The expanding Halal food market represents a significant opportunity for international food companies, not only in Muslim countries but also, Rupert Sutton writes, in western markets with significant and growing Muslim populations among whom Halal observance is on the increase.
Two events, one a trade show and the other a conference, which took place in Malaysia last week, serve to underline the growth and further potential of the Halal food market. The World Halal Forum 2007 conference had as its main theme ‘harmonising the global Halal market’, while the MIHAS Malaysian International Halal Showcase is the world’s largest Halal Food and Beverage Trade show.
According to research presented at the conference, Halal food sales are now worth over US$560bn annually, and it is estimated that the category will exceed US$850bn by 2020.
The Halal market is spread across many countries. With its roots naturally in the Middle East and Asia, it also extends to the significant Muslim populations in Africa and China. There are also newer and rapidly growing Halal markets in Europe where there are over 50m Muslims, while America and Australasia are also witnessing significant growth in Halal food sales.
Halal is an Arabic word meaning ‘clean’. Halal foods do not contain ‘Haram’, or unclean, items such as pork or alcohol. In addition, all meat must have been slaughtered according to Islamic principles. Although many non-Muslims assume Halal applies just to food and beverages, it also extends to cosmetics, pharmaceuticals, finance, logistics, banking and more.
There is also no reason why Halal foods should just be consumed by Muslims. As Usmirah Anum Ahmad of babyfood producer Petitgems puts its: “Halal means high quality, and strong food safety; we are not just targeting Muslim consumers.”
Today, Muslims account for around 26% of the global population and this is forecast to increase to 28% by 2020. Research in France, which has the highest Muslim population in Europe, shows that Muslims spend up to 35% of their income on food, a higher than average percentage, partly attributable to the fact that Muslim family sizes tend to be larger.
Many Muslim countries are also net food importers. Australia for example currently exports over US$2bn worth of food products to Muslim countries annually.
Whilst developing and implementing a coherent Halal strategy is clearly necessary to enter traditional Muslim markets in Asia and the Middle East, there is a huge market for Halal products among Muslim communities living in multi-cultural societies, and the importance of Halal to these consumers is growing.
Nordin Abdullah, executive director of KasehDia Sdn Bhd, the organiser of the World Halal Forum 2007, estimates that approximately 70% of Muslims worldwide are now following Halal standards and this is expected to increase. “Food items, which can legitimately claim to be ‘Halal’, will win the trust of Muslim consumers and become an important part of brand equity,” says Abdullah. “An on-pack Halal logo is a sign of reassurance.”
This has not been lost on domestic food industries in developed western markets. In Australia, for example, the food industry is taking a proactive approach to the category, recently launching a new Halal food brand along with a specific website to promote its Halal industry, www.halalaustralia.com.au. Both Australia and South Africa had stands at MIHAS. Meanwhile, in the UK, major mainstream retailers such as Sainsbury’s are selling Halal meats in their stores.
However, the biggest challenge remains the lack of consistent global Halal standards. Little wonder therefore that the World Halal Forum 2007 made the aim of harmonising the world Halal market its central theme. One slide presented at the conference showed 17 different Halal logos. There is also no global Halal trademark.
While countries like Malaysia, Singapore, Thailand and Australia have Halal certification systems, ironically some Muslim countries, such as Saudi Arabia and Turkey, have none as Halal is the norm rather than the exception. However, this creates difficulties for a company looking to export Halal foods to such countries. Imported foods may be assumed not to be Halal so are arguably in greater need of a reliable and easily recognisable certification system.
Historically, companies wanting to market Halal products internationally have had to take a country-by-country approach. But a more efficient solution when targeting several markets is to get certification in a country like Malaysia, which has well-established Halal standards accepted throughout the Muslim world. Indeed, Malaysia is positioning itself as a ‘Halal Hub’ and has set up organisations like the Halal Industry Development Corporation (HDC) to simplify the accreditation process.
Non-Muslim food companies wanting to make their products Halal are advised to set up a Halal committee comprising people with a strong food science background to manage its implementation. Nordin suggests that the head of such a committee should not only be a Muslim to enhance credibility, but must also be someone senior within the organisation.
Switching to Halal production also requires a thorough review of all supply chain processes and can naturally involve reformulating products. For example, vanilla flavourings produced using an alcohol extraction process would need to be modified; there must also be dedicated production lines for Halal products. Changes in logistics are also necessary; for example Tesco and Carrefour in Malaysia have separated loading docks in their distribution centres and retail stores between Halal and non-Halal items.
Darhim Hashim of HDC praised the Al-Islami food company in Dubai as a model for Halal best practice. “Its whole corporate philosophy is based on Halal,” he says, “from food production to finance in offices and staff policies.” Once seen as a niche category, Halal is rapidly becoming mainstream and clearly represents an opportunity to food companies looking for new markets.
Rupert Sutton is president of the Singapore-based management consultancy Exigo Marketing.