Global Halal Food Trends

It’s time to leverage on the multiple opportunities offered by the global halal industry which would be worth USD 5 trillion by 2020, according to Euromonitor. Market demand, from both Muslim and non-Muslim countries, are skyrocketing year after year. If you are not part of the Halal revolution yet, it is time to get going!

 

Prologue

Today the halal food market is projected to be worth $1.6 trillion by 2018. This sector is also estimated to be growing faster than the conventional food market, and could exceed 17% of the world food market by this year.

Some Muslims believe that kosher-certified food can be substituted for halal products because of similarities in the slaughtering process; as there are many more kosher offerings than halal, it’s not uncommon to sometimes opt for kosher products instead. However, this is not ideal, because the two standards do differ, and kosher is therefore not a perfect substitute. (For example, a Muslim must slaughter the animal for the meat to be halal, and a specific prayer must be said at the time of slaughter.)

Countries with high Muslim populations cannot always rear all the meat that they want to eat because of geographic reasons or because their populations outnumber the size of their animal husbandry industry. These countries must import a lot of halal meat from other nations, which provides a huge opportunity for non-Muslim-majority countries to meet this demand. For example, Brazil, America, Australia, Pakistan, India, and Ethiopia all export halal meat to Dubai.

Because of the high Muslim population in the region, Southeast Asia is also a general hub for Islamic products. Japan is beginning to get in on the halal action with food producers applying for halal certification from religious bodies, and China is on this path, too. Japan in particular is hoping to tap into external markets including Singapore, which has a Muslim population of around 15 per cent.

The organic market intersects with the halal market, so there are opportunities for natural growth in this area. The US Company Whole Earth Meats is tapping this market already, with products advertised as “local, grass-fed, free-range, organic, humanely-raised, family farmed, Halal meats and poultry.”

The market appeal for these products and is potentially broader than just religious adherents. Because of the perception that halal food is subject to stricter controls, halal food is sometimes preferred by non-Muslim consumers, too. For example, animals slaughtered in a halal manner basically undergo two health checks instead of one: the usual regulatory health check of its country of origin, as well as a check by the halal certification authority. The method of slaughter, in which the blood is drained from the animal, is also thought by some to be healthier.

The Halal opportunity is high in Indonesia, India, Pakistan and Bangladesh as these countries account for 70% of Asia’s one billion Muslims. Indonesia’s booming Halal industry is worth USD 190 billion alone!

This market provides huge potential for companies, organisations and others, from the West and from Muslim countries, and is on a steep growth path. The expected growth of the global Muslim population is about 35 per cent over the next 13 years, rising to 2.2 billion by 2030, or 26.4 per cent of the world’s total projected population of 8.3 billion. The Muslim population could grow to 2.6 billion and represent nearly 30 per cent by 2050 of the global projected population.

But addressing this market is not as straightforward as dealing with other billion population consumer markets such as India and China. For a start, the Muslim community is not a single homogeneous group. Muslims live in every country in the world, represent every race and come from every social and economic stratum. And although they share the common thread of their beliefs, they have their own cultural, regional or local nuances, preferences and practices. The strong cultural and historical links between the Muslim and non-Muslim worlds are starting to come to the fore for example China as a country that is addressing the Muslim opportunity.

Consumer demand is spurring the growth of clearly labelled and regulated Shariah-compliant products across the value chain from the abattoir to the plate. Increasing demand for Halal food is impelling the creation and maturity of an end-to-end ecosystem. It begins with regulation and covers the entire supply chain all the way to the consumer’s plate. Such an ecosystem acquired a higher level of maturity in 2016 and industry participants expect this to continue in 2017 as the Halal market sweeps into new geographies and embraces new population demographics.

Halal food will continue to see growth as a result of increasing religious awareness, a growing Muslim middle-class and government efforts to promote domestic Halal food services and exports.  Indonesia, Malaysia, Thailand and Singapore in Southeast Asia as well as Oman and the UAE in the Middle-East are aggressively promoting Halal food exports. Nestlé reported that the UAE, for instance, will see the Swiss food and beverage giant open its second factory in the country in 2017. In 2014, the company said 85 of its 456 factories globally were Halal-certified. The factory in the UAE takes the number of factories with Halal certification to at least 86. The new factory in Dubai South has also been certified by ESMA.

Food Business

The food sector has the advantage of having some of the biggest players in the Halal industry throwing their weight behind producing a diverse range of fully compliant products, adding to a rich range available to the consumer. Some hotspots are seeing more action than others. In a report released in by Transparency Market Research (TMR) estimated the global size of the Halal market, 50 per cent of which comprises food products, at $10.51 trillion by 2024, a CAGR of 16.2 per cent.

Halal food eaters do not eat non-Halal products, although non-Halal food eaters eat both products. The market is growing more diverse with the introduction of Halal in energy drinks, vegan and vegetarian foods, meat and poultry, canned goods, and gourmet and fine foods.

One of the reasons for the high growth in the sector is cross-border consumption, which is set to increase with new entrants eyeing the expanding market. Brazil, for instance, is the biggest exporter of Halal meat and livestock to Organisation of Islamic Cooperation (OIC) countries.

Countries with large Muslim populations especially in Asia will start to drive the Halal food import trade, as Muslim consumers begin to hit that income tipping point beyond which they demand higher-quality imported food. Economies with rapidly-growing middle income demographics, such as Indonesia, Nigeria, Bangladesh and Iran are the ones driving demand. Iran is a special case which will see significant economic growth in 2017 due to the easing of Western sanctions and hence more demand for quality imported Halal food from its middle-class.

