Growth and technology: Food companies singled out as significant force in generating halal industry development
According to the State of the Global Islamic Economy Report 2019/20 by Salaam Gateway, food companies in the region were encouraged to ‘emulate the successes’ of Brazilian food conglomerate BRF, which set up a company focused on producing halal products dubbed One Foods Holdings in 2017.
One Foods has control over 45% of the poultry market in Saudi Arabia, the United Arab Emirates, Kuwait, Qatar and Oman, according to Reuters.
“Food conglomerates can emulate the successes of BRF by developing robust halal propositions, exploring setting up operations in Organisation of Islamic Cooperation (OIC) countries, and providing Muslim consumers with their global brands, particularly in large consumer markets such as Indonesia and Saudi Arabia,” said the report authors.
Of the 56 countries that are members of the OIC, 26 are from Asia and the Middle East.
The report authors also cited Nestle as a successful case study analogue, saying that it had generated ‘substantial revenues’ from halal food operations such as in Muslim-majority countries Malaysia and Indonesia.
“[If food companies take advantage of this opportunity], potential outcomes from this include [the formation of] distinct halal entities, either partly or fully owned by leading multinationals, which will be publicly listed and generate billions in revenue, [advancing the halal industry],” they said.
Another proposition was for food businesses to more substantially support firms with a focus on halal technology, with an eye on the long-term gains to be attained from this.
“[Halal] tech propositions can cater to a global ethical audience, for instance, through offering organic or vegan propositions, or solving a broader problem that goes beyond halal,” said the authors.
“[For instance], for the need for transparency across the food value chain, a solution offered by OneAgrix and WhatsHalal among others [is of much value to the industry].”
Unfortunately, due to fragmentation and a lack of awareness, it was acknowledged that significant challenges still lie ahead in these suggestions being translated into reality.
“Many [food and beverage] corporates don’t fully realize the scale of the opportunity,” said the authors.
“The halal opportunity remains largely under the radar despite success stories, due to limited openness by companies about their experiences, compounded by fears of negative public opinion in non-OIC countries.
“[The risk is real too], as halal remains a fragmented market and, to a large extent, one addressed mainly by local or regional SMEs.
“Halal food entrepreneurs [still] struggle to raise investments, with high failure rates and limited propositions [because] dedicated support from well-established incubators for halal entrepreneurs remains very limited.”
Government and others
In addition to F&B companies, it was also emphasised that governments have a significant role to play in halal industry development.
“Following the lead of Malaysia, UAE and Indonesia, it is imperative to develop comprehensive national strategies on how to address the global halal food trade opportunity, with an important development role for sovereign wealth funds,” said the authors.
“Multi-billion dollar investments by halal food companies [have been seen] in Malaysia’s halal zones, with multiple similar initiatives now across the UAE, Indonesia, Philippines and Singapore.”
No mention was made, however, of the current confusion surrounding Indonesia’s attempt to change up its halal certification system, which started with enforcement on the food and beverage industry on October 1 this year.
It was however acknowledged that there is a ‘lack of alignment on halal standards globally’, with special mentions made of a ‘lack of coordination’ for accreditation efforts.
“Substantial national differences remain on halal food standards and regulations, limiting global alignment and market access,” the authors concluded.