The latest news, trends, analysis, interviews and podcasts from the global food and beverage industry

Saudi Arabia has begun cautiously loosening its long-standing prohibition on alcohol, a policy adjustment that, while limited in scope, is already prompting quiet recalibration among global food, beverage and hospitality groups assessing the kingdom’s evolving consumer landscape.

Without public announcement, authorities have expanded controlled access to alcohol beyond diplomats to a small cohort of non-Muslim expatriates holding premium residency status, according to people familiar with the matter. Sales are restricted to tightly regulated outlets, with purchase quotas, identity checks and location limits firmly in place.

For now, volumes are negligible and access remains confined to a narrow segment of residents. But for international brewers, distillers, distributors and hotel operators, the move signals something more consequential than immediate sales: the emergence of a regulated framework where none previously existed.

“We always knew it was coming, that Saudi was preparing for something,” Michael Ratney, who served as US ambassador to the kingdom under the Biden administration, told the Wall Street Journal. “One thing was just the physical signals – you would go into new restaurants, and they all had bars. The bars didn’t have alcohol, but the infrastructure was starting to pop up.”

A regulatory experiment, not a retail launch

Alcohol has been banned in Saudi Arabia since the early 1950s, apart from tightly controlled diplomatic exemptions. Its reintroduction, even on a limited basis, touches on religious, cultural and political sensitivities that the government has sought to manage through incremental change rather than sweeping reform.

Access is currently restricted to non-Muslim expatriates who meet income and residency thresholds, with purchases tracked through a points-based system. The government has not outlined a formal policy roadmap and officials have declined to comment publicly.

Industry executives say the lack of fanfare is deliberate. By avoiding a headline policy shift, Saudi authorities retain flexibility to expand, pause or reverse the programme while gauging domestic response.

That approach mirrors earlier social reforms under Vision 2030 – the economic diversification strategy launched by Crown Prince Mohammed bin Salman – where pilot schemes preceded broader liberalisation in areas such as entertainment, tourism and women’s participation in the workforce.

Implications for drinks, hospitality and ingredients suppliers

While the current regime does not permit alcohol sales in mainstream restaurants, bars or retail, analysts say it begins to address a structural issue that has long complicated Saudi Arabia’s ambitions as a tourism and events destination.

The kingdom is investing heavily in high-end resorts along the Red Sea coast, as well as giga-projects such as NEOM and Qiddiya, designed to attract international visitors, conferences and sporting events. In most global markets, premium hospitality offerings assume at least some availability of alcoholic beverages.

For global hotel groups with large Saudi development pipelines – including Marriott, Hilton, Accor and IHG – the question is less about whether alcohol will be permitted universally, and more about zoning.

If so, a segmented model could be one outcome. We may start to see alcohol permitted in specific resorts or tourism zones, while remaining prohibited elsewhere. That is broadly consistent with how neighbouring markets have evolved.

For drinks producers, particularly premium spirits and craft beer companies, any future participation would likely be indirect at first, supplied through licensed distributors serving hotels and resorts rather than consumer-facing retail.

Executives caution that Saudi Arabia would not resemble a mass-market opportunity even under a more permissive regime. Consumption limits, high prices, import controls and cultural norms would cap volumes. But margins, particularly in luxury hospitality, could be attractive.

A supply-chain story as much as a social one

Industry specialists note that the emergence of a legal channel for alcohol could also reshape adjacent supply chains – from cold storage, operations and logistics to glass packaging, ingredients and flavourings, and non-alcoholic alternatives.

Several global beverage groups already operate in Saudi Arabia through malt drinks, alcohol-free beers and functional beverages, categories that have seen strong growth. Any future expansion into alcoholic products would likely sit alongside – rather than replace – these portfolios.

Saudi Arabia’s cautious approach reflects a broader pattern across the Gulf, where alcohol policy varies sharply by jurisdiction. The United Arab Emirates permits sales in licensed venues, while maintaining restrictions in more conservative emirates. Qatar and Oman allow alcohol in designated hotels. Kuwait maintains a total ban.

Rather than importing any one model wholesale, Saudi policymakers appear intent on designing a system aligned with domestic priorities Analysts say the country is unlikely to replicate any single regional model, instead developing a system aligned with its own economic and social priorities.

For now, the policy shift remains limited and tightly managed. But for an industry accustomed to reading regulatory signals years in advance, it represents a notable change in direction.