Countries that supply meat are becoming increasingly attuned to the lifestyle demands of their target markets. One segment that will see growth is the supply of goats for the annual ‘qurban’ ritual. For instance, Ireland has begun supplying such livestock to Singapore’s Muslim community. Countries that are able to export such livestock in a safe and humane manner will see strong demand from Muslim populations in countries like Singapore and Europe.

Regulations

Muslim-majority countries are now making their presence felt in the regulatory landscape by creating globally acceptable standards after recognizing that an absence of common and unified standards globally is one of the major barriers to entry. There are four specific market drivers for industry growth and the need for enhanced regulation:

1) Increasing spend and Halal penetration among Muslims

2) The high proportion of non-OIC countries exporting Halal products

3) Non-OIC countries seeking to enter the global Halal market

4) The entrance of mainstream players and the growing participation of OIC countries in food export markets.

As official codified Halal standards are largely absent in the Halal food industry, Malaysia and the UAE have gained a foothold with industry-leading standards, and Turkey-based Standards and Metrology Institute for the Islamic Countries (SMIIC) has established a framework for a global, unified Halal food standards, according to the report.

Giant food company, Nestlé, has been operating in the Halal sector for more than three decades and has witnessed many regulatory developments. In the Middle-East when there were no local Halal standards, Nestlé ensured international certifications. When the UAE introduced ESMA (Emirates Authority for Standardisation and Metrology) certification, Nestlé was the first food manufacturer to obtain the certification. In early 2015, ESMA launched the UAE Halal Mark for certifying the full Halal supply chain, from the slaughter process to the additives and ingredients used.

Another potential significant facilitator towards more unified standards is the Indonesian government taking the country’s Halal certification under its authority and away from the long-standing independent LPPOM-MUI. The government hopes that its oversight of Halal certification will better assure other countries of Indonesia’s Halal standards and processes. The new body, to be called the Halal Products Certification Agency, is scheduled to start operating in 2017, ahead of mandatory Halal labelling in Indonesia by the end of 2019.
Indian Halal Food Industry

India stands as major demand market due to its burgeoning middle income group and as the major attracting destination of foreign investment for its infrastructure and industrial projects. High purchasing power parity and large unexplored sectors are making it lucrative for all brands across the world. While the world advanced economies are pegged at 2-5% economic growth, India consistently maintains the pace of economic acceleration at 7-10%. Benefit of economic development reflects in living standard and lifestyles of Indian consumers. Indian Muslim, in spite of marginalization, has not been excluded from the economic benefit and they are now more economically empowered in compare to previous years. Increasing per capita income has given more amounts in their basket to spend for fulfillment of their food and other necessities.

Muslim has the substantial share in Indian population with minority status. In terms of Muslim population size, India is the third largest destination in the world and first country in Non OIC (Organization of Islamic Cooperation) nations. Indian Muslim constitutes the 14% of total population of India and 11% of total global Muslim community. Such great size with comparative young ratio indicates about a huge market for Muslim compliance products and services that are still largely untapped in India. Since food is compulsive consumption and has the large ambiguities about Halal and Haram, its potentialities to expand with halal endorsed products are undeniable for catering of large Muslim consumer. Considering its importance at domestic as well as overseas markets, halal food is being studied here in reference of Indian Muslim consumer and OIC markets.

Domestic Halal market

Large size of food market is still unorganised in India. Most of people prefer to purchase the food products from the neighboring retail outlets due to uncertainty in quality of packaged and processed foods. Packaged food demand is mainly concentrated in metropolitan and urban areas. Muslim have the dual reasons for selecting the neighbouring outlet, first is quality and second is Halal authenticity.

Food safety and standards authority of India (FSSAI) has made the mandatory to disclose the vegetarian and non-vegetarian ingredients in packaged foods by a clear visible logo but such official declaration is not required for Halal or non Halal classification. Muslim can also not believe all vegetarian products as Halal in India due to unspecified. Therefore, an exclusive and most loyal customer’s demand of Halal products approximately 10% of total consumption exists in Indian market. Major food product-wise estimated Muslim demand is shown in given table:

Overseas markets:

India has large overseas market for exporting of food products in OIC countries. Most of Arab countries depend upon India for fulfilling their food requirements, mainly for rice, buffalo’s meat, coffee, cereals, spices and fresh vegetables and fruits. According to 2016-2017 data release by Indian ministry of commerce, India’s share of total export in OIC market is 310338$ million while only major food products share is 12629$ million. Half (44.32%) of India’s export of food product are imported by OIC countries. A cross comparison about the India’s total export and export of food products for top ten OIC countries is shown at given table:

Indian food export can also be further expanded manifold to OIC countries by proper and transparent adherence in Halal certification and with some official provision to cross check the authenticity of Halal methods. Due to absence of such guidelines, sometime the buffalo meat exported by India is falsely blamed for not fulfilling the Halal process properly.

Aforementioned discussion clearly indicates about the potential and lucrative business opportunities in Halal food in domestic as well as in overseas market. Multi-prolonged strategies are required for establishing the new products especially at domestic market in packaging products and for enhancing the existing unorganised markets. These strategies are required a better planning from all stakeholder i.e. Muslim consumer, Muslim producers, mainstream producers, Halal certifying agencies, community organizations and the government authorities.

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