The Global Halal Food Market: Riding a Wave of Growth

halal certified

The literal meaning of the Arabic word ‘Halal’ is allowed. It is used in reference to food and drinks that are permissible for Muslims under Islamic law, as defined in the Qur’an. It establishes instructions that specify what foods can be consumed, as well as the method of preparation, mainly addressing items of meat and animal tissue. For example, the Islamic way of slaughtering animals is to kill them by cutting the trachea, carotid artery, and jugular vein.

Muslim consumers now contribute to a growing demand for high-quality and varied Halal foods. Halal certification is a concern for the world’s Muslim population of 1.6 billion because many Muslims live in majority non-Muslim countries where Halal-certified food is sometimes difficult to find or where the authenticity of the certification may be questionable.

growth potential

What is driving the rapid growth in the Halal food market?

Increase in the Muslim population

According to research published in 2015, Muslims currently make up about a quarter (23.2 percent) of the world’s population. The study further claims that the increase in the Muslim population is due to younger demographics (many Muslims live in countries with low median ages such as Indonesia, India and Pakistan) and continued improvements in infant mortality rates. With the rise of the Muslim consumer, food service chains like KFC and Nando’s now have Halal outlets, while Pizza Express uses Halal chicken and supermarkets in Europe are stocking up on Halal frozen foods.

Higher disposable income

Rising income levels among the Muslim population is fueling the demand for new and differentiated Halal foods. A growing Muslim population, as well as economic development in countries with large Muslim populations, make this a lucrative segment to invest in. For example, the combined disposable income of a Muslim American in 2012 was $98 billion.

Growing awareness and demand

The awareness factor is at play for both the Muslim and non-Muslim populations. The former are becoming more aware of their religious obligations, while some experts believe the latter are expected to shift towards Halal food due to growing concerns over unhygienic and unhealthy food. For example, Halal meat accounts for about 15 percent of total UK meat sales (£2.6 billion), which is much higher than the proportion of Muslims in Britain (which is about five percent). hundred).

Halal non-food market opportunities

Not all Halal products are related to meat. The evolving lifestyle and increasing purchasing power of Muslims means that there is a growing demand for products that conform to Islamic dietary laws. As the Halal industry continues to expand beyond the food sector, there are many industries that will benefit, including:

cosmetics and personal care

More consumers are aware that cosmetics may contain alcoholic substances or products derived from animals prohibited by Islam. According to 2013 data, the Halal cosmetics and personal care market is worth approximately USD 13 billion with an annual growth rate of 12%.

pharmaceutical and health

Halal pharmaceuticals and healthcare products are in demand not only among Muslims, but also among non-Muslims who value wellness products that do not harm the body in the long term. That’s why industry players are willing to change ingredients and manufacturing methods to meet this demand. In 2013, the Halal pharmaceutical market was estimated at USD 34 billion, and it continues to grow.

Tourism

Recently gaining popularity, this type of tourism refers to hospitality services and products in accordance with Islamic practices. Traditionally, Halal tourism has been commonly associated with umrah, hajj and pilgrimage. Muslims’ changing preferences for travel destinations, the rise of affluent middle-class consumers, and the increasing degree of interconnectivity make travel convenient. This puts the Halal tourism market at USD 137 billion in 2014.

dress

Fashion houses in Paris and Milan have noted the commercial potential of Muslim women’s clothing that respects religious sentiments but incorporates elements of good taste and style. According to a 2012 report, the Muslim fashion industry would be worth $96 billion if half of the world’s Muslims (1.6 billion) spent $120 a year on clothing.

Logistics

Halal logistics also has clear growth potential. This means paying close attention to the supply chain where the integrity of the product is maintained from the farm to the consumer’s table. Therefore, an international Halal logistics standard is crucial. Based on 2014 data, this industry is projected to grow at a compound annual growth rate (CAGR) of 12.6% to reach US$539 million.

Halal primary markets

As the Halal market emerges as a new growth sector, a growing consumer base and further growth in different regions will lead to increased competition. Key regions where growth potential is evident include:

Asia

With nearly a billion Muslims or close to two-thirds of the world’s Muslim population, Asia is at the forefront of Halal products. The Asian Halal market has been driven mainly by India, Malaysia, Pakistan, Indonesia and China. With nearly 1 billion Muslims or close to two-thirds of the world’s Muslim population, Asia’s Halal market has been driven primarily by India, Malaysia, Pakistan, Indonesia and China.

