Saudi Coffee to open roasting plant in Q4 2024, local consumption of coffee reaches 80,000 tons annually: CEO

Khalid Abu Theab, CEO of Saudi Coffee Co.

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Saudi Coffee Co. is set to inaugurate its coffee roasting and packaging factory with a production capacity of up to 26,000 tons annually in Jazan in the fourth quarter of 2024, CEO Khalid Abu Theab told Argaam in an exclusive interview.

 

The Kingdom consumes 80,000 tons of coffee annually, compared to local production of 400 tons. The sector is expected to see growth at a CAGR of 6.2% between 2021 and 2027, Abu Theab added.

 

He also stressed that Saudi Coffee will invest about SAR 1.2 billion in the next decade in the local coffee sector. It aims to boost production from 300 tons to 2,500 tons by 2030 by planting five million trees in the south of the Kingdom.

 

Abu Theab also highlighted the company’s role in supporting coffee farmers, raising their production efficiency to the global level and enhancing the coffee value chain, while committing to the sustainability standards in all phases. The company aims to establish a specialized academy to train and upskill talents in the field of coffee farming, roasting, marketing and sales. The CEO also spoke about the strategic agreements announced by Saudi Coffee.

 

Here’s the full interview with Abu Theab:

 

Q: Give us insight into the coffee market in terms of production, imports, and consumption in the Kingdom?

 

A: The global coffee production is estimated at 10.3 million tons, based on the latest statistics. The coffee sector experienced a compound annual growth rate (CAGR) of 6.1% from 2018 to 2024. In the GCC region, the coffee market is valued at around 166,000 tons, with Saudi Arabia occupying nearly 50% of that volume.

 

Saudi Arabia ranks among the top Arab countries in coffee consumption and is the tenth among Asian countries, consuming around 80,000 tons annually.

 

The local coffee production ranges between 300 and 400 tons annually. The Kingdom’s coffee is projected to be 6.2% annually from 2021 to 2027.

 

Production coffee is concentrated in the Southern Region. There are 400,000 coffee trees in Jazan, Aseer and Al-Baha. Jazan represents more than 92% of the local coffee production, which renders it a crucial agricultural region for the Kingdom and the local economy.

 

Q: What is the expected growth rate for the coffee sector in the Kingdom in the upcoming period?

 

A: The coffee sector experiences significant growth and has promising opportunities. The sector is expected to grow at a CAGR of 6.2% during the period from 2021 to 2027.

 

SCC strives to seize these opportunities to develop and elevate the sector to global standards, drawing from its rich heritage of over 800 years of coffee cultivation in the Southern Region of the Kingdom. The Southern Region, situated in the coffee belt, is distinguished by its fertile environment conducive to cultivating the finest coffee varieties. We also work towards harnessing rain harvesting programs and aligning with the Kingdom's vision in supporting food security initiatives, capitalizing on the Kingdom's relative advantage.

 

Q: Tell us about the business model of Saudi Coffee Co., its activities, and objectives?

 

A: SCC was launched by the Public Investment Fund (PIF) in 2022 with the aim of supporting the local coffee industry and elevating it to global standards in the future. The company also aims to play a key role in promoting sustainable agriculture development in Jazan, in the south of the Kingdom. Jazan is a major global hub for Arabica coffee, and the company aims to increase production from 300 to 2,500 tons by 2030 by planting five million coffee trees.

 

Among the company's key objectives are empowering farmers through private sector partnerships, investing in the latest technologies, and establishing training academies related to the coffee industry.

 

SCC is committed to raising awareness of Saudi culture and local coffee production, both domestically and globally.

 

The company supports the entire value chain of local coffee production, from farming and manufacturing to packaging and reaching the consumer.

 

Agricultural investments include establishing model farms, adopting the latest technologies, and providing farmer support programs. The company also aims to contribute to Saudi Arabia's Green Initiative by planting five million trees in the south of the Kingdom by 2030 as part of the Coffee Trees Plantation initiative, in addition to participating in Saudi Arabia's afforestation initiative.

