Halal is the future. Many big and small businesses have been turning to halal products over the past few years to meet the burgeoning demand of the growing Muslim population. The increasing spending power and their mix of faith and consumerism drive the trend.
Halal food is a dietary standard Muslims follow worldwide. The halal certification process ensures food is free from prohibited ingredients and is prepared according to Islamic guidelines.
For example, Saudi Arabia has stringent regulations and does not allow the entry of food products that have not been slaughtered based on the Islamic process.
On a macro level, the halal F&B industry is a mainstay for 1.8 billion Muslims and increasing numbers of non-Muslims worldwide. The global halal food market is projected to reach a value of $2.55 trillion by 2024, with the Middle East as one of the significant regions driving growth.
As more Muslims seek halal-certified food products, GCC-based F&B brands are adapting to expand into this specialized market.
According to the State of the Global Islamic Economy Report 2020-21, Muslim spending on food was estimated at $1.17 trillion. In 2019, the halal economy accounted for around $2.02 trillion of consumer spending.
However, Farrelly and Mitchell, F&B Consultants, state that the GCC imports over $50 billion of halal products, with the UAE importing $20 billion of the share.
GAPS IN THE SUPPLY CHAIN
Despite the scale of this market, there is a gap in the global halal food supply chain. Finding credible solutions requires a deeper understanding of the industry.
In stark contrast with non-Muslim food producers that have successfully scaled into well-regulated giants, halal F&B production is populated by a small business community that often needs to meet halal certification requirements.
In simple terms, the global halal production sector has yet to mature and has been burdened by decades of serious under-investment.
Of the $343 billion in annual mergers and acquisitions activity in global F&B between 2018-19, the halal industry accounted for a tiny proportion at just $0.6 billion. For the investment community, there is an immediate opportunity. Given the global Muslim population is projected to grow by approximately 40% to 2.2 billion between 2010 and 2030, according to Pew Research, demand continues on an inevitable growth path.
Monique Naval, Senior Analyst for Euromonitor International, the world’s leading independent provider of strategic market research, comments the top reasons for taking a halal diet in the UAE are: religious or faith, feeling healthier, and recommendations from family and friends.
Touching upon certification, Naval says, “In the absence of a global standard for halal certification, brands must identify a credible regulatory authority and label type. This is necessary to assure consumers and business partners that the brand validates its religious commitments.”
“The proportion of religious labeled food and drinks globally within categories can also help brands size potential future demand. There is significant opportunity for expansion in categories where halal penetration is currently low, such as snacks and baked goods,” she adds.
Transformation of the global halal supply chain is overdue, but a new era of robust, scaled production and regulation is within grasp, according to Haroon Latif, Managing Director of Orchard Way Capital, a US investment firm uniquely focused on capturing the unrealized value of a fragmented halal food market.
“By comparison, 1.8 billion Muslims rely on small-scale producers, with North America playing a pivotal role. Key halal brands in North America, like Crescent Foods and Al Safa, barely exceed $50 million in revenue. Addressing this paradox is both urgent and laden with opportunity. A more focused and ‘hands-on’ investment in the halal food sector is an idea whose time has come, and the inherent benefits to the GCC go far beyond the immediate problem of authentic provenance.”
A NATURAL ADVANTAGE
Outside the halal supply chain, Middle Eastern F&B restaurant brands have a natural advantage in catering to the global halal market, as many traditional dishes are already halal-certified. Furthermore, many brands are opening new branches and franchises in countries outside of the GCC while finding greater success within the region.
Al Baik is a highly popular chain of restaurants founded in Saudi Arabia and is expanding with increased popularity in the UAE and Qatar. The chicken is sourced from leading producers of chilled and frozen foods that maintain slaughterhouses specifically for the production of halal products.
Looking ahead, the company has already started accepting limited licensing requests for those individuals who share the same common goals.
Dubai-based SLAW’s Ali Yazdi is passionate about his brand, starting with expanding into India, Saudi Arabia, Qatar, Kuwait, and more. In addition to being a halal brand, Ali prioritizes local resources and Emirati flavors.
One of the burgers on his menu is made from UAE’s hammour fish sourced from local markets. Yazdi says, “As a brand serving halal food, I recognize there are Muslims worldwide, and it’s important to understand that halal food isn’t always easily found globally. A halal version can attract Muslims in any country or city.”
“My dream is to serve good, quality food worldwide , not only in Dubai. We always bring brands from out of the country to the UAE. Why don’t we get a brand from the UAE to somewhere else?”
Al Tazaj has established itself across the Middle East with over 100 venues. However, it started in 1989 as a simple chicken restaurant in Mecca. This halal chain has had locations in Bahrain, Jordan, Kuwait, Lebanon, Morocco, Oman, Qatar, Iraq, Yemen, and the US since 1996.
Similarly, Operation: Falafel, which offers a range of halal-certified menu items, has grown with outlets in the UAE, KSA, the UK, and the US.
Masters in contemporary Arabic street food flavors, Manhal Naser says, “Middle Eastern food can be found worldwide with varied recipes and ingredients. My partner and I noticed traditional Middle Eastern cuisine morphing into modern ingredient combinations. For us, hummus, falafel, and shawarma are food that we grew up on. We valued the authenticity of this cuisine and noticed that no established brand in the market offered fresh, authentic Middle Eastern street food.”
The region’s economy stands to benefit from the efforts of halal F&B transformation. It is one of the few opportunities to capture enormous value by consolidating a fragmented global industry ripe for growth.
Middle Eastern F&B brands can easily adapt to the global halal market by offering halal-certified vegan and vegetarian options, leveraging technology to enhance the dining experience, and expanding their presence in international markets.
As the demand for halal-certified food continues to grow, these brands are well-positioned to capitalize on the trend and cater to diverse customers worldwide.
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