Several non-Muslim countries export halal food products to Muslim countries as well as to Muslim minority communities living in Europe, North and South America, Australia and New Zealand. The major non-Muslim countries that export halal food include Australia, New Zealand, Brazil, the United States and some European nations.
Mohamed Abd El-Wahab had never given a passing thought to halal certification. ‘I have worked in the food industry all my life. In Egypt nobody is interested in halal certificates,’ said Abd El-Wahab, Export Manager of the Greenland Group for Food Industries. ‘Egyptian food is by definition halal.’ That was two years ago. Since Abd El-Wahab’s participation in ITC’s Enhancing Arab Capacity for Trade (EnACT) programme, Greenland has quadrupled its sales to Malaysia, a country that operates one of the strictest halal labelling schemes in the world. The programme has also opened up several new markets, including Azerbaijan, Indonesia and Singapore. Sales of halallabelled products now make up a quarter of the exports of Greenland, Egypt’s largest dairy company. ‘This growth is all thanks to certification,’ Abd El-Wahab said. Egypt had traditionally exported halal products to North American and European markets. These markets are growing, but are much smaller than markets in South Asia, Southeast Asia and the Middle East. It is estimated that there are over 1.7 billion customers for halal products worldwide, an increasing number of them middle class with growing purchasing power. Yet, Egyptian exporters have secured only a small share of the Asian halal market so far, due in part to a lack of halal certification, branding and packaging. The Egyptian food processing sector strengthened its presence in the Malaysian market following the ITC project, increasing exports by 30% since 2011, according to figures from the country’s Food Export Council. ‘This is just the start,’ said Manal Karim, the Food Export Council’s Executive Director. ‘We expect that an increasing number of food processers will succeed in the market in Malaysia and the wider region following halal certification.’
Source: ITC (2015). Connecting Markets, Improving Lives. Geneva, ITC.
Available from http://www.intracen.org/uploadedFiles/intracen.org/Content/About_ITC/Corporate_Documents/
Sugar, confectionery and cocoa
Global trade in these halal products reached US$ 93 billion in 2014, an increase of 111% over the decade. Leading exporters include Brazil (US$ 9.9 billion), Germany (US$ 8.1 billion), Netherlands (US$ 6.5 billion), Côte d’Ivoire (US$ 5.3 billion), Belgium (US$ 4.8 billion), United States (US$ 4.3 billion), France (US$ 4.1 billion), Ghana (US$ 3 billion), Thailand (US$ 3 billion) and Mexico (US$ 2.3 billion). Both Ghana and Thailand showed above-average growth rates over the decade with increases of 245% and 236%, respectively.
Major importing countries for these products in 2014 were the United States (US$ 9 billion), Germany (US$ 6.7 billion), Netherlands (US$ 4.9 billion), United Kingdom (US$ 4.7 billion), France (US$ 4.6 billion), Belgium (US$ 3.6 billion), Italy (US$ 2.6 billion), China (US$ 2.6 billion), Canada (US$ 2.6 billion) and Malaysia (US$ 2.4 billion). Countries with above-average growth rates for these imports over the past decade are China at 323% and Malaysia at 215%
Increasing global awareness of potential of the halal market by governments, corporations and financial institutions • Recognition of halal as genuine engine of economic growth • Continued strong growth across all halal market sectors • Halal industry initiatives across MENA region strengthen the market • Appearance of reliable trade and research data • Synergy between various sub-sectors, e.g. food, travel, digital • Young entrepreneurs and start-ups entering halal sectors • More countries developing national halal campaigns • Halal foods playing a more prominent role in global sporting events, e.g. the Olympics
Lack of clear leadership to coordinate regional initiatives • Confusion over differences in standards • No viable accreditation scheme to regulate halal certification bodies (HCBs) • Conflicts of interest among HCBs • Evident fraud and rumours undermine market integrity • Lack of funding for start-ups and SMEs • Insufficient awareness among financial institutions • Regional competition hinders mutual recognition initiatives • Negative reports of animal welfare issues • Insufficient training and human resource development programmes • Halal as non-tariff barrier hinders trade • Weakness among many Organisation of Islamic Cooperation member states • Unclear or opaque labelling issues