 

SCC recognizes that producing high-quality coffee begins with a commitment to sustainability at all stages. This includes environmental balance, economic development contributions, reducing carbon dioxide emissions, providing sustainable water solutions for coffee cultivation, and waste management to minimize air pollution and soil erosion.

 

In the industrial investment sector, the company began constructing a coffee roasting and packaging factory in the Jazan Industrial City in October of the previous year. The factory is expected to open in the last quarter of 2024 with an annual production capacity of 27,000 tons of coffee.

 

The company is also building a processing center in the model farms, featuring advanced fermentation capabilities up to 30 tons per day, using innovative drying systems.

 

SCC is also keen on enhancing education and training through its specialized academy, aiming to train 1,000 farmers and 400 individuals annually in various coffee-related fields.

 

In November 2023, SCC launched the first Jazean specialty coffee brand, along with the first coffee shop and experience center for specialty coffee, offering a unique experience in Saudi Arabian coffee traditions with modern products.

 

In addition, the company has entered into several strategic partnerships, including collaboration with Siemens to build a smart system for its Jazan factory and agreements with various entities to promote Saudi coffee production globally.

 

Additionally, the company has signed memorandums of understanding (MoUs) during the Jazan Investment Forum 2023 with the Saudi Authority for Industrial Cities and Technology Zones (MODON), Jazan University, the Ministry of Investment, Bieder & Maier,

 

and the National Center for Vegetation Cover Development and Combating Desertification (NCVC). These agreements aim to enhance Saudi coffee production, create job opportunities across the entire value chain, and promote the Saudi coffee production globally.

 

SCC is actively marketing its local coffee products globally, striving to establish a global reputation for Saudi coffee beans through agreements with international companies.

 

The MoU signed between SCC and Bieder & Maier outlines the company's role in providing local coffee beans from the Jazan region to Bieder & Maier, when their coffee shop commences operations in the Kingdom.

 

Bieder & Maier will blend and roast Saudi coffee beans with international beans to develop a new flavor called the "Luxurious Saudi Blend by Bieder & Maier." This new product will be available in both medium and light roasts for both the Saudi and Austrian markets.

 

Q: Did the company acquire agricultural land and engage in coffee cultivation, or does it have stakes in farmers' companies? Does it provide financial and technical support to farmers?

 

A: Ownership of available farms in Jazan remains with the farmers, as the farm contract is an investment agreement. The company's role revolves around assisting farmers by providing financial and technical support.

 

SCC established a model coffee farm on a one-million-square-meter area in Jazan, the renowned global home of Arabica coffee. This farm will implement world-class operating procedures to enhance the quality of Arabica coffee.

 

The farm will serve as a platform for regional coffee producers to develop best practices and techniques in farming and harvesting.

 

It will create new opportunities for coffee farmers in Jazan, providing support and access to global coffee experts.

 

Q: You mentioned that SCC will invest around SAR 1.2 billion over the next decade. What was the focus of the company’s investments in 2023?

 

A: SCC aims to invest around SAR 1.2 billion over the next ten years in the Kingdom's coffee sector, contributing to raising the production capacity of Saudi coffee from 300 tons to 2,500 tons annually and advancing the local coffee sector.

 

Throughout 2023, we focused on enhancing local production by supporting farmers and improving their production efficiency to international standards. This involved establishing the academy and collaborating with relevant authorities in Jazan to provide the latest coffee farming technologies locally.

 

We also concentrated on applying the highest global sustainability standards and best practices through the establishment of a model coffee farm. SCC has been committed to supporting the private sector in the coffee industry through initiatives and memoranda of understanding with Beans United and Bieder & Maier to increase local and global demand for Saudi coffee beans.

 

2023 marked a significant milestone locally and regionally, and we aim to continue our efforts for the upliftment of the coffee sector, increasing its contribution to the Kingdom's economy and achieving economic diversification in line with Vision 2030.