Why the Halal Food Industry Is Booming
Thursday, November 23rd, 2023
The global halal food market reached US$2,221.3 billion in 2022 and is forecast to have a 11.1% growth rate, reaching US$4.1 trillion by 2028. This is partly due to the pandemic, which has opened up new opportunities in halal food e-commerce and delivery business sectors as well as new food product categories. Furthermore, for non-Muslim consumers, halal food products are fast becoming synonymous with food safety, hygiene and health. Kerry’s Widya Herminingsih, Senior Regulatory Manager, gives us an overview of the opportunities in the halal food industry.
The Growing Influence of Muslim Consumers in the Global Market
Muslims from Asia Pacific make up most of the global Muslim population, consuming up to 90% of halal foods and beverages. Within this segment, the highest demand is for halal meat, poultry and seafood products, all of which constitutes almost 50% of total global market sales. Additionally, halal confectionery, bakery and related products are the fastest growing segment with a forecasted growth of 9% CAGR. (ResearchAndMarkets.com 2023 report)
In 2020, Muslim consumers had a global presence of 1.9 billion, making them one of the fast-growing consumer segments in the world. It is estimated that there will be 2 billion practising Muslims by 2030 and 3 billion by 2060, which will make up around 30% of the global population. The Islamic economy comprises seven sectors — Islamic finance, halal food, modest fashion, media and recreation, Muslim-friendly travel, pharmaceuticals and cosmetics — with halal food being the second biggest sector with a US$1.27 trillion spend by Muslim consumers in 2021. This is projected to hit US$1.6 trillion by 2025.
Global product launches with halal claims jumped by 19% from 2018 to 2020, from 16,936 products to 20,482. Sixty-three percent of these came from Asia, followed by Africa and the Middle East, both of which were in the low double digits (14% and 10%, respectively). Malaysia retains its top spot in the overall Global Islamic Economy Indicator (GIEI) for the ninth consecutive year. Saudi Arabia, United Arab Emirates, Indonesia and Turkey round out the top five nations.
Big players in the food industry are already taking notice of the booming halal food sector. In 2019, Japanese seasoning company Ajinomoto invested US$85 million to build a new halal production line on a 49-acre site in Malaysia, which opened in 2022. In December 2020, Fraser & Neave Holdings (F&N) acquired Malaysian companies Sri Nona Food Industries, Sri Nona Industries and Lee Shun Hing Sauce for US$14.5million. These investments and acquisitions are aimed at expanding halal food product offerings and meeting rising local and global market demand.
Developments in the halal food industry mark the beginning expansion of a potentially huge market. This is fueled by a large, fast-growing and young Muslim population across Muslim-majority countries who are seeking products and services that resonate with their Islamic way of life. According to a study by Pew Research Center, 60% of this population is under 30 years old.
Capturing Consumer Interest With Halal Assurance
Halal foods must not contain pork, alcohol or intoxicants, harmful ingredients, unsanitary elements and poisons. Meat must be slaughtered according to methods prescribed under Islamic law known as Zabihah.
According to Islamic Sharia Law, ‘halal’ means permitted, allowed, authorised or lawful. Halal food refers to food that adheres to the Sharia Law. In contrast, ‘haram’ means forbidden or unlawful, and haram foods are not to be consumed. Attaining halal certification is not simply about using halal raw materials and products, and following Islamic slaughter methods. The halal assurance system is an integrated management scheme that encompasses all processes that include product development, purchasing, production, quality control and warehousing.
In 2021, a halal food lifestyle study was conducted by Mastercard-CrescentRating in Singapore. It revealed that Muslim consumers in the country have the greatest trust of halal assurance in establishments that have halal certification, a Muslim-friendly rating, the halal logo in Arabic or indications of ingredients suitable for Muslims.
Obtaining a halal certification is crucial for food establishments to meet the dietary and religious needs of Muslim consumers, expand their market reach, build trust, and ensure compliance with standards and regulations. It is not only a matter of religious sensitivity but also a smart business strategy in a globalised and diverse marketplace.
A case study in Indonesia reaffirms the importance of a halal certification. At first launch, Korean instant noodle brand Samyang did not have a clear label calling out its pork content on its packaging. Public outrage led to the product being pulled off the shelves, affecting total sales and consumer trust. The company was quick to turn the situation around by immediately reformulating its recipe and getting the product halal certified by the Indonesian Ulema Council (MUI). That, along with the MUI halal logo on the packaging, helped win back consumer trust.
