4 Reasons the Halal Food Industry is Booming

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.

According to ResearchAndMarkets.com’s 2023 report, Muslims from Asia Pacific make up most of the global Muslim population and consume up to 90% of halal foods and beverages. The highest demand is for halal meat, poultry and seafood products, which constitute almost 50% of total global market sales. The report also identified halal confectionery, bakery and related products as the fastest growing segment with a forecasted growth of 9% CAGR.

Big players in the food industry are beginning to take 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$14.5 million. 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, fueled by a large, fast-growing and young Muslim population across Muslim-majority countries who are looking for products and services aligned with their Islamic way of life. According to a study by Pew Research Center, 60% of this population is under 30 years old.

Halal assurance is key to capturing consumer interest

Halal means permitted, allowed, authorised or lawful, according to Islamic Sharia Law, and halal food refers to food that adheres to this law. By contrast, haram means forbidden or unlawful, and haram foods are not to be consumed. Attaining halal certification is not only about using halal raw materials or products and Islamic slaughter methods. The halal assurance system is an integrated management system that encompasses all processes including product development, purchasing, production, quality control and warehousing.

A 2021 halal food lifestyle study conducted by Mastercard-CrescentRating in Singapore 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.

A case study in Indonesia reaffirms these findings. 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 shelfs, 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 drive 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 at 207 million people — introduced the Halal Product Law in 2019, where all consumer products and related services that enter and are traded in the country must be halal-certified. There are exceptions to the law, such as the allowance of haram products including alcohol, pork or pork by-products, blood and meat not slaughtered according to Islamic method.

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.

Opportunity for halal food-related apps, cloud kitchens and new product categories

COVID-19 disrupted the halal food supply chain, but it also opened up various new opportunities in the space, First, there is growing urgency for countries to be self-sufficient and develop local and regional production which can address food security and supply chain concerns as well as encourage 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 to help the company expand further into Paris, Berlin and select cities in the United States. There’s also great interest in halal-food related apps. For example, delivery startup Jahez in Saudi Arabia raised US$36 million for its commission-free halal food ordering website, DeliverDXB, which launched in Dubai March of 2020.

Halal-certified plant-based meat and milk are also experiencing a boom. In UAE, food manufacturer Al Islami Foods expanded its portfolio by introducing a preservative-free plant-based beef burger and frozen paratha (flatbread) in 2021. Closer to home, 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 APMEA, 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. Ethanol has traditionally been used in combination with water for botanical extraction, and although it is removed via distillation later, around 0.5% ethanol remains in the final extract.

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. In addition, using vinegar as a solvent creates a clean label without preservatives and is a cost-effective method to bring out very intense aromatic profiles.

Botanical sources of flavour have great potential with more yet to be explored and these innovations will help brands break the perception that alcohol-free beverages lack taste. While Collection Zero focuses on fresh aromatic profiles, Collection Zero 2.0 delivers complex aromatic profiles. Both offer single distillates such as rosebud, passion fruit, coffee and turmeric, as well as fusion distillates which can be tailored to suit specific local and regional tastes.

Halal food appeals to non-Muslim consumers

The rise of the ethical consumer has attracted even non-Muslim consumers to halal brands and products, as factors such as diseases and food security concerns drive demand for healthier options.

Because of the stringent regulations in attaining halal certification, halal cuisine has evolved from being a religious dietary choice to an assurance of safe, healthy, hygienic and reliable food. Various research studies indicate that non-Muslims have a positive perception of halal food products and show significant intentions to buy them as they know halal food is appropriately processed.

These market studies and sentiments are further reflected on-ground as having universal appeal. According to the 2021/2022 State of the Global Islamic Economy Report by DinarStandard, many of the 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. The move to adopt uniform halal standards across OIC countries will allow them the opportunity to raise the standard of halal food and further strengthen the perception and market share of halal products in the global food trade. Additionally, 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, signaling that the industry remains robust and thriving.

Courtesy: Kerry Digest