FURTHER INFORMATION

Agricultural Trade Officer

American Embassy

P.O. Box 94309, Riyadh 11693

Saudi Arabia

Tel: 966-1-488-3800, Extension 4351

Fax: 966-1-482-4364

Internet E-Mail Address: Agriyadh@usda.gov

Food standards are set by the Saudi Arabian Standards Organization
(SASO), with product inspection done by Saudi Ministry of Commerce and
Industry Laboratories at various ports of entry. The following are
coordinates for SASO and the Ministry of Commerce and Industry:

Dr. Khalid Al-Khalaf

> Director General of SASO and Secretary General for Standardization and
> Metrology Org. of the Gulf Cooperation Council Countries.

Tel: 966-1-452-0000

Fax: 966-1-452-0086

Dr. Hamad Al-Awfy

###### Director General, Quality Control and Inspection Department

Ministry of Commerce and Industry and Industry

Tel: 966-1-401-3265

Fax: 966-1-402-2539

Live animals, plants and animal feed are inspected by the Saudi Ministry
of Agriculture and Water (MAW). Following are coordinates of some of the
important departments.

Dr. Abdulgani Al Fadil

Director General

Plant and Animal Quarantine Department

MAW

Tel: 966-1-404-4292

Fax: 966-1-401-1323

Mr. Mohammed Al-Mazroa

> Director General (registers and testes seed as well as pesticides used
> in foodstuffs)

Agricultural Research Department

Ministry of Agriculture and Water

Tel: 966-1-405-5848/401-6666 ext, 2062

Fax: 966-1-405-5848

# VI. APPENDICES

## Table A. Key Trade and Demographic Information

+--------------------------------------------------+-------------------+
| Agricultural Imports From All Countries          | \$5,825           |
| (\$Mil)\*                                        |                   |
|                                                  |                   |
| U.S. Market Share                                |                   |
+--------------------------------------------------+-------------------+
|                                                  | 4%                |
+--------------------------------------------------+-------------------+
| Consumer Food Imports From All Countries         | 3,092             |
| (\$Mil)\*                                        |                   |
|                                                  |                   |
| U.S. Market Share                                |                   |
+--------------------------------------------------+-------------------+
|                                                  | 5%                |
+--------------------------------------------------+-------------------+
| Edible Fishery Imports From All Countries        | 127               |
| (\$Mil)\*                                        |                   |
|                                                  |                   |
| U.S. Market Share                                |                   |
+--------------------------------------------------+-------------------+
|                                                  | 1%                |
+--------------------------------------------------+-------------------+
| Total Population (Millions)                      | 24                |
|                                                  |                   |
| Annual Growth Rate                               |                   |
+--------------------------------------------------+-------------------+
|                                                  | 3.5%              |
+--------------------------------------------------+-------------------+
| Urban Population (millions)                      | N/A               |
|                                                  |                   |
| Annual Growth Rate                               |                   |
+--------------------------------------------------+-------------------+
|                                                  | N/A               |
+--------------------------------------------------+-------------------+
| Number of Major Metropolitan Areas               | 15                |
+--------------------------------------------------+-------------------+
| Size of the Middle Class                         | N/A               |
|                                                  |                   |
| (Millions)/Growth Rate                           |                   |
+--------------------------------------------------+-------------------+
| Per Capita Gross Domestic Product (U.S.          | \$ 10,430         |
| Dollars)\*\*                                     |                   |
+--------------------------------------------------+-------------------+
| Unemployment Rate \*\*                           | 15-20%            |
+--------------------------------------------------+-------------------+
| Per Capital Food Expenditures (U.S. Dollars)     | \$3,129           |
+--------------------------------------------------+-------------------+
| Percent of Female Population Employed\*\*        | 10%               |
+--------------------------------------------------+-------------------+

  --------------------------------------------------- -------------------
  Exchange Rate                                       \$1 =3.75 SR

  --------------------------------------------------- -------------------

\* Data for 2003 obtained from the FAS Global Agricultural Trade System
using data from the United Nations Statistical Office.

