Segmentation and spending patterns in the Saudi Arabian coffee market

Abstract

While Saudi coffee (SC) holds deep cultural and historical significance within the Kingdom, rising global exposure and modern coffee shops are driving domestic consumers toward other coffee (OC) varieties. In this context, this study has two objectives: First, to segment the coffee market and analyze how consumer characteristics vary among its components, and second, to estimate the coffee expenditure function. The study data were collected through our custom online survey. We employed a multinomial probit model to estimate choices within the identified market segments of individuals consuming: (1) SC, (2) OC varieties, such as American or Turkish coffee and (3) Both Saudi and OC types. Additionally, we applied an ordered probit model to estimate coffee-related expenditure. The results offer valuable insights for marketing and policy considerations relevant to the concurrent government’s efforts as consumers are increasing their consumption of OC types.

Keywords

• Saudi coffee
• market segments
• expenditure function
• coffee consumption
• multinomial probit model
• ordered probit model