Halal foods becoming brick-and-mortar business

Halal is an Arabic word for permissible and is often used to refer to food and drink which are acceptable for Muslims to consume under the Islamic Shariah law. It has taught us how to cook these products which are allowed by Islam. Halal animals include goats, sheep, cows and chicken. According to the Holy Quran, the correct method of slaughtering animals is killing animals through a cut to the jugular vein, carotid artery and windpipe. This process is called ‘zabihah’. The condition for the slaughtering animals are that they should be healthy and alive and then the blood is drained from the carcass. Moreover the butcher should be a Muslim.

Muslims accounted for approximately 23% of the total population worldwide in 2010. In 2016 the Global Market value of halal products amounted to approximately 45.3 billion US dollars and it was expected to increase by roughly 29% in 2020.

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When we think of a Halal food, the first thing that comes into our mind is the Shariah animal slaughtering in specific, that is meat and poultry products, then we think about food and drinks products in general. It is perceived by many of us that Halal is an ecosystem of ethical values that businesses and societies should adapt to eat healthy, clean, non-toxic products along with healthy lifestyle and respect for environment, animal welfare, sustainability, workers and suppliers rights. It means that it includes food and beverages sector and others like cosmetics, friendly travel, tourism, fertilizers, pharmaceutical, education, chemical, modest fashion, Islamic themed media, recreation, and Hospitality Industries as per report by Salaam Gateway on the ‘State of the global economy 2020/21’.

A product is termed as completely Halal if all of its ingredients and manufacturing process is Shariah compliant and Islamic financing is used to prepare these products it is generally presumed that if the country is Islamic all the produced goods will be Halal but actually there are many things which are non -compliant to Shariah like seafood, chicken and chocolates etc.

Halal food production of Pakistan and exports of semi cooked meals should be increased since these products have high quantity of demand in China & Far East countries. Our 90% raw material is also halal, therefore ‘Made in Pakistan’ products should be increased. The speakers in the webinars organized by FPCCI experts have emphasized that government should take fiscal and monetary measures to decrease tax and increase investment. The companies with fake ‘self – developed’ logos of Halal foods should be banned and import should be Halal certified fulfilling the mandatory standards requirement of other countries.

Chairman all Pakistan meat processors and exporters association and CEO of Saifi Group of Companies has highlighted that Pakistan has the potential to make Rs.50 billion exchange per annum by exporting Halal Meat and on Hajj occasions export of sacrificial animals can earn Rs.40 billion.

The Global Halal market is emerging as dominant and fast growing segment of the international trade amounting to Rs.3 trillion at present, showing growth from $635 billion in 2010 to $3.2 2 trillion forecast for 2023.

Organization of Islamic countries (OIC) statistics have shown that over all expenditure on Halal products in the world are estimated to be $3.15 trillion in 2014 representing 2.6% market share of total spending in the world.

Among Halal goods, food has shown upward trend and has market share of 36% in the overall Halal industry: Out of global spending of $6.75 trillion on food and beverages during 2014, the Halal food and beverages share is 16.7% when the expenditure of $1.13 trillion. Since by 2020, Muslim population will be 26% of world population so share of Halal food and beverages is expected to touch the figure of 16.9% of market share with $1.59 trillion expenditure. Due to this increase in demand for Halal food and beverages more profit is expected along with more investment in this industry in the coming years.
China, Turkey, Malaysia, Indonesia, Central Asian States and other such countries which have larger population and are heavy importers of meat and meat products should be targeted instead of hitting the demand of Arab countries only. The officials appointed on duties in this country should be given targets of exports in these countries and meat exporters and processes should be given chance to participate in exhibition and fairs. India, Brazil and Africa are the furious competitors.

In Pakistan, governmental support is scarce and you and the export procedure to meat is troublesome. There is a need to address few problems like practice of allocating live animal export special quotas should be abolished, stoppage of livestock smuggling, a ban on slaughtering of female animals, government should set up Halal zones in Cholistan and land should be allocated to the actual owners of meat processors and exports.

Halal meat industry of Pakistan is an infant industry and needs governmental patronage such as zero-rated taxation, facilitation and relaxation in various phases of production, transportations, and export enabling it to complete in the global economy with more courage and confidence.

An employee of Halal accreditation said that food is the Global fundamental requirement for sustaining the overall good health and wellbeing of consumers. There are hundreds of food borne diseases due to which around 600 million consumers become sick and over 420,000 die prematurely per annum. Realizing the fact that Halal food is safe, secure and healthy along with quality and competence, Non – Muslim countries are also demanding Halal food which are in conformity to Islamic values.

