Why KSA should incentivize local cocoa production
https://arab.news/p3b8m
The tale of the cocoa bean is more than 5,000 years old and its history connects the Americas with Europe, Africa and the Arab world. Having been introduced to the Middle East by Europeans about 450 years ago, the popularity of chocolate and its entrenchment in the local culture have grown consistently. The Ottoman Empire played a key role in spreading cocoa-based drinks and confections across its vast territories, including the Levant and North Africa.
Today, the modern consumer in Saudi Arabia and across the Middle East is fueling the demand for local and innovative adaptations of chocolate, including dates, nuts and regional spices. The success of Waw Chocolate, a Saudi brand producing chocolate bars that incorporate the Kingdom's diverse regional flavors, highlights this demand. Saudi Arabia is the region's biggest market for chocolates and, in 2024, the Kingdom imported a whopping 123 million kg of chocolate. This reflects the significant growth in consumer demand for a product that is popular not only for everyday consumption but also for premium gifting.
Strong local demand for chocolate indicates there is significant growth potential for a domestic Saudi chocolate industry. There is a particular spike in demand during the festive periods of Ramadan and Eid, as well as during busy tourist periods. However, at present, the Kingdom relies entirely on imports, as it does not produce cocoa locally. Typically, the UAE, the UK, Jordan, Egypt and Turkiye have been the leading suppliers of chocolate to the Kingdom, with the price of imported premium chocolates going up to $80 per kg. Although international chocolate brands will continue to see growing demand in Saudi Arabia, there is scope for the government to incentivize local cocoa production to reduce the current dependence on imports.
Much has been written about Saudi Arabia's ongoing economic diversification, as the Kingdom is investing heavily in the move toward a post-oil economy. Local chocolate manufacturing and cocoa bean harvesting have the potential to boost this transformation, not least by mitigating the challenge of global supply chain disruption and increasing local employment opportunities. Most importantly, it will boost the spirit of entrepreneurship within the Kingdom.
Strong local demand for chocolate indicates there is significant growth potential for a domestic Saudi chocolate industry
Zaid M. Belbagi
The recent growth of dairy-free and sugar-free chocolate options highlights another benefit of investing in the local chocolate industry — it can cater to an increasingly health-conscious consumer base. Saudi Arabia has typically witnessed high rates of weight-related medical conditions. The obesity rate among adults in the Kingdom has reached more than 20 percent and nearly 40 percent of adults are overweight. Today, as the young consumer base is adopting healthy dietary and lifestyle options, we can anticipate a growth in the demand for healthier chocolate products.
In recent years, the global cocoa industry has faced significant challenges due to climate change. Droughts, excessive rains and insect infestations have impacted the survival of cocoa trees, which in turn reduces the supply of cocoa beans and disrupts the global supply chain. Deforestation is also linked to commercial projects, as well as illegal gold mining in parts of Africa such as Ghana. This has significantly reduced cocoa production, which has typically been concentrated in West Africa. Additionally, this decline is pushing cocoa farmers into extreme poverty, highlighting the need for robust infrastructure and government oversight to secure supply.
This decline is not only indicative of the state of chocolate production but also the broader volatility of global supply chains and the risks of overreliance on food imports. Amid this crisis, the Kingdom may find an opportunity to incentivize local cocoa production in its southern regions, where tropical weather conditions make the cultivation of cocoa possible. Jazan is a suitable location due to its warm, humid climate, seasonal rainfall and regular temperatures between 21 and 32 degrees Celsius, which are ideal for the cocoa bean. The viability of its nutrient-rich soil and access to groundwater has been proven by the production of coffee and mangoes in the area.
Investing in the Saudi cocoa and chocolate industry is in line with government plans to increase food security in the Kingdom
Zaid M. Belbagi
Of course, this will not be without its challenges. Growing cocoa requires shade farming, significant initial investment and the right training in a country where it is not a part of native agriculture. However, the long-term benefits are significant. In fact, the Kingdom took initial steps toward this goal in 2020, when 200 experimental cocoa shrubs were planted in Jazan. The Mountain Areas Development and Reconstruction Authority in Jazan observed that research and experiments on cocoa production in the area commenced, although local farmers expressed concerns over the viability and profitability of a nonindigenous crop.
Investing in the Saudi cocoa and chocolate industry is in line with government plans to increase food security in the Kingdom. Under Vision 2030, the government has committed $10 billion to strengthen global food supply chains and boost domestic agricultural production. This includes the reduction of groundwater extraction, the use of desalinated water for irrigation and deploying advanced techniques for farming. The Agricultural Development Fund has allocated $533.33 million to bolster agricultural projects and strengthen food security across the nation. Investment in new frontiers of agriculture will in turn boost local employment and entrepreneurship, confirming the Kingdom's position as a hub of innovation in the region.
Today, Saudi Arabia is daily news — from a growing local non-oil economy to its navigation of geopolitical volatility in the Middle East. Young Saudi entrepreneurs are keener than ever before to work toward elevating the Kingdom's global positioning. At such a time, the Kingdom can incentivize the local cocoa and chocolate industry to harness its growth potential. As the celebrated chef Alain Ducasse once said, 'everywhere in the world there are tensions — economic, political, religious. So we need chocolate.'
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