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Brexit and Coronavirus; two words which have the impact to severely affect the global halal food industry. With the UK deciding to leave the European Union in 2016 and now leaving in 2021, there will be widespread complications as the EU accounts for 70% of the UK food imports and exports. Uncertainty has lowered the value of GBP (£) and may result in higher raw material costs for stakeholders in the industry-leading to less profitability.
Unanticipated but deadly, the coronavirus pandemic has not only been a tragic health issue globally but has destroyed the global economy with industries across the globe feeling the impact of restrictions set by governments globally. Restrictions such as social distancing and national lockdowns have led to a chain reaction in global markets leading to a -4.5% reduction in global GDP, where it was originally forecasted to be 2.9%, indicating lower disposable income for consumers and even potentially increased risk of halal food fraud as companies look to satisfy both consumer needs and its own financial needs in this pandemic.
But with challenges come opportunities. Companies have a wide range of opportunities to gain more competitive advantage including expanding into the gulf region with a high demand for Halal suitable products. Other opportunities include the digitalisation of the halal industry with an increased shift to meeting e-commerce demand due to the more and more consumers shopping online post-Covid-19.
Whilst there is a massive impact due to challenges such as Brexit and Covid-19, the Halal food industry has not been significantly impacted relative to the rest of the halal industry with just a 0.2% drop forecasted and a CAGR of 3.5% expected between 2019 and 2024 instead of a -8.1% drop in the other sectors. Ramadan, a time where sales rocket in the halal industry with revenue at restaurants dropping in the midst of the pandemic.
Investments in the Halal food industry are also rebuilding momentum with acquisitions happening globally from Indofood’s $2.9 billion acquisition of Pinehill, Indomie noodles MENA market manufacturer whilst Isla Delice acquired Hoca Meats.
Consumer behaviour has also changed with an increase in home cooking and e-commerce with Saudi supermarket BinDaWood Holding reporting their e-commerce sales increasing by 200%. An increase in healthier product demand, due to covid-19, has led to spectacular feats such as the IPO of Pakistan’s The Organic Meat Company Ltd. (TOMCL) a major halal meat exporter, were oversubscribed by 1.7 times, showing a keen investor interest.
Recent studies show an estimated 400 million jobs have been lost worldwide, poverty levels regressing 30 years and GDP dropping expeditiously in both advanced economies and emerging markets, it’s safe to say that the Coronavirus pandemic has greatly affected the global economy including the halal food industry.
When looking at the top 5 halal product exporters, we see that 4 of those exporters are the top 4 countries affected by Covid-19. The table below shows the ranking in halal product exporting and their ranking of coronavirus cases:
With manufacturing, production and logistical operations being disrupted, key exporters have had a challenging year financially. But with challenges come opportunities and Covid-19 has led to an increase in e-commerce, increased demand for food security initiatives, and more clear labelling of healthier foods.
Technology has always been key in the halal industry for a multitude of reasons such as detection of haram ingredients such as rennet in cheese manufacturing. With advancements in technology, companies can now have the option of using fungal rennet as a substitute in halal-certified products. With consumers socially distancing due to Covid-19, online grocery shopping has increased thus highlighting the importance of increased demand for halal products online.
Technology has always been key in the halal industry for a multitude of reasons such as detection of haram ingredients such as rennet in cheese manufacturing. With advancements in technology, companies can now have the option of using fungal rennet as a substitute in halal-certified products. With consumers socially distancing due to Covid-19, online grocery shopping has increased thus highlighting the importance of increased demand for halal products online.
Another process within the halal certification that has been altered by social distancing is the auditing process for food safety and halal compliance. There has been an increase in remote auditing as a way to hurdle the challenge of lack of travelling to sites. It’s also clear to see the potential of AI and automation in the industry, potentially lowering total operating costs for companies thus giving consumers a higher quality at a lower price. This webinar will dive deeper into the digitalisation of the halal industry and the influences of halal claims on consumer behaviour.
The halal food industry has the potential to grow expeditiously especially when Islamic banks such as CIMB and Standard Chartered Saadiq, two of the largest Malaysian Islamic banks, have launched initiatives for the growth of Malaysia’s small and medium food enterprises. Legal changes promoting Halal such as Indonesia’s ‘The Halal Product Assurance law no.13/2014’ will further promote global spend on food increase by 3.1% in 2019 from £844.4 billion to £874.37 billion and whilst Covid-19 will impact global growth in 2020, it’s expected to grow to £1.31 trillion at a 5-year CAGR of 3.5% by 2024.
By further highlighting the importance of Halal certification, quality assurance of halal products is highlighted. Consumers trust spending their money on halal-certified products due to the trust they give to certifiers in auditing and assuring that these products meet the Islamic standards are met. This consumer trust will lead to an increase in sales and solidify brand recognition of a Halal-friendly company in any Halal sector.
Don’t miss this definitive halal awareness webinar, reserve your place now and discover the challenges and opportunities of a growing market!
