Structure and Performance of the Retail Outlets of Honey in the Kingdom of Saudi Arabia

Abstract

The study aimed at analyzing the most important factors affecting the retail marketing of honey in Saudi Arabia. Cross sectional survey was employed using field interview (direct contact) with a random sample of 343 retail outlets represented all its forms and patterns in seven major cities in Saudi Arabia. Measurements like market share, Gini coefficient and Herfindahl Hirschman Index (HHI) were used to estimate the indicators of market structure and its performance. The result showed that the structure of honey retail market is generally closer to pure competition with a small concentration in some areas. Gini coefficients of concentration, as well as the values of the Herfindahl Hirschman Index (HHI) were relatively low for retailers. The average marketing margin was about SAR 6.4/Kg for local honey while the marketing margin of imported honey was about SAR 113/Kg. The high profit margin variation between local and imported honey is due to the high marketing costs, lower supplied quantity and higher demand for local honey. The estimated cost of marketing of onekilogram of honey was about 8 SAR at the retail level. From retailers’ point of view, low quality, lack of marketing services, improper display, high rental property, lack of knowledge and experience of the consumer about properties and quality characteristics honey, high prices and shortage of some varieties of honey in some specific season are the most important problems of honey marketing in the Saudi market. Setting priorities between different brands of honey plays a noticeable role in marketing. Some honey producers and traders were very concerned about unfair competition of honey market through high promotion as a brand based on their long history in the production and supply of high-quality varieties of honey from specific and well-known varieties. Hence, intensive awareness creation effort through training, exhibition, media and advertisement are required to improve the perception of consumers towards the local honey.