Saudi Arabia's first alcohol store is a big step, but also aims to tackle a longstanding drawback: Booze smuggling

Saudi Arabia’s first alcohol store has opened within the diplomatic quarter of its capital Riyadh, accessible to non-Muslim diplomats. 

While it solely impacts a choose group, it is a big change for the extremely conservative Muslim kingdom, the place alcohol has been banned since 1952 after a Saudi prince murdered a British diplomat in a drunken rage. Drinking is also forbidden beneath Islam, and most of Saudi Arabia’s native inhabitants is religiously observant.

That hasn’t stopped alcohol from flowing into the dominion over time — it simply occurred behind closed doorways.

Foreign embassies are in a position to import alcohol beneath specified agreements with the Saudi authorities, whereas some have snuck booze into the dominion in safe “diplomatic pouches” that may’t be inspected.

From there, bottles are sometimes bought on the black market at enormous markups, in accordance to expat and native residents of the nation. All those that spoke to CNBC did so on situation of anonymity due to the sensitivity of the subject.

“Everyone is aware of which embassies promote booze … a few of them have made a complete facet enterprise out of it, promoting on the black market at 4, 5, even ten instances the traditional worth. It’s gotten ridiculous. The authorities had to do one thing,” one Saudi investor based mostly between Dubai and Riyadh informed CNBC. 

A one-liter bottle of vodka, for example, sometimes prices between $500 and $600 on the black market, sources mentioned, whereas they described a single bottle of Johnnie Walker Blue Label going for between $1,000 and $2,000. At-home booze making has also taken place within the kingdom for many years, in accordance to expats who’ve beforehand lived there. 

The Kingdom Tower, operated by Kingdom Holding Co., centre, stands on the skyline above the King Fahd freeway in Riyadh, Saudi Arabia.

Simon Dawson | Bloomberg | Getty Images

The new store in Riyadh comes with strict guidelines: authorization for entry and purchasing have to be validated by way of an app known as Diplo and authorized by the Saudi Foreign Ministry, and purchases are topic to a month-to-month quota system per registered particular person.

The new tracked buying system is “to cope with the smuggling drawback that we have all the time had with diplomats,” one Saudi guide mentioned. Another Saudi enterprise proprietor based mostly within the kingdom’s jap Khobar area informed CNBC: “The authorities discovered that a lot of alcohol is transferring from the allotted portions allowed for embassies to the black market … Now this app is put in place the place they are going to be getting their allotted amount with monitoring from a centralized place.”

Indeed, the Saudi authorities confirmed that the regulation of alcohol quotas for diplomatic missions was being put in place to “counter the illicit commerce of alcohol items,” the nation’s Center of International Communication (CIC) mentioned in a assertion cited by CNN. 

The Saudi Foreign Ministry and CIC haven’t responded to CNBC requests for remark.

Expats have usually gone to lengths to get liquor into the dry kingdom; one former British diplomat recounted receiving bottles of whiskey saved inside an imported grand piano, whereas one other described the second that a firm delivery his furnishings informed him: “Sir, your sofa is leaking.”

Saudi Arabia imposes extreme penalties on these caught consuming or promoting alcohol, starting from fines or lashes to deportations and jail time. 

Still, many within the kingdom say that the legalization of consuming outdoors of diplomatic venues is simply a matter of time, although it can probably be restricted to inns or particular financial zones and stored off-limits to Muslims. Several high-end eating places in Riyadh and Jeddah are already kitted out with fully-equipped bars, at present used for making elaborate non-alcoholic mocktails.

Saudi Arabia has undergone seismic change each socially and economically within the years because the younger Crown Prince Mohammed bin Salman, now the dominion’s de-facto ruler, got here to energy.

His Vision 2030 marketing campaign is a multitrillion-dollar endeavor to remake the Gulf nation’s picture, appeal to tourism and diversify its financial system away from oil. It also aims to create new jobs for the booming Saudi youth inhabitants, 70% of which is beneath the age of 30.

The kingdom has seen a collection of liberalizing reforms applied since Crown Prince Mohammed got here to energy, permitting beforehand banned issues like girls driving, film theaters, and music festivals.

But alcohol in Saudi Arabia has all the time been a taboo topic — whereas the nation’s management needs to modernize it and produce in additional tourism and international buyers, it also has to hold from upsetting its home inhabitants, most of which is deeply non secular.

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