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December 2011

New Zealand Trade and Enterprise (NZTE) has identified halal as an emerging global trend that holds great promise particularly for New Zealand’s food and beverage as well as cosmetics and beauty products.

NZTE recommends companies stay up to date with this rapidly changing global market said to be worth US$2.3 trillion. Food products comprise 61 percent, pharmaceutical products 26 percent and cosmetics 11 percent.

At the World Halal Forum held in Kuala Lumpur in 2011, there was a strong emphasis on the convergence of the halal goods and services industry and the Islamic finance into an integrated halal economy.

The potential Muslim market is huge and growing: Islam is the second largest religion worldwide, with 1.57 billion followers, or 23 percent of the global population. Many of the world’s Muslims live in rapidly-growing emerging markets such as Indonesia and India.

What is halal?

The concept of halal – defined by the Quran as ‘allowed’, ‘permitted’ or ‘lawful’ – has slowly become accepted as a consumer lifestyle choice encompassing not only religious practices and food, but also finance, non-food products and logistics.

Halal provides a set of laws and guiding principles, and separates out those animals that are prohibited ‘haram’ and permitted ‘halal’, as well as outlining methods of slaughtering, prohibits consuming blood or blood products and intoxicants (e.g. alcohol) etc.

The common understanding of halal is still limited to religious needs and only applicable to Muslims. It is considered a given in Turkey and the Middle East, although consumers in this region generally do not place much importance on specific halal branding, certification or country of origin.

Halal certification

At present there is no international consensus on halal standards and certification. As a result, the International Halal Integrity Alliance (IHIA) was set up in 2007 to work with industry, research institutions and other organisations to develop an internationally recognised standard.

Ten “modules” that make up the standard are under various stages of development including topics such as food service, logistics, animal welfare and animal slaughter and processing. Once the standard is complete, the IHIA will seek endorsement by the Organisation of Islamic States.

Discussions are still underway to get this standard approved.

In the meantime, oversight of halal certification is often carried out by religious bodies in each market and represents that country’s individual expression of Islamic beliefs. As such, getting agreement between countries on a global halal standard has been very difficult.

In New Zealand, the New Zealand Ministry of Agriculture and Forestry (MAF) has oversight of companies exporting halal meat products and, in November 2010, released the Animal Products (Overseas Market Access requirements for Halal Assurance) Amendment Notice 2010.

MAF also certifies approved halal organisations in New Zealand who offer assessment, approval and certification services, with the approval of the importing country.

New Zealand and Malaysia signed a new halal meat arrangement in December 2010 negotiated between MAF (formerly the NZ Food Safety Authority) and Malaysia’s Department of Veterinary Services (DVS) and Malaysia’s Department of Islamic Development (JAKIM). This provides a framework to reconcile Malaysia’s halal laws with New Zealand’s animal welfare requirements, including that all halal meat products in New Zealand are derived from animals stunned prior to slaughter.

A unified halal standard across the Gulf Cooperation Council (GCC) made up of United Arab Emirates, Kuwait, Oman, Bahrain, Qatar and Saudi Arabia may also be eventually developed.

The halal industry in Southeast Asia

Halal is slowly but surely gaining attention in Southeast Asia. Halal-certified food and beverage products and ingredients provide a definite marketing advantage, particularly in Malaysia, Brunei and Indonesia. Halal health food also appears to be an up and coming sector in both countries.

In Malaysia and Brunei there’s rigorous application of the halal concept in regulations. In both countries the authenticity and quality of halal food is under government control.

Malaysia has been aggressively promoting itself as the leader in the global halal industry. Malaysia’s halal initiatives, including certification, have had a flow-through effect on halal development globally. To achieve this, it has established a ‘one-stop’ shop – the Halal Industry Development Corporation (www.hdcglobal.com) and a Halal Knowledge Centre (www.knowledge.hdcglobal.com), to position Malaysia as the reference and knowledge centre for halal. Malaysia also organises the world’s largest halal conference, hosted by the IHIA, the World Halal Forum, which ran for its sixth year in 2011.

Malaysia has designed one of its two largest sea ports as halal (‘Northpoint’), supported by a local halal shipping services (MISC). Malaysia has also now adopted a halal pharmaceutical standard (MS2424:2010).

The halal industry in Europe

Rapid growth in halal consumer segments in Europe has seen halal become a mainstream market segment among the region’s estimated 30 million Muslims. Major retailers, picking up on halal trends, are establishing highly visible and dedicated halal areas in stores.

There is no government-recognised halal certification requirement in Europe, which means consumers often doubt the genuineness of the halal logo.

Turkey is leading some work on halal standards across Europe and, in April 2009, its Good Auditing and Certification Research Association (GIMDES) started issuing halal certificates for Turkish food manufacturers.

They offer a wider selection of halal certified food and beverage products with French retailers sourcing Western Hemisphere halal food. Growth is most noticeable in France and London, particularly in food and beverages.

The trend is predominantly driven by second and third generation Muslims proud of their cultural and religious roots who want to differentiate themselves from older generations. Consumption is heavily influenced by their forefathers’ countries of origin.

Around 80 percent of halal food products in Europe are still sold through neighbourhood ethnic stores and butcher shops. Although meat constitutes the bulk of halal food, most that is sold in butcher shops is not branded or certified.

Halal finance

Another opportunity for New Zealand companies in the Middle East is the growth in Islamic finance. The Islamic finance market currently accounts for only 1 percent of total global financial market, but is growing at 15 percent per year.