Creation of a viable global regulatory framework • Investment opportunities in niche food and personal care markets • Global promotional campaign to increase halal awareness • Marketing based on ‘tayyib’ and eco-ethical values • Increase use of effective social media campaigns • Acquisitions to gain market share or create global halal brand • Vertical integration to ensure halal compliant supply chain • More focused scientific research on the benefits of halal foods • Accessing global markets via online platforms • Providing accurate and well-researched market data • Incubation of SMEs and start-ups • Crowdfunding and other alternative investment platforms
War, violence and social upheaval in the Middle East • Acts of terrorism fuel Islamophobia in the West • Opposition from vocal animal welfare groups, especially against live animal exports and unstunned slaughter • Non-Muslim consumer opposition to unlabelled halal food • Banning unstunned slaughter, e.g. in Denmark • Scandals caused by poor management and operational methods • Fake halal logos on non-halal products • Proliferation of online videos highlighting bad practices
Standards and certification
The choice of standards that a manufacturer chooses to follow, and the certification body that will issue the certificate of compliance, must be very carefully considered, especially for export products. There is a wide choice of standards, and the importing country will have specific conditions on the standards to be followed, as well as which HCBs it considers to be competent and trustworthy. This topic is addressed in the previous chapter of this report, but it must be emphasized that this issue is in a process of change and evolution, and attention must be paid to ensuring that the right choices are made. Manufacturers that are serious about succeeding in the halal sector must monitor the progress of the discussions and decisions about halal compliance that are being made at national, regional and international levels to ensure that they stay ahead of changes. Exporters do not want to find themselves, as has happened, with full containers ready to ship, only to discover that the contents are no longer considered halal by the importing authority.
As has been noted, there is a great deal of debate, discussion and disagreement about acceptable methods of slaughter. Most halal slaughter lines in Muslim-minority countries are simply shared with, or adapted from, mainstream use, and the process is often viewed in terms of doing the minimum to gain access to the market. Non-dedicated lines are more prone to some form of contamination, such as pork DNA resulting from an insufficient wash-down. Dedicated processing plants, such as in Australia and New Zealand, clearly stand out as a good benchmark. There are also indications, such as in the Malaysian standards, that dedicated lines will be necessary for compliance in the future. Hand slaughter, stunning and the use of mechanical blades are hotly debated among industry professionals, certifiers and the general public. Markets vary regarding their requirements, from the compliance perspective as well as consumer demand, and these are matters that a manufacturer must understand and factor into the production process. Certifiers can always be found for almost any method, but global trends are moving away from mechanical slaughter, which is increasingly considered unacceptable for halal compliance. Consumers, when asked, tend to favour unstunned hand slaughter, but this is not always feasible for a variety of reasons, especially for poultry. This is another issue to which manufacturers must pay close attention, to ensure they make choices that are both cost-effective and being acceptable to the target markets.
Processing and manufacturing
The success of dedicated halal manufacturers, such as the multinational Nestlé Malaysia, or independents like Crescent Foods in the United States, underscores the advantages of a dedicated halal facility. Close attention to details such as the integrity of all ingredients (including flavouring, colouring and additives, and even the glue used in packaging) gives manufacturers a competitive edge. In-house training to develop expertise and understanding of the complexities inherent in the halal market are similarly important elements for success. With the growing complexity of supply chains, ensuring end-to-end halal integrity is not simple. These matters are best addressed from the ground up, not just handled in retrospect. Like safety measures, halal is the responsibility of the manufacturer, and should be built in, not added on. For a multinational, this may involve training suppliers to ensure they maintain the same levels of halal integrity that the brand owner expects to deliver to the end user. While product quality naturally varies according to price and market positioning, the levels of halal integrity expected by the market are increasing across the board – for the highend as well as the discount product.
