Chapter 2 – THE HALAL SECTOR
THE HALAL SECTOR The halal market has for many years been uncharted territory. In terms of market research, trade data and analysis, and the preferences and spending habits of 1.6 billion consumers, the halal marketplace is still a very young, continually evolving commercial arena. It is, in effect, a new market paradigm that crosses geographic, cultural and even religious boundaries. Halal food has been traded and consumed for more than 1,400 years. However, the first general use of the term ‘global halal market’ can be traced back to 2004, when Malaysia published its first official Halal standard MS1500:2004, which was launched by Prime Minister Tun Abdullah Badawi at MIHAS. This event brought together, for the first time, buyers and sellers of halal-certified products from around the world and demonstrated the reality of a global halal market. In 2006, the inaugural World Halal Forum in Kuala Lumpur gathered industry leaders, including senior representatives from the world’s largest food companies such as Nestlé, McDonald’s and Tesco. Major international news media organizations covered this event, which gave rise to the term ‘halal industry’. The reality of the potential of halal as a defining parameter for 25% of the global population started to become evident.
How large is the halal market? Before attempting to assess the size and the future potential of the halal market, it must first be acknowledged that there are no specific mechanisms to track the trade or consumption of halal products as such. It must also be borne in mind that many halal products – such as fruit and vegetables, grains, nuts, oils and pulses – are not certified halal, as there is no need or demand for this. There is no specific system to capture trade of halal products, such as HS codes, though certain countries have their own methods of capturing this data. In Malaysia, this is done through collaboration among various authorities such as customs, JAKIM and Standards Malaysia. However, these figures do not refer exclusively to halal-certified products and will include other general food products as well as commodities such as palm oil. Halal certification becomes an important issue with meat and poultry products and other manufactured goods across all F&B sectors, and to a lesser extent with cosmetics and pharmaceuticals. The range of products that are being certified is also expanding, in line with increased consumer
awareness and growing recognition that halal certification of existing products can open up new markets. Trade figures for food and beverages, excluding pork, alcohol and tobacco-related products, have been used for the purposes of this report. Similarly, production in Muslimmajority countries, as well as their imports and exports, can generally be assumed to be halal. On this basis, some relatively accurate, and certainly indicative, assessments of the size and future potential of the halal market can be derived. In the context of the rest of this report, these can provide some useful guidance for anyone already involved in, or considering entering, this fast-growing marketplace. A report commissioned by the Dubai government, and researched and written by Thompson Reuters and DinarStandard2, valued the halal food and beverage market at US$ 1.37 trillion in 2014. That represented 18.2% of the total global F&B market and was a 6.2% increase over 2013 figures. While the halal market is spread across various countries and cultures, if it is viewed as a single collective market of US$ 1.37 trillion, Muslim F&B consumption is greater than that of China (US$ 857 billion), the United States (US$ 768 billion), Japan (US$ 445 billion) and India (US$ 434 billion)3. Accordingly, despite its geographic fragmentation and inconsistent regulations, halal represents a very significant market that cannot be ignored. In addition, the youthful population of the Muslim world – with 60% under age 30 – indicates that demand for halal products and services is likely to continue its upward growth curve and become an increasingly influential market over the next decade.
What are the key regions? In terms of assessing the overall potential size of the Muslim consumer market, the Middle East and North Africa (MENA) region spends the most on food and beverages: US$ 441 billion. The region is followed by South Asia (US$ 238 billion), East Asia (US$ 230 billion), Central Asia (US$ 218 billion) and sub-Saharan Africa (US$ 127 billion)4. Significantly, the Gulf Cooperation Council (GCC), with an F&B expenditure of US$ 93 billion, represents 21% of the MENA total and is generally viewed as the key market in the region. Given that the GCC, both as a collective and among individual members, is actively pursuing a more prominent role in the halal ecosystem, we can expect to see the GCC becoming more influential in the halal market in the coming years.