According to forecasts, the halal food market should reach a value of 2.5 trillion dollars by 2019, equal to 21.2% of the global food expenditure. The leap is substantial, given that this sector of the food industry was worth 795 billion in 2014. The estimate comes from the “Global Islamic Economy Report” commissioned by the Dubai Government and signed by Thompson Reuters and Strategic Dinar Standard Research. Mintel adds that so far 7% of the products launched globally have carried a halal claim, up from 4% of food products launched in 2012. Between 2012 and 2016, there’s been a 12% increase in the proportion of food products launched globally carrying a halal claim. Of all food categories, the chocolate confectionery market has seen the greatest rise in halal claims: between 2011 and 2015, there was a 208% rise in the number of chocolate products launched globally, followed by desserts and ice-cream (203%) and bakery (183%). To fully understand the ongoing change, some growth factors must be taken into account. First of all, some structure variables are impacting on the offer. The productive investment in the industry is increasing: Nestlé, for example, counts 151 halal factories from Malaysia to Pakistan, whereas Unilever has recently unveiled plans to become the halal hub for Southeast Asia and Australia through its recently opened halal-certified plant in the Philippines. But also a country like Singapore, where less than 2% of land is available for agriculture, has ambition in the halal food production, trading and re-export: of the 8,4 billion of food imports in 2014, 75% has been exported to neighboring countries. Whereas new testing technologies for products have been developed by France, Malaysia and the UAE, Dubai and Malaysia are investing to play an increasingly important role in the islamic economy.
Trust the label
Halal certification is another major factor driving sector growth. Decades ago, halal certification was provided by individuals and by marketers, exporters certifying themselves. Consequently, there have been incidents where food products were marketed as halal food, but were later found to have failed to meet halal requirements. The need for halal certification by authorized bodies is strong and the certification requirements have contributed to an increase of the demand and the consumption of genuine halal food products. Halal compliance of a product, in fact, not only dictates the use of halal raw materials, but also the proper way of handling, storing, warehousing and transporting raw materials and finished products. For instance, halal food cannot be transported, stored and displayed next to haram food, like pork, alcohol and tobacco, and the retailer must provide a separate cashier. Since the global halal food market is still highly unregulated, the emergence of accreditation agencies is facilitating the supply of halal food products primarily in the Western world where the majority of halal foods are produced. Accreditation agencies would help in the logistics and the supply chain management system, by tracking and tracing procedures for the transportation of halal goods across the world.
The impact of the demographics
Sales volumes are only one part of the story: the halal food has the demographics on its side. In the US, the 3,3 millions of Muslim are projected to grow to 8,1 millions by 2050 and, in the next decade, they will surpass Jews as the largest non-Christian religious group in the country, says Pew Research Center. If the richest markets are Indonesia, with a turnover of 190 billion dollars, Turkey with 168 and Pakistan with 97 (data 2013), the novelty is represented by a higher demand for quality food. While Malaysia, United Arab Emirates and Australia are paying growing attention to the food safety, some countries – United Arab Emirates, Maldives, Spain, Japan and the Philippines – are investing in the production. Furthermore, in countries with declining birth rate the Muslim community is sustaining the population of consumers. In the UK, the percentage of Muslims among the under five years old is now almost twice as high as in the general population, with the community’s growth occurring at the same time as a wider decline in birth rates, contributing to relieve the pressure on the baby food and drink market.
A cultural consumption
With the added value of being considered healthier, ethical and with less additives, the halal food begins to gain consensus even outside the cultural sphere of belonging. In the US, halal occupies a small, but rapidly growing niche and the potential market is wider than that of practitioners. The eco-conscious chain Whole Foods Market, one of the pioneers of the halal food, ranks it among its fastest growing categories, with double-digit sales growth in each of the past five years. In an interview with Bloomberg, Adnan Durrani, founder of the specialty food and ready to eat brand Saffran Road, refers that 80% of the customers does not buy its label for religious reasons. The market research institute Nielsen reports that in the first eight months of last year halal food sales grew by 7%, while they were almost zero in 2013, and in the grocery and convenience stores sales have reached 1,9 billion dollars in the twelve months through August 2016, equal to a 15% increase on 2012. Overall, the projected sales from restaurants to supermarkets total twenty billion, according to the Islamic Food and Nutrition Council of America. In reality, the “halal revolution” had had a humble start: the street carts of New York serving halal food have contributed to the trend growth. The Halal Guys, for example, is now going from a street cart business to open 300 restaurants across the US.
Shopping on the go
The tourism industry is waking up to the growing spending power of the Muslim travelers in Europe and Asia. Muslim travel is expected to be a 220 billion market by 2020, according to a recent report by Mastercard and CrescentRating, fueled by the growth of emerging economies such as Indonesia and Malaysia. Halal tourism growth is also a driver for food and beverage sales and hospitality: it now weighs 11.6% on global travel and vacation expenses and is expected to be worth 238 billion dollars by 2019. With the expansion of e-commerce businesses, there is a huge potential for vendors in the market to increase their profitability. Currently, more and more customers prefer to shop online and pay for their orders using credit cards, which help them avoid time-consuming journeys to shops and billing queues. This trend has encouraged numerous companies to focus on internet-savvy customers and venture into this new retail format for halal food, whereas other producers exploit the opportunity presented by the booming fast food and takeaway food markets as an alternative to home-cooked meals.