Policymakers around the world are discussing labelling, and there is a full spectrum of opinion. There are calls in Europe for labels to disclose the slaughter method, including whether stunning was used, either pre- or post-cut. Both the Jewish and the Muslim communities have objected to this on the grounds of religious discrimination. Non-Muslim consumer groups say they want to avoid religious slaughter on animal
Box 3: Halal baby food – Morocco as pioneer ‘When we moved from France to Morocco in 2004, our objective was to create a range of baby products that was halal,’ said Philippe Karim Charot and Bruno Montier, the founders of Agro-Food Industrie in Marrakesh. They took this step after being told by Muslim friends in France about the difficulties they faced in feeding their children by respecting their faith, they said: ‘At that time, there were no halal products available, especially in the baby-food section, in the supermarkets, hence, the decision for us to get into the halal baby-food sector was evident. We started production in our first factory in 2006. We had a range of small baby pots with meat, fish, fruits and vegetable-based foods.’ Charot and Montier said they invested in the latest technology and now adhere to strict national and global standards. VitaMeal Baby products strictly follow all European norms for baby food and international standards, such as ISO 22000, International Food Standard (IFS) version 6 and recognized halal certifications, they said. Their company was the first to receive the official Moroccan certification by IMANOR (Institut Marocain de Normalisation), they said. Charot recalled his first meeting with one of the hypermarkets in Morocco: ‘The purchasing manager was very appreciative of us investing into this sector in Morocco, but she did not understand the concept of halal in baby food,’ he said. ‘According to her, all products in her store were obviously halal. Then, I explained to her about the preservatives used in the majority of processed foods that principally come from pork gelatine. Once convinced, she immediately gave us space on their store shelves.’ Agro-Food Industrie has come a long way since. ‘We are pleased to see so many babies fed with our food in Morocco,’ Charot and Montier said. ‘This venture has also expanded our exports to 25 countries, in Europe, Africa, Asia and the Middle East. To meet this demand, we opened a second factory in 2013 where we produce cereals and milk powder for babies. We aim to increase our exports and reach at least all the 57 OIC countries.’
TRADE AND INVESTMENT SUPPORT INSTITUTITIONS
Building institutional capacity for a national halal industry is key to success. Trade and investment support institutions (TISIs) need to think and act outside their normal patterns of activity, and be more proactive in understanding and engaging with the halal marketplace. There are now enough examples to provide insights and fresh ideas for TISIs to apply to their own situations. Given the continued expansion of the halal market, both in size and complexity, and with the crossover potential into the mainstream as well as into other eco-ethical markets, there is a significant window of opportunity. TISIs can make a valuable contribution to the growth of their national economies by developing expertise within the halal market, and using this to nurture SMEs, entrepreneurial startups and even assist major corporations looking for a pivot into the halal sector. In general, trade and investment support institutions play a critical role in garnering political support, facilitating exports and supporting SMEs and startups, as well as providing market intelligence and training. The well-known 2006 study by the World Bank concluded that every dollar spent on export promotion led, on average, to a US$ 40 increase in exports. With regard to the emerging halal sectors, TISIs have a more sharply defined role, one that requires a high degree of insight into the dynamics of the halal marketplace, as well as recognizing their own countries’ strengths and weaknesses in order to provide practical and result-oriented assistance to the private sector. The level of government buy-in and understanding of the halal sector is critical. A TISI is unlikely to have success in promoting halal trade if the government does not see it as a viable market. While the track record over the past decade has gone a long way to demonstrate the potential of the halal sectors to make a significant contribution to the national economy, policymakers must still have some vision to recognize the potential power of the halal ecosystem. It is important to have employees who are not just welltrained in the halal sector, but who also understand the practical realities of commerce. Public sector jobs tend to attract people who have opted not to go into business themselves, and who consequently lack a practical understanding of running a business and have even less understanding of the halal sector. A welltrained team with a good grasp of the commercial realities of the halal ecosystem, its challenges and opportunities, is critical for a successful TISI, and will enable them to provide a real competitive edge for companies in the halal F&B sector.
