The Middle East: A Complicated, Unique & Promising Market for Coffee
Credit: Raw Coffee
Despite the turbulence, the Middle East, with its growing young consumer base and strong purchasing power, remains a land of immersive opportunities for coffee companies. By Vladislav Vorotnikov.
With its rich diversity and a significant disparity in living standards, the Middle East stands out as a unique and promising market for coffee companies seeking global expansion.
The coffee market in the Middle East is primarily driven by several oil-rich countries, including the United Arab Emirates (UAE), Saudi Arabia, Bahrain and Kuwait, all of which enjoy a steady rise in the number of citizens and their purchasing power. Coupled with a relatively high share of young generations, these factors set the stage for rapid and multi-vector development of the coffee market.
The Middle East is a region with one of the world’s fastest and strongest demographic dynamics. Over the past four years, the number of citizens in the region jumped by 30 million to 500 million citizens, driving demand for consumer goods correspondingly. The Middle East’s key markets are witnessing a positive trend in coffee sales, encouraging investors about the market’s potential.
The UAE coffee market is demonstrating strong growth in retail and even faster growth in HoReCa, said Alexandra Molokova, senior research analyst at Euromonitor International, specialising in this country. A flourishing economy and steadily evolving coffee culture make the market bulletproof for any storms. “Global supply challenges and further price increases for coffee do not slow down the growth of the category in the UAE,” Molokova added.
The coffee scene in Saudi Arabia and Kuwait has become more dynamic, especially from mid-2022 onwards, wherein coffee cafés became the socialising hub of choice for Gen Zs and Millennials, indicated Manoj Nair, senior research analyst, also with Euromonitor International.
After the resumption of economic activities post-pandemic, there were significant delays in re-opening many shisha establishments – a term usually describing hookah lounges – where patrons share shisha, or flavoured tobacco, from a communal hookah or from one placed at each table. “These establishments were the preferred venue of meet-ups with friends before Covid-19,” Nair said. The coffee cafés, which endured the turbulent time much better, eventually took advantage of this situation.
A general surge in the popularity of healthy living trends is also believed to play a role in the trend. The prevalence of hookah smoking in the Middle East is still high, as shisha smoking is a deeply ingrained cultural practice in many countries of the region, but it is on a steady downward trajectory. “Coffee cafés grew all across these two countries and soon became the favourite mingling hotspots for most Gen Zs and Millennials,” Nair explained.
The available concrete figures illustrate the upward trend in the segment is strong. Between November 2023 and November 2024, the Middle East and North Africa branded coffee shop market grew 11.2 percent to reach 11,163 outlets, according to a Project Café Middle East 2025 study by the World Coffee Portal. The analysts calculated that 14 out of 20 markets featured in the report achieved net store growth despite growing geopolitical tensions.
Nearly three-quarters of industry leaders report current trading in their market is positive, with 76 percent achieving sales growth. Specialty and boutique operators continue to gain ground in many markets, pointing to growing premiumisation across the coffee market in the region.
Euromonitor analysts indicated that in contrast to coffee, in general, the growth of black tea is expected to continue slowing down across the region. Analysts report that the green tea market is increasing, and much growth is coming from herbal tea and infusions, which are witnessing strong interest and a good growth rate, albeit from a smaller base. Herbal tea products are often consumed for their purported benefits.
However, Nair pointed out that current regulations and the need to present medical assurance of health benefits, if claimed, limit the number of herbal tea products with health benefits in the region. Despite this, the market for these teas in Saudi Arabia and Kuwait is being driven by an overtly positive perception that promotes them and their alleged health benefits.
Consumer Patriotism on the Rise
Over the past few years, the Middle Eastern market has witnessed a continuing expansion of foreign coffee chains, not only from the West but also from the East.
In September 2024, Cotti became the first Chinese coffee chain to enter the Middle Eastern market, with the opening of its inaugural store in Dubai. Since its initial launch in China in October 2022, Cotti Coffee has enjoyed outstanding growth, expanding its business throughout the Asia-Pacific region. The UAE is the first market outside this region in Cotti’s international program.