\*\*Major local banks estimate for 2004

## Table B. Consumer Oriented Foodstuffs Imports

  -------------------------- ------------- ------------- ------------- ----------- ----------- ----------- -------- -------- --------
  Saudi Arabia Imports (In   Imports from                              Imports                             U.S.              
  Millions of Dollars)       the World                                 from the                            Market            
                                                                       U.S.                                Share             

                             2001          2002          2003          2001        2002        2003        2001     2002     2003

                                                                                                                             

  **CONSUMER-ORIENTED        **\$2,567**   **\$2,676**   **\$3,092**   **\$141**   **\$122**   **\$138**   **5%**   **5%**   **4%**
  AGRICULTURAL TOTAL**                                                                                                       

  Snack Foods (Excl. Nuts)   152           159           205           6           4           5           4        3        2

  Breakfast Cereals and      12            16            21            2           1           1           15       5        4
  Pancake Mix                                                                                                                

  Red Meats,                 150           200           224           5           5           11          3        2        5
  Fresh/Chilled/Frozen                                                                                                       

  Red Meats,                 19            20            26            3           3           4           16       15       15
  Prepared/Preserved                                                                                                         

  Poultry Meat               389           331           449           2           1           2           1        0        0

  Dairy Products (Excl.      362           389           475           1           1           1           0        0        0
  Cheese)                                                                                                                    

  Cheese                     197           212           248           2           2           2           1        1        1

  Eggs and Products          10            13            18            1           1           3           1        2        18

  Fresh Fruit                283           310           307           9           8           8           3        3        3

  Fresh Vegetables           101           141           119           2           1           1           2        1        1

  Processed Fruit and        166           171           203           26          25          26          16       15       13
  Vegetables                                                                                                                 

  Fruit and Vegetable Juices 85            88            103           24          18          4           28       20       4

  Tree Nuts                  20            25            27            4           4           6           20       16       20

  Nursery Products and Cut   10            9             10            1           1           1           3        9        3
  Flowers                                                                                                                    

  Pet Foods (Dog and Cat     2             2             3             1           1           1           16       12       8
  Food)                                                                                                                      

  Other Consumer-Oriented    611           591           653           53          49          64          9        8        10
  Products                                                                                                                   

                                                                                                                             

                                                                                                                             

  **FISH and SEAFOOD         **127**       **126**       **127**       **1**       **1**       **1**       **1**    **1**    **1**
  PRODUCTS**                                                                                                                 

  Salmon                     10            15            25            1           1           1           1        0        0

  Surimi                     1             2             5             0           1           1           0        1        0

  Crustaceans                16            14            13            1           1           1           1        1        5

  Groundfish and Flatfish    31            20            21            1           1           1           1        0        0

  Molluscs                   1             1             1             1           1           1           18       15       28

  Other Fishery Products     70            74            63            1           1           1           0        1        1

                                                                                                                             

  **AGRICULTURAL PRODUCTS    **\$4,438**   **\$4,815**   **\$5,322**   **\$420**   **\$307**   **\$235**   **9%**   **6%**   **4%**
  TOTAL**                                                                                                                    

  **AGRICULTURAL, FISH and   **\$4,925**   **\$5,333**   **\$5,825**   **\$452**   **\$331**   **\$254**   **9%**   **6%**   **4%**
  FORESTRY TOTAL**                                                                                                           
  -------------------------- ------------- ------------- ------------- ----------- ----------- ----------- -------- -------- --------

Source: FAS\' Global Agricultural Trade System using data from the
United Nations Statistical Office. This data is based on C and F values.

