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

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

While it only affects a select group, it’s a big change for the highly conservative Muslim kingdom, where alcohol has been banned since 1952 after a Saudi prince murdered a British diplomat in a drunken rage. Drinking is also forbidden under Islam, and most of Saudi Arabia’s local population is religiously observant.

That hasn’t stopped alcohol from flowing into the kingdom over the years — it just happened behind closed doors.

Foreign embassies are able to import alcohol under specified agreements with the Saudi government, while some have snuck booze into the kingdom in secure “diplomatic pouches” that can’t be inspected.

From there, bottles are often sold on the black market at huge markups, according to expat and local residents of the country. All those who spoke to CNBC did so on condition of anonymity due to the sensitivity of the topic.