However, Western investors should approach development opportunities in the region cautiously. As indicated by Kim Thompson, owner of RAW Coffee, a Dubai-based coffee company, the region boasts immersive development opportunities, but the growing consumer patriotism should be taken into account in light of the continuing war in the Gaza Strip. “Movement away from international brands with consumers supporting local brands is one of the key trends in the GCC (Gulf Cooperation Council) countries,” Thompson admitted. In some cases, this trend translates into boycotting of some of the bigger international franchise brands, he added.
The most striking example is Starbucks, which, early in 2024, laid off nearly 2,000 of its workers across the MENA region due to a slump in demand. Since the beginning of the war between Israel and Hamas on 7 October 2023, Starbucks has found itself alongside a variety of other Western brands targeted by pro-Palestinian activists. According to Thompson, the boycott movement is not limited to Starbucks, as other brands also suffer. On the bright side, similar boycotts happened in the past, and they gradually winded down each time. “There is a significant move towards supporting local UAE brands or alternative options to international brands. As an educated guess, I would assume this will continue for as long as the current situation [in Gaza] continues,” Thompson assumed.
Project Café Middle East 2025 also noticed rising risks associated with political instability in the region, citing the Red Sea Crisis as an example of the challenges. Over the past few years, local coffee chain brands have also expanded to a degree, allowing them to start contemplating development in other countries.
In November, Saudi Kyan Café became the first Saudi Arabia-based coffee chain to launch in the US. Kyan Café is the sixth-largest branded coffee chain in the Middle East, with more than 340 outlets across Saudi Arabia, Israel, Jordan, Kuwait, Oman, Qatar and the UAE. Kyan Café opened its first outlet in a New York City neighbourhood known as ‘Little Yemen’ in the Bronx due to its high concentration of Yemeni-owned businesses, apparently also counting on capitalising on the consumer patriotism of the local community.
Tectonic Shifts
Over the past few years, coffee consumption culture across the Middle East has experienced huge changes, according to market players and analysts. “I believe the UAE is the example of rapid changes and shift from tea to coffee and also from Arabic – lightly roasted – coffee to Turkish coffee,” Molokova said.
Some differences in the coffee culture stem from religious restrictions. “In Saudi Arabia and Kuwait, the sale and consumption of alcohol is illegal, unlike the neighbouring UAE and Bahrain, wherein there are multiple venues to meet,” Nair said. Therefore, overall, the coffee café culture is more prevalent and stronger compared to UAE.”
According to Thompson, the key changes in coffee-consumption habits are associated with growing consumer awareness in products and a quest for greater quality. He adddded that health and fitness awareness play a part as customers are increasingly looking at reducing or removing sugar, adddditives, and syrups. There is a greater preference for Turkish coffee in the roasted variety while the fresh coffee beans are preferred for Qahwa, or Arabic coffee. The sales of roasted Turkish variety are dominant across retail and cafés.
The coffee chain sector expansion in the Middle East is also accompanied by rapid growth of at-home consumption.
“This has allowed households to explore the coffee products offered by many independent roasters which helped them further develop their taste and preferences for unique blends such as coffee with cardamom that are also offered by such independent coffee roasters. Moreover, there is also a growth in demand for coffee-pod machines as consumers further develop their taste and preference for relishing their own choice of coffee blends at home,” Nair said.
Prioritising the Coffee Industry
Against this background, the authorities in some Middle Eastern countries have taken steps to bolster the coffee industry’s growth and trade.
For example, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, launched in May 2022 – unveiling a plan to invest USD $319 million over the next ten years to support the growth of the national coffee industry – from production to consumption. Saudi Arabia harbours an ambitious plan to plant 1.2 million coffee trees by 2026, which is one of the steps aimed at a strategic goal of diversifying its oil-dependent economy. The project is expected to boost annual production from 300 metric tonnes to 2,500 metric tonnes.
In contrast, the UAE is positioning itself as one of the world’s key hubs for trading coffee. In 2019, the country kicked off the Dubai Multi Commodities Centre (DMCC) Coffee Centre, a 7,500-square-meter coffee storage, trading, and value-add ed service facility in Dubai. The Centre has facilitated the trade of over 100 coffee varieties, connecting major growing regions such as Central and South America, Africa and Asia with key consumer markets.
Vladislav Vorotnikov is a Batumi, Georgia-based multimedia B2B freelance journalist writing about the tea and coffee industries since 2012.
