Estimating the demand for imported green coffee in Saudi Arabia using the Almost Ideal Demand System

Introduction Understanding the demand for imported green coffee in Saudi Arabia is crucial for stakeholders in the coffee trade. This study examines how demand varies by country of origin, focusing on Ethiopia, Brazil, India, and other exporting nations such as Colombia, Vietnam, and Kenya. Given the growing coffee consumption in Saudi Arabia, analyzing consumer preferences and market dynamics can provide insights for importers, exporters, and policymakers. Methods This study employs the Almost Ideal Demand System (AIDS) model to estimate demand elasticities for green coffee imports. The analysis considers income and price elasticities to determine the classification of coffee imports as necessities or luxury goods, as well as cross-price elasticities to assess substitution and complementarity relationships between different origins. Results Findings indicate that Ethiopian coffee dominates the Saudi market and is considered a luxury good with high income elasticity. In contrast, Brazilian and other coffees exhibit characteristics of necessities, with relatively stable demand. Indian coffee is highly price-elastic but maintains a smaller market share. Cross-price elasticity estimates reveal that Ethiopian and Indian coffees act as substitutes, whereas Ethiopian coffee complements imports from other sources. Discussion and conclusion Projected trends suggest continued growth in Ethiopian, Brazilian, and Indian coffee imports, while imports from other origins may decline. These findings have practical implications for importers and marketers, who can refine sourcing and promotion strategies, and for exporters, particularly from Ethiopia and Brazil, who can strengthen their market positioning. Policymakers may leverage these insights to ensure stable coffee import flows through targeted trade policies. This study contributes to the coffee demand literature by emphasizing the role of origin differentiation in shaping market dynamics in Saudi Arabia's green coffee sector.