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Last Updated: Sep 25th, 2006 - 11:36:04 |
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In an emerging market, what is really needed is an ability to read the signs. In today’s fast-evolving Halal market, statistics are scarce and by the time you see them, it may be too late. |
Statistics are like the footprints in the desert, which tell you that the caravan has passed through. Like tracks in the rear-view mirror, statistics tell you what has already happened. In today’s fast-evolving Halal market, statistics are scarce and by the time you see them, it may be too late.
In an emerging market, what is really needed is an ability to read the signs. If you are reading the signs correctly, the statistics, when they finally arrive, just give you the finer details of a picture that you already recognise.
We are consistently being reminded now that Halal is an integrated farm-to-fork process. It is not simply a matter of a Shariah-compliant slaughtering process, although that remains the market’s essential core and foundation. As the market expands and develops, all the links in the Halal value-chain are expanding and developing correspondingly; any ‘missing links’ will get put in place, and become integrated into the process.
Who is driving?
So what are the drivers that will push the growth of the Halal sector? Let us take a look at some of the forces at work in the retail sector, and see how they affect the entire Halal value-chain.
Europe, at its widest definition (that includes Russia) is home to around 50 million Muslims. European retailing trends are generally driven by Western Europe, home to some 20 million Muslims. The food retailing giants of Europe and the UK are locked into the dynamics of a constant struggle for better margins, bigger market share and higher profits. The bottom-line decisions they make often have repercussions that can be felt around the world.
Over the past decade, the retail giants have watched the hard discount stores, where the shopper can save up to 25% on the weekly shopping trolley, consistently taking market share away from them. As a result, they have turned their gaze to the neighbourhood convenience stores. Once the domain of the European Mom and Pop, these stores have become the face of immigrant – and predominantly Muslim – Europe. Pakistani, Kashmiri, Indian, Bangladeshi, Algerian, Moroccan, Turkish, these family-run businesses now sit at the centre the multi-billion Halal retail sector in the UK and Europe.
However, with 98% of the shopping population already going into the retail chains every week, the supermarket giants have turned their attention to the needs of the Halal customer. Why are they not buying Halal products from the super/hypermarkets? Primarily, because the products are not on offer.
Just as a comparison, look at the kosher market in the USA. With a Jewish population of less than 6 million, there were a staggering 86,000 kosher-certified products on the shelves in 2004, up 14% from 2002. According to a recent Mintel survey, only 15% of the kosher customers are dedicated Jews running a kosher household. 55% of those surveyed purchase kosher because they believe it to be healthier and safer than regular products. 38% are vegetarian, 24% want dairy-free.
As a Mintel spokesperson commented, kosher ‘seems to have equal “bragging rights” with organic and natural.’ The kosher market in the US market alone is worth US$ 190 billion annually.
Most significantly, from our point of view, 16% of the kosher market is made up of Muslim consumers. With only 1,000 Halal-certified products available, most of which are not on the mainstream supermarket shelves, many Muslims are simply buying kosher because they have no other choice. Would they buy the Halal equivalent if it were available? Oh yes, indeed they would, to the tune of around 30 billion dollars.
But let’s go back to Europe.
Value-Chain-Reaction
With the average western European spending US$ 1,750 a year on food, the EU Halal food market is potentially worth some US$ 35 billion annually. Once the retail giants tuned into Halal, the rules of the market shifted. The old order ended, and a new era was ushered in.
Being risk-averse, the big retailers want Halal certified goods, so naturally they came to look in South East Asia, home to the most respected Halal certification agencies in the market, and where you can find, in any average supermarket, not just Halal meat, but all manner of food and non-food items that are certified Halal.
And, being risk-averse, the retail giants are looking for a secure and verifiable supply-chain. It is not enough to know that it was Halal at source, and on the shelf. It must be Halal all along the way, in the packaging, handling, storage, road, sea and air transportation. And so Halal logistics is born.
Halal logistics demands standards and Shariah-compliant parameters, which in turn pushes the various standards developing agencies to include the logistics sector into the Halal standard.
Furthermore, in order for the entire Halal industry to take its place in the global market, the actual process of Halal-compliance has started to undergo a seismic shift. As Halal evolves to fulfill its potential as an ISO-equivalent benchmark, the entire process of Halal certification will itself have to comply with food industry norms, whereby the audit and the certification process are separated.
The days of the Halal audit being under the total control of religious authorities is coming to an end. While the issuance of Halal certificates can, and indeed must, remain within their authority, the audit process itself will inevitably become the domain of the industry professionals. Halal-compliance will become a transparent systems-driven procedure, like HACCP, GMP, BRC or EU compliance. And it does not end here.
A professional audit will in all likelihood create a market demand for the resulting certificate and logo to incorporate sufficient security features to fend off counterfeit and fraud, which will in turn change the way the packaging industry handles Halal products.
As the supermarkets like to carry in the region of 40% of their product line as ‘own label’ products, as they offer better margins, there will also be growth in the Halal contract-manufacturing sector.
With cheaper materials and labour, plus better certification procedures, the opportunities for contract manufacturing in the Halal sector in South East Asia are likely to increase considerably over the next few years as the retail giants build up their own Halal lines. Furthermore, Halal products manufactured in Asia will not only find their way onto local shelves, they will also make their way into branches around the world, including the Halal sections of selected outlets in Europe.
So, yes, decisions made by food retailers in Paris and London will have a knock-on effect in Kuala Lumpur, Bangkok and Singapore, in Melbourne, Beijing, Istanbul and Dubai. They may actually change the way the Halal industry operates.
Raw materials from dedicated Halal farms will travel to regional Halal Food Parks with centralised state-of-the-art Halal certified processing, packaging and cold storage facilities. Products will then be shipped via integrated Halal logistics providers to Halal DistriPark around the world, and finally sold in Halal sections of major retails chains.
In the relatively near future, a full product range of audited and certified Halal goods will be securely tracked and traced from one end of the supply-chain to the other. We will, as a convenient by-product, finally get some accurate Halal market statistics.
By the time you get to read those, many things will have already happened.
The writer welcomes feedback and can be contacted at hamid@kasehdia.com.
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