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Global Market Growth: Surging Demand For Halal Products In Saudi Arabia

RIYADH: The expansion of halal pharmaceuticals, beauty products, and even athletic attire is driving an economic upturn that is extending well beyond Saudi Arabia, and the broader Middle Eastern region.

The number of products launched worldwide that have been certified halal increased by 19 percent between 2018 and 2020, rising from over 16,000 products to more than 20,000.

Approximately 63 percent of these goods have been identified as originating from Asia, with Africa and the Middle East as subsequent sources.

According to Frost and Sullivan, a marketing research firm based in the United States, the global halal market is experiencing rapid growth and could achieve a staggering worth of $4.96 trillion by the year 2030.

This demonstrates that individuals who perceive "halal" solely as a series of Islamic regulations concerning meat are overlooking a domain that has yet to reach its full capacity for expansion.

Halal is a term originating from the Arabic language that signifies something as being "acceptable" or "in accordance with the law."

According to the laws stated in Islam and mentioned in the Holy Quran, the phrase encompasses both products and services that are considered suitable for Muslims.

Halal goods are commonly recognized for their exclusion of pork and are produced using a particular approach to slaughter. This technique necessitates the throat of the animal being cut, with the act carried out exclusively by a Muslim. Additionally, these products are devoid of any alcohol content.

The antonym of halal is haram, which conveys the notion of "prohibited." Presently, regulatory authorities exist that grant certifications to companies, confirming that their products are genuinely produced in compliance with halal protocols.

According to the Islamic Development Bank's acting chief product and partnership officer, the halal sector was worth $1.27 trillion in 2021 and is expected to grow to $1.67 trillion by 2025. He emphasized that the food industry contributes the most to this overall valuation.

As per Frost and Sullivan, an American market research firm, the halal economy on a global scale is experiencing rapid growth and holds the possibility of reaching an impressive $4.96 trillion by the year 2030.

This would indicate a substantial surge from the previous year, 2020, where the total worth of the worldwide halal market peaked at $2.30 trillion.

Muslim consumers are rapidly expanding, making up around 26% of the global population, totaling about 2.2 billion people worldwide.

Saudi Arabia, the origin of the Islamic faith, is presently experiencing a swift process of social and economic change, along with a substantial surge in the halal industry.

The halal market is growing, according to Hussein Shobokshi, a Saudi entrepreneur and writer, as stated to Arab News. He mentioned that previously it was restricted to only chicken, beef, and basic food products, but now it encompasses areas like cosmetics, cleaning products, and household items.

He further stated: "There is now a case to be presented for items that are environmentally friendly, produced ethically, and eco-friendly, which should also be considered as halal."

Saudi Arabia is currently leading the way in promoting the halal sector due to its prominent status as the primary consumer of halal goods in the Middle Eastern region.

Shobokshi highlights the significant market opportunity for the halal economy. However, he underscores the need to clearly define and specify what falls under the category of halal, as more companies aspire to tap into this expanding industry.

The entrepreneur stated: "We are referring to a market potential that is quite appealing, alluring, and significant."

This is why many prominent companies like Procter and Gamble, Unilever, Nestle, and other significant players in the food, cosmetics, and clothing industries are focusing on becoming certified as halal producers in order to cater to this market.

According to Shobokshi, Saudi Arabia plays a significant role in the expansion of the halal market "as it aims to redefine the meaning of halal goods and establish a worldwide benchmark for halal certification, examination, and accreditation to achieve global standards and eliminate any ambiguities that might perplex consumers."

Becoming a leader in the halal economy is a logical move for the Kingdom, considering its recent overhaul and its position as the hub of the Muslim community.

"It's only natural for them to aspire to take the lead in the ever-expanding halal economy," he further remarked.

In the month of October next year, the Public Investment Fund of Saudi Arabia disclosed its plan to establish the Halal Products Development Co.

The newly established company is set to fund the development of the halal industry within Saudi Arabia, focusing on producing goods that cater to local preferences. Additionally, the company aims to enhance the effectiveness of the local ecosystem and has intentions to expand its reach by entering international markets.

HPDC is dedicated to assisting small and medium-sized businesses in their growth and expansion into international halal markets through collaborations with important local and international organizations.

According to Waheed Qaiser, a British-Pakistani Islamic banker and entrepreneur, Saudi Arabia has a distinct and significant position in relation to both civic matters (Fiqh Al-Muamalat) and religious matters (Fiqh Al-Ibaadaat), not just among Muslim countries but globally.

Qaiser asserts that ever since the establishment of the initial Islamic bank in Dubai in 1975, there has been a growing emphasis on the halal economy and its offerings, which has stirred up Muslims and greatly surged in demand.

He also mentions how the market for natural and organic food products has expanded due to a rise in health-conscious individuals, including Muslims.

"This phenomenon has resulted in a rise in the consumption of halal food items as they generally provide improved cleanliness and hygiene, thus promoting good health and safeguarding against different illnesses," he asserted. He further stated, "As a result, it is now common to observe dedicated sections or areas in western supermarkets exclusively designed for halal products, regardless of their geographic location."

Qaiser remembered how a big grocery store once informed him that their total sales had experienced a considerable increase after they implemented a halal section.

Purchasing halal goods is also observed as a means of enhancing a feeling of Muslim esteem and individuality, and this extends from Saudi Arabia to the wider Gulf region, Asia, Africa, and more.

Several member countries of the Islamic Development Bank are actively working towards the growth of their halal economies and seizing the immense opportunities within the market.

Moreover, from 2020 to 2026, the economies of the Organization for Islamic Cooperation are predicted to witness a growth rate exceeding 7 percent. This growth is fueled by the ambitions of countries like Malaysia, the UAE, Saudi Arabia, Qatar, and Turkey, who aspire to establish themselves as major centers for the worldwide halal trade.

Countries such as Thailand, Japan, and South Korea, which are not predominantly Muslim, aspire to establish themselves as significant participants in the halal industry. On the other hand, Australia and Brazil stand out as leading providers of halal meat and poultry to Middle Eastern nations.

Qatar, a member of the Gulf Cooperation Council, is widely acknowledged as a key influencer and is currently experiencing substantial expansion in the halal economy.

The country has been promoting key industries with promising growth prospects to create goods and services in adherence to Islamic principles, as per a study conducted by the Qatar Investment Promotion Agency.

According to the research, the nation documented a total value of $156.4 billion in its financial markets during 2021. Additionally, it observed a sum of $1 billion in takaful, another term for Islamic insurance. Furthermore, $14.2 billion was generated by the Islamic tourism industry, whereas $5.1 billion was attributed to healthcare. Lastly, the Islamic fintech sector recorded an amount of $849 million.

Additionally, the study pointed out the active contribution of Qatar in the advancement of the worldwide and local halal accreditation system. This was achieved by creating the Organization of Islamic Cooperation Halal Accreditation Center and the progressive development of regulations for importing halal food products by the Ministry of Public Health.

There is no denying the immense growth of the halal industry in the GCC, broader Middle East, and worldwide. The abundance and diversity of halal goods being manufactured appear to have no bounds.

Nevertheless, the task at hand is to elucidate the precise meaning of halal.

Bukvic concurs: "There is a necessity to tackle two significant hurdles confronting the halal economy, specifically funding the halal sector and efficient administration of the halal distribution network."