The primary role of a TISI is to promote and facilitate trade, and to find effective ways to expose companies to potential buyers. Trade shows are a well-established and proven arena for this, and halal food and beverage trade shows have gained a recognized foothold in the emerging halal marketplace over the past decade. While initiatives such as providing support for companies to exhibit together in a national pavilion are useful, much more can be done to take advantage of the gathering of buyers and sellers. For example, the Malaysia External Trade Development Corporation, (MATRADE) is a good example of a pro-active TISI engaged in the halal sector. Over a 10-year period, MATRADE has collaborated, and more recently taken ownership, of the Malaysian International Halal Showcase, (MIHAS), one of the most influential halal-only trade shows. Part of the success of MIHAS is due to MATRADE’s policy of flying in buyers to attend the expo under incoming buying missions (IBMs). The MIHAS 2014 IBM programme attracted 370 foreign companies with 532 representatives from 41 countries. Over a two-day period, a total of 2,942 business meetings were conducted with the participation of 471 Malaysian companies, which generated total sales of RM 477.2 million. Major products sourced by importers during these business meetings were prepared food products, beverages, palm oil products, agricultural produce, pharmaceuticals, toiletries and cosmetics. Added to the general sales generated by the expo of RM 655.8 million, the overall total for MIHAS 2015 was RM1.1 billion (US$ 289 million), an impressive figure for a halal trade event. About 43% of the total sales were derived from MATRADE’s IBM programme.
Matrade, Malaysia’s national trade promotion agency, has a well-recognized track record as a proactive trade support institution and has been instrumental in positioning the country as a trading nation. In 2004, former Prime Minster Tun Abdullah Badawi announced his aim to make Malaysia an international halal hub. Matrade took up the challenge and now has now over a decade of experience promoting and nurturing Malaysia’s halal sector. The Malaysian International Halal Showcase (MIHAS), the world’s first halal-only trade event, was started as a private sector initiative by Muhammad Shukri Abdullah in 2004. MIHAS has been a sell-out event with over 500 exhibitors in its inaugural year and every year since. Matrade actively supported, and later took ownership of MIHAS. Matrade’s initiation of the Incoming Buying Missions programme has been a key component of MIHAS’ continuing success. The 12th annual event held in spring 2015 was attended by 528 exhibitors from 21 countries, and attracted 23,107 trade visitors from the halal sectors of 67 countries. Matrade hosted 500 trade buyers and arranged business-matching sessions with exhibitors, which resulted in immediate and negotiated sales of US$ 260 million. Over the past decade or so, MIHAS has generated an estimated US$ 2.1 billion in sales. MIHAS has triggered similar expos all over the world, and remains a fixed date in the calendars of many halal market stakeholders.
supported, and later took ownership of MIHAS. Matrade’s initiation of the Incoming Buying Missions programme has been a key component of MIHAS’ continuing success. The 12th annual event held in spring 2015 was attended by 528 exhibitors from 21 countries, and attracted 23,107 trade visitors from the halal sectors of 67 countries. Matrade hosted 500 trade buyers and arranged business-matching sessions with exhibitors, which resulted in immediate and negotiated sales of US$ 260 million. Over the past decade or so, MIHAS has generated an estimated US$ 2.1 billion in sales. MIHAS has triggered similar expos all over the world, and remains a fixed date in the calendars of many halal market stakeholders.