Forecasted market revenue of Halal food worldwide from 2018 to 2027 (in billion US dollars) is showing an upward trend over the years.

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Halal certificate is a document that guarantees that product or services are permissible as per Islamic laws and complies fully the Shariah and is suitable for consumption. This usually implies to meat, milk and canned food. Halal meat means that it has been slaughtered as per Islamic law and there is no mixing of pork in it.

Halal certification increases radius of targeted region for the sale of your product or service. You can target 50 million consumers in Europe and round 1.9 billion worldwide. Moreover, there are markets in which only sellers with certificate can sell. If you have Halal certification for ingredients than the producer using these ingredients can easily get Halal certification for this product. If you have Halal certificate, you can put logo on the packaging.

There are many opportunities for the Halal products in the world. Halal is symbol of ethics, healthy lifestyle and sustainable product. So a wider consumer base can be attracted through organic, healthy and vegan production.

South East Asian economies are growing so they have rising demand for Halal food especially packaged food. There was a significant rise in the demand of Halal products with a growth rate of 7% YOY over the period 2015-2019 whereas the global growth rate was 4%.

It is important to mention here that people are fully aware of new trends, benefits of healthier options, enjoy higher incomes and have higher levels of education so have more potential for these Halal products demand in this region.

China has around 2.6 million Muslims living in the northwest China. Now Muslims are moving to other regions also and are fully aware of new Trends and healthy lifestyle. Halal food is getting popularity among Chinese also because of the food safety scandals of various local companies. In China Halal Food Industry is having issues of lack of qualified staff and having financing difficulties. This being a local challenge can be of great benefit to the big companies who are willing to export to China.

Europe is also a growing hub for Halal products since Muslims are increasing in this region. The prime buyer/consumer of these products are Muslims because the rest of the residents are still reluctant to use Halal food but demand for halal products is embracing possibilities. The concept of Halal holidays has become one of the new concept to boost the sales and demand for Halal options. The Boom of Halal sector means entering into the market of almost two billion people.

Based on a report from the United Nations, Islam is the second largest religion after Christianity. UN Statistics show that Muslims around the world are growing at a rate of around 6.4% compared to 1.46% for Christianity. According to the same statistics, one in five persons by birth or geography is a Muslim. Since Muslims have a huge Halal market as they are there to religious principles and are particular about their Halal lifestyle, especially food so prospect for Halal market is enormous.

Muslims represent 23% of the global population or 1.8 billion consumers with an average growth rate of 3% per annum. Muslim population is expected to grow to 35% over the next 20 years, rising from 1.6 billion in 2010 to 2.2 billion by 2030, or 26.4% of the world’s total projected population of 8.3 billion. By 2050 population could grow to 2.6 billion and nearly 30% of the global projected population. Also by 2030, 79 countries are expected to hold 1 million or more as Muslim residents as compared to 72 countries now. (Fleishman Hilardl and Majlis 2011)

In Islamic majority and minority countries throughout Asia, the Middle East, Africa and Europe business activity is escalating, with Islamic trade currently estimated in trillions of dollars. There is now a way of religious fervor among the rising social class of young, highly educated, savvy and affluent Muslims, who embraces an “Islamic contemporary with global lifestyle”. This new generation of Muslims favors western style product and aspires to a modern lifestyle as they become more integrated into the global economy as consumers, employees, travelers, investors, manufacturers, retailers and traders. This has created a worldwide demand for Halal products and services.

Economist Ben Simpfenderfer suggests that the strong cultural and historical links between the Muslims and non-Muslim worlds are starting to come to the fore. He gave example of China that is addressing the Muslim opportunity. (Fleishman Hillard Majlis 2011).

In his book ‘The New Silk Road”, he cites the example of the city of Yiwu where an estimated 200,000 Arab nationals visit the Chinese coastal city every year because it boasts the largest wholesale consumer goods market in China. Besides this Yiwu’s success lies in an open arms approach of making a prayer hall for nearly 10,000 worshippers by the government.

The largest opportunity within the Halal market is undoubtedly food, which is also where the greatest challenge lies. Halal has universally taken as food and is associated with the ritual of slaughter (zabihah).

The main segments of Halal good are diagrammatically shown below, food comprises 61%, pharmaceutical 26%, cosmetics 11% and others 2%.