With nearly 1 billion Muslims or close to two-thirds of the world’s Muslim population, Asia’s Halal market has been driven primarily by India, Malaysia, Pakistan, Indonesia and China. This market is worth approximately USD 420 billion (in 2013) and is expanding rapidly. Some of the key countries within the Asian region that have been setting the direction of the regional Halal market are:

Indonesia

The country with the world’s largest Muslim population is, unsurprisingly, a huge market for Halal products, estimated at USD 10 billion annually in 2013 and growing 7-10 percent annually.

Malaysia

The Malaysian Halal market was valued at US$1.9 billion in 2013. The Halal industry, which is a crucial contributor to the country’s economic growth, is expected to contribute up to 5.8% of Malaysia’s Gross Domestic Product (GDP). the nation by 2020, up from 2% hundred in 2013.

Pakistan

Pakistan’s share of the global Halal food market in 2013 was a dismal 0.26 percent of the total USD440 billion. This is undoubtedly because Pakistan produces much of its food domestically, without a large amount of Halal food imports and exports. However, Pakistan has great potential to become a hub for Halal food. This is due to its large Muslim population, as well as its strategic geo-economic position, which gives it access to 40 million Muslim consumers in the Central Asian republics and Afghanistan.

thailand

Thailand has become the fifth largest producer of Halal food in the world, holding a 5.6 percent share of the global Halal food market, valued at US$5 billion per year. Ongoing efforts by the Thai government to strengthen the Halal industry resulted in the establishment of the Halal Standards Institute of Thailand in 2003 to ensure proper development and certification for national Halal foods. These standards comply with Islamic law as well as international food quality standards. Thailand has become the fifth largest producer of Halal food in the world.

middle East

The Halal food industry in the Middle East was worth approximately USD 20 billion in 2013. The Middle East imports 80% of its food needs, making it an important segment for global Halal food. Annual food imports are projected to double from USD 25.8 billion in 2010 to USD 53 billion in 2020, with total Halal meat imports exceeding 1 million metric tons per year.

Europe

The flourishing European market for Halal foods has drawn the attention of many Western countries. Large UK grocery retailers such as Sainsbury’s, Morrisons and Tesco sell Halal food ranges in selected stores, spanning categories from baby food to Halal meat.

challenges ahead

The global Halal food industry seems to present many business opportunities. What obstacles should investors be aware of?

halal world standard

The lack of a single unified global Halal standard is a brake on the growth of the industry. Each country has different certification standards due to the presence of various Halal authorities. A global Halal standard and certification system would provide security for consumers, reduce the need for multiple certifications, speed up product development and reduce supply chain cycle time.

New Muslim consumers

In 2011, approximately 60% of the world’s Muslim population was under the age of 30. The average age in Muslim-majority countries is expected to reach 30 by 2030. This young generation will demand a wide range of Halal consumer products and services to meet their lifestyle aspirations in accordance with their faith. The tastes of these customers can also be expected to evolve over time, indicating a need for innovation.

Halal farm-to-table integrity

Maintaining integrity throughout the Halal supply chain has become a major concern for Muslim consumers, with fraudulent Halal certification and physical contamination of food products on the rise. Therefore, the integrity of the supply chain must be protected from the moment the animal is slaughtered and includes the transport, storage and handling of Halal products.

human capital

There is a shortage of skilled workers in the Halal industry. Additionally, many industry players have considerable room for growth with respect to production efficiency and innovation.

What awaits us?

As industry players compete for a share of the USD 700 billion global Halal food market, competition will only increase. This will prioritize efficiency, quality and diversity in the coming years. Halal certification should be seen as just the beginning of the process of developing a competitive advantage.

The Halal food market will also be more diverse, both geographically and in terms of purchasing power and therefore consumer sophistication. For example, the sale of Halal food in the US has been on the rise, increasing 70 percent since 1995. In Russia, 2011 saw the production of 65,000 tons of Halal meat. China is also emerging as a Halal market, with more than 23 million Muslims living there.

Above all, the African continent is widely recognized as the market for Halal products of the future, due to a large and growing consumer base of African Muslims, as well as rapid economic growth on the continent. For example, Kenya has around 150 companies operating with Halal certification from the Kenya Halal Certification Office.

For Halal food exporters, there will continue to be more frontiers to explore.