TRAINING AND HUMAN RESOURCE DEVELOPMENT
The growth of the halal sectors over the past decade has created opportunities for TISIs from developing countries, or those just entering the halal markets, to learn from the experience of others. There are now clear examples of useful strategies to develop halal as an export-revenue generator. Developing training sessions for halal sector stakeholders is critical for success. As the halal sector is still relatively young as a market parameter, and at times confusing, TISIs must be able to guide companies towards their target markets with the right products and services. Some inhouse expertise and market intelligence, even at beginner or intermediate levels, can be an important catalyst for future success. TISIs can gear this to the sectors in their own country that show the most promising potential to succeed in the halal markets. Malaysia’s HDC, in conjunction with JAKIM and other relevant agencies, has designed and conducted programmes for SMEs in the halal sector, with roadshows that travel around the country offering training and raising awareness of the opportunities halal has to offer. HDC has also developed an online knowledge base providing useful information that similarly contributes to the creation of a well-informed halal sector. Some major corporations, such as Nestlé Malaysia, have participated in these training programmes, in part as a corporate social-responsibility initiative, but also as a way to train suppliers for the ingredients and raw materials required for their own halal manufacturing processes. A knowledgeable and well-trained supply chain is a distinct advantage for a large manufacturer, especially in a market sector that still has many unknowns and variables to contend with.
Creating a national food ‘brand’ can also be an effective tool for developing the halal food industry and building a receptive market for national produce and flavours. For example, Malaysia has established a solid reputation for halal-standards development and certification. This has been more instrumental in giving the country a leadership role in the halal sector than its food production. By giving priority to their export products to Muslim-majority markets, Australia and New Zealand have both developed national brands based on the quality of their red meat exports. The Australian halal symbol that is stamped on all halal exports is owned by the government, and is not simply the logo of an HCB, as is the case in most other countries. This gives added authority to its halal compliance, and builds the reputation of the national brand. As part of efforts to diversify its economy, Brunei Darussalam has developed a range of products that are packaged under its own ‘Brunei Halal’ brand, building on its reputation for stringent application of Halal standards. These products are now appearing on UK supermarket shelves. Thailand has taken a slightly different approach that has certainly reaped rewards. By promoting its national cuisine overseas through the ‘Kitchen of the World’ programme, Thailand has built a market for its food and the ingredients used to prepare it. Thai food can be found all over the world, and its distinctive taste has grown steadily in popularity.
LuLu Group International opened its first Lulu Hypermarket in Dubai in 2000 with the vision of becoming a global retail brand and a preferred employer to their multi-ethnic employees. Currently, as the biggest retail chain in the Middle East and one of the largest in Asia, it operates 117 stores employing more than 30,000 people across the Gulf Cooperation Region, Yemen, Egypt and India. It is regarded as a retail pioneer constantly setting new benchmarks for the industry. LuLu Group’s latest plans include beginning operations in both Malaysia and Indonesia. Through large initial investments in both countries, LuLu Group plans to introduce its unique concept of halal-only hypermarkets, which will start opening in 2016. ‘With a population of over 29 million, Malaysia needs quality halal-only hypermarkets. We will be the first to operate 100% halal hypermarkets there,’ said Yusuff Ali M.A., LuLu Group’s Managing Director. With initial investments to reach US$ 200 million for the first five Malaysian hypermarkets, LuLu Group has the support of the government-run federal land development authority (Felda), which will help build the new outlets. LuLu will in turn market local ‘Felda Best’ products and other halal products in these new stores and others in the Middle East, which is expected to give a boost to the halal SME industry in Malaysia. The next step will be to introduce its halal food concept to Indonesia. With an initial investment of US$ 300 million for the first phase, LuLu plans to open 15 hypermarkets by the end of 2017. In addition to the capital city of Jakarta, Lulu intends to open hypermarkets in Bandung, Solo, Semarang, Surabaya and Yogyakarta. ‘We also plan to set up contract farming to ensure a continuous supply of high-quality farm produce and to support the Indonesian agriculture sector,’ Yusuff Ali M.A. announced. He made the announcement to Indonesian President Joko Widodo during his visit to a LuLu hypermarket in Abu Dhabi that was holding an exhibition of Indonesian food exports.