Islamic funding is also a major source of investment across the Muslim world. For example, Islamic banks from the Middle East are expanding their operations to Malaysia and Singapore. HSBC also offers Shariah compliant products, as does Lloyds TSB in Britain and the United Kingdom, France and Luxembourg have all passed laws to ensure tax neutrality for Islamic finance.

The recent global financial crisis has increased interest in Islamic finance though there have also been calls to ‘demystify it’ and to emphasis its links with other forms of alternative finance.

Muslim consumer demographics

Halal is considered a given in Turkey and the Middle East, while it is growing strongly in Europe in countries such as France and Germany.

Middle East

  • With 99.9 percent Muslim population, and 90 percent of Turks practising Islam at some level, halal food is considered a given in Turkey’s food and beverage industry.
  • Halal branding and certification in the Middle East has little meaning as halal is a prerequisite for all imported food and food is deemed halal at its source. Halal certification is only required for meat and meat products which are mainly imported from Brazil.

Southeast Asia

  • Indonesia has the largest Muslim population in the world with Muslims making up 88 percent of the total population of 245 million. Halal is considered a given. Key markets include Malaysia, Brunei and Indonesia.
  • More than 60 percent of Malaysia’s population of 24 million is Muslim and most foods and beverages sold in Malaysia are halal certified. While halal is not seen as a given, it is definitely a marketing advantage.
  • The halal market in Singapore is considered an important and integral part of the food and beverage sector. Singapore’s Muslim population of around 650,000 constitutes about 15 percent of the total population.
  • Muslims constitute about 4.6 percent of Thailand’s population of 65 million and are concentrated in the southern provinces. Although the Thai Government has some ambitions to expand halal good exports between 2010 to 2014 (www.halalfocus.net), anecdotal evidence suggests that halal is not considered to be a marketing advantage in Thailand.

Europe

  • The Muslim population in Europe is rising rapidly largely due to the higher population growth of Muslim families compared to the average national growth, Migration has also contributed. According to the Halal Journal, the total number of Muslims in Europe (including the Russian Federation) reached 54.7 million in 2010.
  • The European halal food market size was expected to reach USD 63.9 billion in 2010 (around 10.5 percent of the total global halal food market, based on data from the World Bank, United Nations and other Muslim population databases).
  • As a result more multi-national corporations are getting involved in halal food. Retailers such as Tesco in the United Kingdom and Carrefour and Groupe Casino in France, target Muslim customers through halal-specific shelf space in their hypermarkets.
  • Increasingly, retailers and manufacturers are publicly promoting halal products using mass media.
  • Other global brands are promoting halal products. Halal products account for around 13 percent of Nestle’s total production and growing. This includes tea, coffee, infant formula, baby food and breakfast cereals. Nestle reports that total sales from Muslim countries in 2008 was valued at USD$51 million and is growing at 12 percent per annum.
  • Although the halal food and beverage segment is rapidly growing in the modern retail sector, the traditional retail channels (i.e. halal butchers) still account for 80 percent of the distribution of halal food and beverage products in Europe.
  • Despite the large size of the European halal market, it remains fragmented, in part because of the various ethnic backgrounds of the different Muslim groups. The complexity is compounded by the various European political groups, the influence of animal welfare groups, and the lack of official halal certification bodies which means most consumers buy their halal meat from trusted local butchers.
  • The United Kingdom has a Muslim population of 1.6 million (or 2.8 percent of the total population). Most are immigrants from South Asia, particularly Pakistan, Bangladesh and India.
  • France has the highest Muslim population of five to seven million, approximately 10 percent of its total population. The halal market in France was valued at USD 17 billion in 2009. Nearly three quarters of French Muslims are originally from Algeria, Morocco and Tunisia.
  • Germany has a Muslim population of 3.5 million, approximately 4 percent of the total population. More than 90 percent are Turkish immigrants. The Muslim population has been growing over the last five years.

Health, pharmaceutical and cosmetic industries

The migration of halal certification from the traditional food and beverage sector to other consumer sectors is most likely to occur in the health sector, which encompasses health and food supplements.

Research suggests that the influence of halal in the cosmetic and beauty sector is minimal although a halal skincare market is also developing in Malaysia – e.g. perfumes without alcohol, skincare without animal based ingredients etc.

Challenges for New Zealand companies

NZTE believes there are challenges for New Zealand companies wanting to participate in halal markets including:

  • uncertainty whether the concept can reach beyond religious and racial boundaries and become a mainstream trend
  • the lack of a globally-recognised halal standard, resulting in higher operational costs and tedious certification processes
  • the market potential still limited to Muslims because halal certification is not a meaningful standard for non-Muslims
  • the purchasing power of Muslims in markets like Europe is still relatively low combined with their preference to buy low-cost bulk foods
  • marketing of halal products can be challenging and costly due to the various schools of thoughts within Islam. Non-Muslim sensitivities must also be taken into account if the product is meant for a wider market.

Further information

For further information on the Animal Products (Overseas Market Access requirements for Halal Assurance) Notice 2010 on MAF’s website: http://www.foodsafety.govt.nz/elibrary/industry/halal-notices/

International Halal Integrity Alliance – www.ihialliance.org

Halal Journal – www.halaljournal.com

Demystifying Islamic Finance – https://www.zaidibrahim.com/wp-content/uploads/2010/05/Demystifying-Islamic-Finance-soft-copy.pdf

 

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