Halal is the rules that influence consumption in the Muslim world, directed by the values and beliefs defined in the Quran. It refers to anything considered permissible and lawful.
The global halal market — food and non-food — is estimated to be in excess of $2.3 trillion, with the food sector alone reaching $700 billion annually, says Angelo A. Camillo, Ph.D., associate professor of strategic management in the School of Business at Woodbury University.
In Muslim countries, the halal industry is vital to societal development and economic growth. Global marketers also are strategically promoting the halal industry by targeting geographic clusters with large Muslim populations like France and Italy.
“The primary factor for the rapid expansion of halal is health related,” Camillo says. “Halal industries are emphasizing the sustainability, cleanliness and healthiness of their products.”
Smart Business spoke with Camillo about where this globalization is heading, and how business owners might get involved.
What kinds of products must be halal?
Halal impacts many products and services, although those that impact daily life most are food and beverage. In the Islamic religion, these products must be clean, pure and contaminant-free. For example, Muslims don’t consume pork byproducts, animals contaminated by intoxicants or killed prior to slaughter, or carnivorous animals or birds of prey. Many Muslims cannot take pain relievers manufactured with gelatin made from pigs’ feet and ears.
Some industries directly affected by halal guidelines are agricultural products (plants, animals and derivatives), chemical, health care, cosmetics, personal care, pharmaceutical and medical devices, and financial activities and business transactions.
How are halal products being globalized?
Halal food products produced and consumed locally may have a higher nutritional value, so halal businesses are emphasizing this over culture or religion. However, Islam is the main expansion driver — by 2030, the global Muslim population is expected to grow by 2.19 billion.
Halal producers often make their products on location, leaving insignificant carbon footprints without pesticides, fertilizers or genetically modified organisms. Despite this appeal, non-Muslim consumers may be reluctant to buy halal food products due to the religious implications — a halal-certified Muslim blesses slaughtered animals in the name of Allah.
Who are the industry players?
It’s difficult to obtain true data, as this industry is extremely fragmented. Malaysia appears to be developing as the major halal player, followed by Indonesia and Pakistan. Competition between businesses in these areas, as well as Singapore, New Zealand and Australia, is fierce.
In 2010, the size of the industry in the U.S. was approximately $13.1 billion, compared with Europe at $67 billion, and Asia at $416 billion, according to the Islamic Food and Nutrition Council of America. Many Muslims may be willing to buy strictly kosher meat products, processed according to kosher dietary laws, because that’s the closest thing they can find.
Halal is likely to grow as marketing raises awareness and links halal to sustainability and healthy choices. In the past two years Italy has exploded with halal food products. With a large Muslim population already supplying most of Europe’s organic food, it was a natural fit for companies in every sector to become halal-certified. But the road ahead is bumpy in the U.S. business landscape for halal industries. In addition to non-Muslims’ discomfort with religious implications, there is a lack of trust by Muslims regarding the safe production and distribution of U.S.-made halal products.
What’s the best market entry for U.S. companies?
There are opportunities for profit — as a case in point, Brazil has started producing halal food. Aside from product production, businesses along the supply chain can tap into this market in areas such as research and development, finance, marketing, support service, hospitality, life sciences, agro-based industries or food additives/enhancers manufacturing. However, the best entry for a U.S. company is overseas halal markets that produce products and services locally. ●
Insights Executive Education is brought to you by Woodbury University