## Table C. Consume-Oriented Agriculture Total

+-----------+-------+------+-------+---+-----------+-----+------+-----+
| *         |       |      |       |   | **FISH    |     |      |     |
| *CONSUMER |       |      |       |   | and       |     |      |     |
| -ORIENTED |       |      |       |   | SEAFOOD   |     |      |     |
| AGR       |       |      |       |   | P         |     |      |     |
| ICULTURAL |       |      |       |   | RODUCTS - |     |      |     |
| TOTAL -   |       |      |       |   | 700**     |     |      |     |
| 400**     |       |      |       |   |           |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| **R       | **Imp | **   | **Imp |   | **R       | *   | **   | *   |
| eporting: | ort** | Impo | ort** |   | eporting: | *Im | Impo | *Im |
| Saudi     |       | rt** |       |   | Saudi     | por | rt** | por |
| Arabia    |       |      |       |   | Arabia    | t** |      | t** |
| --**      |       |      |       |   | --**      |     |      |     |
|           |       |      |       |   |           |     |      |     |
| **Top 15  |       |      |       |   | **Top 15  |     |      |     |
| Ranking** |       |      |       |   | Ranking** |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
|           | **2   | **20 | **2   |   |           | **  | **20 | **  |
|           | 001** | 02** | 003** |   |           | 200 | 02** | 200 |
|           |       |      |       |   |           | 1** |      | 3** |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
|           | Value | V    | Value |   |           | Va  | V    | Va  |
|           |       | alue |       |   |           | lue | alue | lue |
|           | (10   |      | (10   |   |           |     |      |     |
|           | 00\$) | (100 | 00\$) |   |           | (1  | (100 | (1  |
|           |       | 0\$) |       |   |           | 000 | 0\$) | 000 |
|           |       |      |       |   |           | \$) |      | \$) |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
|           |       |      |       |   |           |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Brazil    | 27    | 310  | 35    |   | Yemen     | 25, | 33   | 33, |
|           | 6,642 | ,376 | 6,934 |   |           | 375 | ,522 | 863 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Ne        | 20    | 205  | 26    |   | Thailand  | 29, | 28   | 22, |
| therlands | 8,329 | ,554 | 2,991 |   |           | 422 | ,599 | 816 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| France    | 23    | 191  | 24    |   | United    | 17, | 16   | 22, |
|           | 3,798 | ,902 | 1,494 |   | Arab      | 644 | ,848 | 377 |
|           |       |      |       |   | Emirates  |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Ireland   | 17    | 157  | 17    |   | Oman      | 10, | 6    | 8,  |
|           | 1,097 | ,100 | 6,804 |   |           | 967 | ,874 | 201 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Australia | 14    | 168  | 16    |   | Taiwan    | 5,  | 5    | 5,  |
|           | 8,085 | ,006 | 1,944 |   | (E        | 569 | ,851 | 497 |
|           |       |      |       |   | stimated) |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Denmark   | 9     | 122  | 14    |   | Indonesia | 4,  | 2    | 4,  |
|           | 9,041 | ,521 | 7,381 |   |           | 659 | ,393 | 055 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| New       | 10    | 94   | 13    |   | Japan     | 7,  | 5    | 4,  |
| Zealand   | 1,723 | ,244 | 9,376 |   |           | 009 | ,519 | 032 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| United    | 14    | 121  | 13    |   | Pakistan  | 3,  | 3    | 3,  |
| States    | 0,875 | ,681 | 7,879 |   |           | 236 | ,162 | 341 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Egypt     | 8     | 98   | 12    |   | Singapore | 412 | 674  | 3,  |
|           | 4,110 | ,777 | 7,038 |   |           |     |      | 233 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Germany   | 8     | 93   | 10    |   | Bahrain   | 4,  | 4    | 2,  |
|           | 7,748 | ,479 | 6,855 |   |           | 007 | ,380 | 897 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Syria     | 9     | 128  | 10    |   | B         | 6,  | 5    | 2,  |
|           | 6,350 | ,001 | 1,205 |   | angladesh | 094 | ,643 | 875 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| United    | 7     | 76   | 7     |   | Qatar     | 1,  | 1    | 1,  |
| Arab      | 6,411 | ,965 | 6,410 |   |           | 937 | ,935 | 801 |
| Emirates  |       |      |       |   |           |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| China     | 6     | 64   | 7     |   | Uruguay   | 653 | 1    | 1,  |
| (Peoples  | 3,142 | ,020 | 6,269 |   |           |     | ,092 | 405 |
| Republic  |       |      |       |   |           |     |      |     |
| of)       |       |      |       |   |           |     |      |     |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| India     | 5     | 57   | 7     |   | United    | 711 | 814  | 1,  |
|           | 6,475 | ,371 | 5,211 |   | States    |     |      | 351 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Turkey    | 6     | 80   | 7     |   | Morocco   | 1,  | 1    | 1,  |
|           | 8,651 | ,410 | 3,365 |   |           | 079 | ,153 | 317 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| Other     | 65    | 705  | 83    |   | Other     | 8,  | 7    | 8,  |
|           | 4,747 | ,646 | 0,752 |   |           | 479 | ,693 | 034 |
+-----------+-------+------+-------+---+-----------+-----+------+-----+
| **World** | **2   | *    | **3   |   | **World** | **  | **1  | **  |
|           | ,567, | *2,6 | ,091, |   |           | 127 | 26,1 | 127 |
|           | 303** | 76,1 | 944** |   |           | ,26 | 70** | ,10 |
|           |       | 44** |       |   |           | 3** |      | 7** |
+-----------+-------+------+-------+---+-----------+-----+------+-----+

**Source: FAS\' Global Agricultural Trade System using data from the
United Nations Statistical Office. This data is based on C and F
values.**