With a captive market of nearly 2 billion people or about 20 per cent of world population, the halal food sector did not only ride out the global financial crisis confidently, but has also posted substantial annual average growth of 10 per cent – making it a lucrative $580 billion (Dh2.1 trillion) industry.
While the double-digit growth may be impressive considering the current economic climate, industry sources believe that the global halal food sector could register further growth if a wider product range is made available to consumers and volumes of supplies, particularly of halal meat products, are increased.
“We’ve continually seen strong growth in the sector of roughly 10 per cent per annum. [But further growth] has been restricted because products have not been available,” says Alex Andarakis, Chief Executive Officer of Dubai-based retailer Al Islami Foods.
In the United States alone, the ratio of halal products to its Jewish counterpart (kosher) is 1:86, prompting American-Muslims to spend $16bn a year on kosher food items because halal products are not on the shelves, according to Imarat Consultants, a Kuala Lumpur-based business consultancy firm specialising in the halal market.
Andarakis believes that as halal product range expands, stronger growth could be seen in the industry.
“The halal food sector has shown great resilience and is growing at a substantial rate. One of the reasons is that it has a huge audience. Islam has the youngest population profile of any religious sects and has perhaps the most prosperous population in the world,” he said.
Euromonitor International in a report published in April also noted that the demand for halal meat has witnessed a rapid rise, but growth in the industry has been stifled by “supply shortages and retailing bottlenecks brought about by ethical controversies and practical constraints.”
Statistics compiled between 2004 and 2009 by the market research firm showed that fresh meat volume sales in the Middle East and Africa region increased by 17 per cent, slightly higher than the global sales average of 15 per cent.
The UAE has recorded the highest increase of 32 per cent in fresh halal meat sales, followed by Jordan at 27 per cent, Egypt at 22 per cent and Saudi Arabia at 21 per cent.
“In other countries where Muslims make up an important minority, ie between 3 and 10 per cent of the population, like France, Germany and the UK, the rising demand for halal meat manifests itself on several fronts, and particularly in the consumer foodservice channel,” wrote Emily Woon, head of Euromonitor’s Fresh Food Research.
She added that Middle Eastern full-service and fast food restaurants are often very popular in European countries, and they tend to offer halal items on their menu even though their client base may be mostly non-Muslim.
Retail clientele that is hard to ignore
According to a research conducted by global management consultancy firm AT Kearney, the size and demographics of the Muslim population make it a significant customer base whose needs are worth addressing.
“Over the past 10 years, populations have surged. Asia's 1 billion Muslims increased by 12 per cent and a quarter of them are in the high growth areas of India and China. The European Muslim population has grown 140 per cent in a decade and is continuing to outpace that of non-Muslims. Approximately 30 million Muslims make their homes in the Russian Federation,” the report said.
With the rise in numbers also comes a subsequent increase in purchasing power, and with that follows preferences in products and services, AT Kearney noted.
This is particularly significant in petrodollar-rich regions such as the GCC and the Middle East where consumers with high disposable income are more discerning about their purchases.
Standardisation, other challenges hit halal sector
The halal food sector remains very much a niche market that industry sources believe have a huge potential to penetrate mainstream retail segment if existing standardisation concerns are also properly addressed.
“It’s very important that if we want to compete as a body, we need to have very clear common standards that applies globally,” says Andarakis.
Euromonitor’s Woon agrees that the absence of widely recognised certification bodies and standards, specifically for halal meat, pose a serious problem to the industry.
“[It is an issue] that needs to be tackled promptly. The core conundrum, however, is set to remain: how to increase production volumes, lower prices and increase availability of halal meat while complying with labour intensive slaughter practices, which defy mechanisation,” she commented.
Woon added that halal meat retailers also have to address issues related to a rising global demand that remains unmet and “will continue to be stifled by supply shortages.”
Consider also reading:
GCC to consume $43.8bn of halal food products
Global halal standard plausible: Malaysia
Singapore sees over 10pct F&B growth in GCC
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