With its latest forecast for Saudi Arabia’s food and beverage consumption – a 5.0% expansion over 2014 – Business Monitor International (BMI) reports an encouraging trend for the Kingdom’s packaging sector.

Driven by rising disposable incomes, favourable demographics and increasing urbanisation, the Saudi retail sector has a promising medium-term future, according to BMI’s Saudi Arabia Food & Drink Report Q1 2014.

Over 2014, Saudi food consumption will grow in local currency terms by 8%, in line with an average annual increase of 7.8% from 2013 to 2017, said BMI.

This year will also see confectionery sales climb 6.9% and mass grocery sales soar 10.3%, in local currency, according to the research company.

Poultry is due to continue its rebound from 2011/12, when disease hit the sector, with a 15.8% surge to a record 660,000 tons, according to media reports of the BMI update.

BMI also forecasts “increased formalisation” of the mass grocery sector, with “both domestic and international investors” drawn by Saudi consumers’ spending power.

In soft drinks, Saudi Arabians already gulp down about two thirds of the region’s consumption, or an average of almost 253 litres each year of bottled bottled water, carbonates, juices and functional drinks.

But BMI says its “bullish outlook” is tempered by concerns over workforce nationalisation efforts under Nitaqat system.

A “downside risk” from Saudisation could raise private sector costs over the medium term, said BMI, according to Saudi media.