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

Abstract

The study aimed atanalyzing the most important factors affecting the retail marketing of honey inSaudi Arabia. Cross sectional survey was employed using field interview (directcontact) with a random sample of 343 retail outlets represented all its formsand patterns in seven major cities in Saudi Arabia. Measurements like marketshare, Gini coefficient and Herfindahl Hirschman Index (HHI) were used toestimate the indicators of market structure and its performance. The resultshowed that the structure of honey retail market is generally closer to purecompetition with a small concentration in some areas. Gini coefficients ofconcentration, as well as the values of the Herfindahl Hirschman Index (HHI)were relatively low for retailers. The average marketing margin was about SAR6.4/Kg for local honey while the marketing margin of imported honey was aboutSAR 113/Kg. The high profit margin variation between local and imported honeyis due to the high marketing costs, lower supplied quantity and higher demandfor local honey. The estimated cost of marketing of onekilogram of honey wasabout 8 SAR at the retail level. From retailers’ point of view, low quality,lack of marketing services, improper display, high rental property, lack ofknowledge and experience of the consumer about properties and qualitycharacteristics honey, high prices and shortage of some varieties of honey insome specific season are the most important problems of honey marketing in theSaudi market. Setting priorities between different brands of honey plays anoticeable role in marketing. Some honey producers and traders were veryconcerned about unfair competition of honey market through high promotion as abrand based on their long history in the production and supply of high-qualityvarieties of honey from specific and well-known varieties. Hence, intensiveawareness creation effort through training, exhibition, media and advertisementare required to improve the perception of consumers towards the local honey.