The Strategist

World Halal Market Will Grow to $ 2.6 Trillion by 2020

02/03/2016 - 15:22

The global market for halal products and relevant to Muslim tradition services will grow to $ 2.6 trillion in 2020. The West is showing Interest in the sector: Nestlé has become a leader in the halal products production.

Christopher Paquette via flickr
Christopher Paquette via flickr
The global market for halal food and Muslim services (excluding services of Islamic banking) will be growing by 6.5% per year in the coming years, and by 2020, its volume will reach $ 2.6 trillion, according to the report on the Islamic global economy prepared by Thomson Reuters and the consulting company DinarStandard and ordered by the government of Dubai.

Volume of halal-related products market (production of food corresponding to rules of Islam, banning the use of, among other things, pork, carrion and blood) should grow by nearly half, that is, $ 1.585 trillion by 2020. In 2014, it amounted to $ 1.13 trillion, more than that of the Chinese or American food market ($ 798 billion and $ 741 billion, respectively). After three years, share of halal products will account for 21.2% of the food production’s total cost, as of a previous 2014 report.

The largest Muslim country in the world is Indonesia (population at the end of 2015 - 257.9 million people). The local halal products market was $ 158 billion in 2014. In Turkey, it reached $ 110 billion, Pakistan - $ 100.5 billion, in Egypt - $ 75, 5 billion.

The market of halal products has long outgrown scope of the local national markets of Muslim countries. The largest producer of halal products in the world is a Malaysian subsidiary of Nestlé Malaysia with a turnover of $ 1.1 billion (accounting data for 2014). The company employs 5 thousand people and works on the Malaysian market since 1912, when the country was still a British colony. The subsidiary produces more than 300 kinds of halal products, has been using halal labeling since 1994 on its own initiative, and created its own Halal quality center. Last year, Nestlé announced launch of production of coffee and cooking in Dubai in 2017, the volume of investments amounted to $ 120 million.

Producing halal products attracts investors from Brazil, France, South Africa and South Korea. So, in 2015, the British division of the largest wholesale supplier A.F. Blakemore & Son Ltd signed a contract with the government-owned Brunei Ghanim International to supply the UK with halal products under Bruneihalal brand. Retailers Carrefour and Tesco have started selling halal products at some of their restaurants and Malaysian halal fast food network Marrybrown is growing its overseas business.

Dubai was established Halal and Islamic economic hub, with an international exhibition of halal products. According to Saudi Gazette, about 800 manufacturing companies, resulting in the same data report for Thomson Reuters in 2014, should attend the 2016 event. Last year, the number of participants was less than a hundred, which indicates the growing demand, as "the largest local, regional and international Halal food manufacturers are exploring the field of new opportunities and investment", said senior vice president of the Dubai International Trade Center Trixie LohMirmand.

Halal market is not limited by the production; strictly speaking, the word "halal" can be applied to any aspect of life. Thus, Thomson Reuters estimated the global market of clothing, following the norms of the Islamic dress code, at $ 230 billion in 2014. The market for halal cosmetics and medicines reached $ 129 billion, a Muslim specific niche in the entertainment industry - $ 179 billion.

Halal tourism is gaining momentum, primarily gastronomic. The share of Islamic tourism not associated with costly pilgrimages (hajj and umrah) accounted for 11% of the entire tourism industry, the report said. The authors estimate the market volume at $ 230 billion. By 2020, it should reach $ 233 billion. This leads to the development of specific Islamic infrastructure. "For example, the tourism segment includes [organization] air travel, during which no pork and alcohol are offered, prayers are declared during the flight and religious broadcasts are available for the passengers," - head of Al Masah Capital Management Shailesh Dash told The Khaleej Times .