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High Global Demand For Halal Products Boosts Saudi Arabia

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

The number of international product releases promoting halal certifications increased by 19 percent between 2018 and 2020, rising from over 16,000 to more than 20,000 products.

Asia is the region from which the majority, around 63 percent, of these products originate, with Africa and the Middle East being the subsequent sources.

According to Frost and Sullivan, a marketing research company based in the United States, the halal economy on a global scale is experiencing rapid growth and has the capacity to attain a staggering value of $4.96 trillion by 2030.

This indicates that individuals who solely associate "halal" with Islamic regulations surrounding meat are overlooking a thriving industry with immense opportunities for expansion.

Halal, originating from the Arabic language, signifies something that is allowed or in accordance with religious laws.

In accordance with the principles of Islamic law and as mentioned in the Holy Quran, the term encompasses merchandise and provisions that are deemed permissible for Muslims.

Halal items are commonly recognized for being devoid of pork, as they follow a particular procedure for slaughtering animals, which involves cutting the throat and must be carried out by a practitioner of the Islamic faith, and are also free of any alcohol content.

Halal, as you may already know, stands for what is allowed and permissible. Conversely, haram represents all that is prohibited. In recent times, regulatory organizations have emerged to grant official acknowledgment to businesses, assuring that their products strictly adhere to the halal guidelines.

According to the acting chief product and partnership officer of the Islamic Development Bank, the market for halal products was worth $1.27 trillion this year and is estimated to grow to $1.67 trillion by 2025. The food sector holds the largest share in this growing industry.

As per the findings of Frost and Sullivan, a prominent marketing research firm from the United States, the worldwide halal market is experiencing rapid expansion and holds immense potential to reach a staggering $4.96 trillion by the year 2030.

This would indicate a significant growth compared to the previous year, as the global halal economy's worth in 2020 was $2.30 trillion.

Muslim shoppers are an expanding group, with around 2.2 billion individuals worldwide, making up approximately 26 percent of the global population.

Saudi Arabia, the place where Islam originated, is presently experiencing quick changes in its society and economy and observing a surge in the halal market.

According to Hussein Shobokshi, a Saudi entrepreneur and writer, the halal economy is experiencing notable growth. Previously limited to poultry, beef, and basic food products, it now encompasses a wider range of sectors such as cosmetics, cleaning products, and household goods.

He stated: "Furthermore, there is a valid case for incorporating items that are environmentally-friendly, ethically produced, and eco-friendly into the halal category."

Saudi Arabia is currently taking the lead in promoting the halal sector, as it boasts the highest demand for halal goods among all Middle Eastern nations.

According to Shobokshi, the halal economy has significant market opportunities. However, he points out that as more companies aspire to tap into this expanding industry, there is a need to clearly explain and establish the meaning of halal.

The entrepreneur stated: "We are discussing a market with considerable, appealing, and significant potential."

That is the reason why many prominent companies like Procter and Gamble, Unilever, and Nestle, along with other significant players in the food, cosmetics, and clothing industries, are aiming to obtain halal certification and become recognized as halal producers in this market.

According to Shobokshi, Saudi Arabia has a significant impact on the expansion of the halal sector. The country aims to redefine what is considered halal and establish a worldwide benchmark for certification, inspection, and qualification. By setting global standards and eliminating any ambiguous aspects, Saudi Arabia seeks to ensure that consumers are not left confused about what exactly constitutes a halal product.

Becoming a pioneer in the halal economy comes naturally to the Kingdom, considering its recent metamorphosis and its significant position as the hub of the Islamic world.

"It is only natural for them to aim to become the frontrunners in the expanding halal economy," he mentioned.

In October 2022, Saudi Arabia's Public Investment Fund revealed the establishment of the Halal Products Development Co.

The fresh firm intends to financially support the domestic development of the halal sector within Saudi Arabia and enhance the effectiveness of the local system, which involves strategies to expand their reach to international markets.

HPDC is dedicated to facilitating the growth and expansion of small and medium-sized businesses in the global halal markets through collaborations with significant local and international stakeholders.

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

According to Qaiser, ever since the establishment of the inaugural Islamic bank in Dubai in 1975, there has been an increased emphasis on the halal economy and its offerings, triggering a heightened awareness among Muslims and leading to a surge in demand.

In addition, he highlights how the escalating number of health-conscious consumers, including followers of the Islamic faith, has contributed to the expansion of the demand for natural and organic food products.

"This phenomenon has resulted in a rise in the consumption of halal food items since they generally provide improved cleanliness and sanitation, which positively impacts human health and helps prevent different illnesses," he asserted. He further stated, "As a result, it is now common to find designated sections for halal products in all mainstream supermarkets across the western hemisphere."

Qaiser remembered a time when a prominent grocery store informed him that the inclusion of a halal section had greatly increased their total revenue.

Purchasing halal goods is also perceived as a means to strengthen Muslim self-esteem and individuality, and this notion expands not only within Saudi Arabia but also throughout the wider Gulf region, Asia, Africa, and other places.

Numerous countries belonging to the Islamic Development Bank are actively working towards building and expanding their economies in accordance with halal principles, aiming to tap into the market's immense potential.

Furthermore, from the year 2020 to 2026, it is predicted that the economies of the Organization for Islamic Cooperation will undergo a growth rate exceeding 7 percent. Several countries such as Malaysia, the UAE, Saudi Arabia, Qatar, and Turkey are determined to establish themselves as major centers for the international halal trade.

Countries such as Thailand, Japan, and South Korea, which are not predominantly Muslim, are also striving to establish themselves as significant participants in the halal market. Furthermore, Australia and Brazil are prominent exporters of halal meat and poultry to Middle Eastern nations.

Qatar, an influential nation within the Gulf Cooperation Council, has emerged as a prominent force in the flourishing halal economy. Moreover, it has experienced substantial expansion in this sector.

According to a study conducted by the Qatar Investment Promotion Agency, the country has been actively promoting key industries with promising growth prospects to generate products and services that align with Islamic principles.

According to the research, the nation registered a total value of $156.4 billion in monetary markets this year. Additionally, there was a sum of $1 billion in takaful, commonly referred to as Islamic insurance. Islamic tourism, on the other hand, contributed $14.2 billion, while healthcare and Islamic fintech accounted for $5.1 billion and $849 million, respectively.

Additionally, the study emphasized the contribution of Qatar in the advancement of the worldwide and local system of halal accreditation through the establishment of the Organization of Islamic Cooperation Halal Accreditation Center. It also shed light on the progress made by the Ministry of Public Health in terms of providing instructions for the importation of halal food products.

It is undeniable that the halal market is experiencing rapid growth in the GCC, broader Middle East, and worldwide. The production of halal products appears to be boundless in terms of quantity and diversity.

Yet, the hurdle that persists is elucidating the classification of halal.

Bukvic concurs: "We must confront two crucial obstacles that the halal economy confronts, specifically the funding of the halal sector and the efficient administration of the halal distribution network."