Halal on the Rise

| 07/08/2009 | Reply

Halal on the rise

MANUFACTURERS and businessmen are scrambling to satisfy the
craving of Muslims, as the global demand for Halal-certified products
escalates.

“Halal” does not refer only to a food category. The Arabic term
refers to any act or object that is considered permissible under the
standards of Islam, and the apparent religious product branding has now
evolved into a very lucrative global market.

The world market for Halal food products is estimated to be around
$630 billion and is still rapidly growing at approximately 20% annually.

The tremendous growth has been seen over the past few years. At the
start of the new millennium there was already an increase in the
Islamic population, which primarily caused the growth on the demand for
Islam-acceptable food. (Muslims reportedly comprise more than 20% of
the world population.)

In 2004, the Halal food market was already estimated to be worth around $580 billion.

The increase in the purchasing power of Muslims, especially in
industrialized nations, also contributed to the global rise of this
market. The Muslim community in Europe, in particular, has better
purchasing power relative to Asian and African Islamic states. This is
reflected in their food preference which demonstrate a demand for
western food qualified for their standards.

Prior to the demand boost, the source of Halal food products were primarily the Muslim countries.

However, the population growth has offset the growth of production.

This resulted in an opportunity which non-Muslim countries gladly
captured. Currently, it is estimated that 85% of the Halal food is
produced from non-Muslim countries. Australia and New Zealand are a
case in point: they are known to be one of leading suppliers of Halal
meat since 2003.

By the end of the year, the anticipated value of the Halal food industry is pegged at over $640 billion.

Furthermore, the rise of Halal market is considered by the Asian
Leadership and Strategy Institute as one of the latest trends and
opportunities together with the Internet, social networking, and viral
marketing.

Demand is greater than the Muslim population

Halal food is the standard food for Muslims, and it can be a choice
for non-Muslims as well. The enormous market size of the Halal food
industry may also be, in fact, due to the patronage of non-Muslims.

Halal food products are perceived to be hygienic and healthy. In
marketing, qualifying to the Halal standards can now be considered as a
strategy to widen the target market.

Without the Halal certification, food businesses can only target the
usual consumers, while obtaining the certification will add at least
two market segments: the Muslim consumers and the health-conscious
clients. According to the Department of Science and Technology (DoST),
there are seven billion non-Muslim consumers who prefer healthy and
wholesome food which is similar to Halal food products.

This operation and marketing strategy is already applied by some
fast-food chains abroad. Kentucky Fried Chicken (KFC) decided to make
eight of its branches in London serve only Halal menu. The fast-food
chain promised to maintain the same “finger-lickin’ good chicken” while
tapping a wider range of customers through the Halal-approved strategy.
Prior to KFC, Domino’s Pizza has already introduced its Halal menu in
its Birmingham branch. This is very risky move for the pizza chain
because some of the famous pizza favorites include bacon and sausage.
Similar to KFC, Domino’s Pizza claimed the decision to be a measure to
improve the business considering the high population of Muslims.

In the Philippine market, where a majority are Roman Catholic,
Halal-certified food products are very visible as well. Supermarkets
and grocery stores in the country also carry an increasing number of
Halal-certified products such as toothpaste, instant coffee, canned
goods, catsup, and instant noodles. Although a majority of these
products are manufactured by international brands, there are also some
Halal-approved local brands (such as Swift of the RFM Corp.)

This industry has also proven its profitability. During the years
2004 to 2005 alone, Halal product distributor Al Islami Foods in the
Middle East experienced a staggering 25% sales growth rate registering
$41 million.

Jobs for Filipino Muslims, export boost for the Philippines

As one of the countries with a considerable Muslim population (given
that the country is home to 18-20 million Muslims, with the majority in
Mindanao), the Philippines is in a favorable position to grab a hold of
the worldwide Halal industry.

On the other hand, the country has not fully exploited its potential.

As early as 2001 the country has been trying to develop the domestic
production of Halal products by creating a certification and regulatory
board and by later luring foreign countries, particularly those in the
Middle East and Southeast Asia.

Until today, such negotiations are still pursued by the government.

One in particular is the dialogue with Kuwait and Brunei. The
negotiation involves the Halal Economic Zone and Halal poultry farm
both in Mindanao, a proposal that reportedly sums Php3.04 billion.

This particular thrust can engage a total of 56,000 Filipino Muslims
in new jobs, farming, and entrepreneurship. It can also increase the
country’s exports by as much as $200 million annually. This presents
good opportunities for the export industry, considering its decline due
to the global economic turmoil. Furthermore, the global demand for
Halal products remains stable and increasing in the face of the
economic meltdown.

Mindanao possesses great advantages to be a competitive Halal
product manufacturer due to its natural endowments and environment. The
region is located outside the typhoon infested area of the country,
making it suitable for agricultural activities that can provide the raw
materials for production.

Spillover effects to other sectors can also be realized with the
development of the Halal industry in the region; for instance, domestic
tourism in Mindanao can be improved with a development of food industry
suitable to their culture and flavor.

Conclusion

The increasing world Muslim population is posting many
opportunities. Globalization and trade have the main contributions to
the exploitation of these opportunities. With the integration of
economies, there is no need to self-produce everything as there are
lesser barriers that prevent two or more countries from trading.

In the case of the Halal products, Muslim countries need not produce
their entire food requirement. Countries that can produce at relatively
lower costs can freely trade with countries with the demand for Halal
products. In this arrangement, both countries are mutually benefiting
from each other.

For the Philippines to grab a piece of the cake, combination of
political will, private sector involvement, and trade openness in
needed. This industry can revive the export sector of the country. If
the country is able to capture the domestic market and penetrate the
international marketplace, it can boost not only the economy of the
country but the quality of life of the Filipino Muslims in the Mindanao
region.


Sources:

Pakistan, Malaysia Join Hands For Major Share in World Halal market. Bernama Malaysian National News Agency. July 31, 2009.http://www.bernama.com/bernama/v5/newsindex.php?id=429352

Halal Initiative in the Philippines gets Boost. http://region12.dost.gov.ph/index.php?option=com_content&task=view&id=1&Itemid=1

Halal Logistics. Nadia Khan. July 30, 2009. http://www.arabiansupplychain.com/article-385-special_report_halal_logistics/

RP in initial talkswith Kuwait, Brunei on Halal exports. DA-Press Office. April 8, 2009. http://www.gov.ph/index2.php?option=com_content&do_pdf=1&id=23423

Fast food chain KFC converts eight London restaurants into Halal-only menu. Debra Killalea. Mail Online. May 6, 2009. HYPERLINK http://www.dailymail.co.uk/news/article-1177969/Fast-food-chain-KFC-converts-London-restaurants-halal-menu.html

Category: Asia, Food Manufacturing

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