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The State of the Global Islamic Economy Report 2015/16 estimates that Market size and profile — Global Muslim consumer spending on food & beverage at $1,128 billion (17% of global expenditure): The Report estimates global Muslim spending on food and beverages (F&B) to be $1,128 billion in 2014. The total global F&B spending during the same period is estimated to be $6,755 billion in 2014, making the Muslim food market 16.7% of global expenditure. Based on total food consumption, the top countries with Muslim food consumption are Indonesia ($158 billion), Turkey ($110 billion), Pakistan ($100.5 billion), and Iran ($59 billion) based on 2014 estimates. Comparatively, the collective global Muslim F&B market is larger than the F&B consumption of the top geographical markets in 2014, such as China ($797.8 billion), United States ($741.2 billion), Japan ($367.3 billion) and India ($335.7 billion). Geographically 16% of Muslim food consumption is in non-OIC member countries.

Global Halal Food Challenges And Opportunities
(Thomson Reuters and Dinar Standard 2016)
Serial No Challenges Opportunities
1 To determine which Halal Standard will actually provide market access.Since Halal products are being produced by Govt Organizations, Private Organizations and Independent Halal Certification Bodies (HCB’s), National Standard Bodies, Regional Bodies such as ASEAN, GSO and the EU and the International Bodies such as the SMIIC / OIC initiatives. So confusion is to determine which Halal Standards to be opted for market Access. OIC countries with expertise in Halal Food Production and processing have possibility of developing partnership with Non – OIC countries. China, South Korea and South Africa are already partnering with Malaysia and the UAE to develop their Halal capabilities.
2 The absence of any viable international schemes to accredit Halal Certification bodies (HCB’s) has long been a problem for Halal Industry. Most of the Halal Industry products are produced in Non – Muslim countries and certified by HCB’s that operate with little regulatory oversight. In order to move in the right direction the International Accreditation bodies should be properly considered to avoid unnecessary duplication or competition. An opportunity to develop Tracking technology i-e in order to track Raw Meat and Ingredients to their source.Brazilian Meat Exporting Industries Association (ABIEC) developed a device called the E- Seal that tracks Meat Cargo passing through ports.
3 Difficulty in obtaining Shariah – Compliant Funding.Companies which intend to integrate vertically their Supply Chain face difficulties in obtaining Shariah Compliance Funding. An increased demand for Hormones free Meat. To give due consideration to the consumer’s demand for Hormone free Meat, the UAE super market chain Spinney’s is the first to sell Hormones free Meat.
4 Halal Food exhibits International Standards for Safe, Wholesome, Human food, if producers religiously follow the concept of Halal & Tayyab.
5 There is increased demand for natural and Organic food especially among Muslim Consumers of young Millennial generation.
6 Develop strong brands. The existing brands can be improved by uplifting Product Quality, Marketing, Messaging, Packaging and overall Communication. In this way Brands already can step up their game and Newer ones can differentiate through powerful branding.
7 Investment Opportunities in Halal Food Value Chain Integration.Halal Food Market Companies are usually small but financing vertical integration of the Supply Chain, from slaughtering houses to distributors is an Investment Opportunity that should provide lucrative returns for the Investors as well as develop strong companies in this Space.

 

Going through research literature, these two flow charts have been prepared by the author to have a comprehensive and indepth view of diversified determinants of Halal food market and to get a fairer idea about the Barriers to Dietary and Lifestyle Change.

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The Halal marketplace is emerging as one of the most profitable and influential market arenas in the world food business today. The Halal food market has grown strongly over the past decade and is now worth an estimated US$667 million. Halal food represents close to 20% of the entire global food industry.

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Many food economists posit that the halal food industry will become a major market force in the near future based on four prevalent trends.

Firstly, Islam is now the fastest growing religion in the world thus fueling a global demand for halal products.

Secondly, the increasing trend of consuming halal food products for ethical and safety reasons by non-Muslim consumers.

Third is the rising halal consumer power as a market force in tandem with the growth of the Muslim population and their rising disposable income.

Finally, there is greater awareness among Muslims on the need and necessity to consume only halal food.

The halal market has witnessed a universal shift in the demand and supply chains of halal food products. They are increasingly made available in Western-style grocery stores including supermarkets and hypermarket chains. As the dynamics within the Muslim world change and globalization trends continue to shape consumers’ tastes, habit and spending patterns across the world; it is highly likely that the developing halal markets will have increasingly influential roles in the established markets of the Middle East and Asia particularly by influencing global corporate halal strategies.

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