National Halal Regulations Will Push Halal Certification and Global Trade
To meet market needs and further strengthen consumer trust in halal products, countries in the region are adjusting their Islamic economy strategies. For example, Indonesia, which has the largest Muslim population in the world, introduced the Halal Product Law in 2019. Under this law, all consumer products and related services that enter and are traded in the country must be halal-certified. However, haram products including alcohol, pork or pork by-products, blood and meat not slaughtered according to Islamic method, are exempted from this law.
The introduction of this mandatory law has given the government better control and management of Indonesia’s production and trade, such as the integrated halal product codification and trade data system by the end of 2021 which aims to improve traceability and halal logistics to strengthen consumer trust.
Similarly, in Saudi Arabia, the kingdom extended its mandatory halal certification in 2019 to also cover imported chilled and frozen foods, confectionery, long shelf-life products, milk and other dairy products and oils and fats.
In October 2021, Pakistan, the country with the second largest Muslim population in the world, approved new mandates for the Pakistan Halal Authority to promote halal products locally and internationally as a move to enter the global halal market. Even countries outside of the Organization of Islamic Cooperation (OIC) are picking up on the trend, with Singapore, the Philippines and South Korea setting up agreements with OIC countries to explore various partnerships on the import and export of halal products and related services. In the UK, M&S Food launched its own range of Western cuisine halal ready meals.
Growth Opportunities for the Halal Food Industry
The pandemic accelerated growing urgency for countries to be self-sufficient, to develop local and regional production that address food security and supply chain concerns. It also encouraged the growth and innovation of the local halal food industry. Then, there is the rapid digital transformation brought on by Muslim consumers looking for healthy, flavourful and convenient meals that can be delivered. Grocery e-commerce and home deliveries spiked, opening up avenues in halal food and grocery delivery, including halal cloud or ghost kitchens. Jumping on this opportunity is Turkish on-demand delivery service Getir. The company raised US$129 million in Series B funding, US$300 million in Series C funding and US$555 million in series D funding in 2021. This helped the company expand further into Paris, Berlin and select cities in the United States.
Halal-certified plant-based meat and milk are also experiencing a boom. Nestlé opened its pioneer plant-based manufacturing facility in Selangor, Malaysia, in 2021 to cater to the retail and foodservice sectors under its Harvest Gourmet brand. Alcohol-free drinks, which recorded a global 32% increase in new product development between 2018 and 2019, is another area of opportunity. In the Asia Pacific, Middle East and African regions, the low- or no-alcohol beverage market has a projected growth rate of 7% from 2019 to 2025. The trend in the region is driven by health and government regulations, and growth is primarily seen in beer, with the non-alcohol beer market expected to increase by 18.9% between 2014 and 2024.
Adding the natural taste of botanicals — without the presence of alcohol — has long been a challenge for beverage brands. New technological advancements, such as those used in Simply Nature Botanicals, allow for the use of only water (Collection Zero) and vinegar (Collection Zero 2.0) as solvents. These have great solubility and 0% ethanol, making them suitable for inclusion in products with halal and kosher certification. Using vinegar as a solvent also creates a clean label without preservatives and is a cost-effective method to bring out very intense aromatic profiles.
Non-Muslim Consumers Enjoy Halal Food
Because of the stringent regulations in attaining halal certification, halal cuisine has become representative of an assurance of safe, healthy, hygienic and reliable food. Research studies indicate that non-Muslims have a positive perception of halal food products and show significant intentions to buy them. This is because they know halal food is appropriately processed.
According to the 2021/2022 State of the Global Islamic Economy Report by DinarStandard, many Islamic values are gaining momentum outside the Muslim world, with non-Muslim consumers also patronising halal products and services. Thanks to increasing consumer awareness, halal products, services, and brands are becoming more relevant to non-Muslim consumers due to the rise of ethical consumerism that mirror similar values with those of halal products.
Investments in the Islamic economic sectors across both OIC and non-OIC markets grew by 118%, from US$118 billion in 2019 to 2020 to US$25.7 billion in 2020 to 2021, of which 15.5% came from the halal food sector, indicating that the industry remains robust and thriving. Further, the move to adopt uniform halal standards across OIC countries will allow the opportunity to raise the standard of halal food. This can also further strengthen the perception and market share of halal products in the global food trade.
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