Halal value chain project Appendices to final report VC analysis final...Halal value chain project Appendices to final report ... Halal Goes Global, ITC, 2015 ... Addressing the demand

Halal value chain project

Appendices to final report

Prepared by

In partnership with

TABLE OF CONTENTS

APPENDIX A: BIBLIOGRAPHY OF USEFUL HALAL LITERATURE AND SOURCES .................... 1 APPENDIX B: ANALYSIS BY VALUE CHAIN ............................................................................. 2 1 Meats and related products.......................................................................................... 2 2 Dairy ................................................................................................................................ 14 3 Fruit (overall and fresh fruit) .......................................................................................... 16 4 Juices and non-alcoholic beverages ........................................................................ 18 5 Confectionery (sweets, snacks, chocolates) ............................................................ 21 6 Sauces, seasoning, spices ............................................................................................ 24 7 Natural ingredients ........................................................................................................ 27 8 Cosmetics and personal care ..................................................................................... 31 9 Pharmaceuticals and vaccines .................................................................................. 34 10 Food service ............................................................................................................... 37 11 “Family friendly” / Halal tourism ............................................................................... 40 12 Halal education ......................................................................................................... 44 APPENDIX C: GEOGRAPHICAL MARKET ANALYSIS ........................................................... 47 13 Bangladesh ................................................................................................................. 49 14 China ........................................................................................................................... 51 15 East Africa (Kenya, Tanzania, Ethiopia, Somalia) .................................................. 55 16 Egypt............................................................................................................................ 58 17 Europe (focusing on France, UK, Germany, France, Netherlands) .................... 60 18 India ............................................................................................................................. 63 19 Indonesia .................................................................................................................... 68 20 Malaysia ...................................................................................................................... 71 21 Mozambique .............................................................................................................. 74 22 Nigeria ......................................................................................................................... 76 23 Saudi Arabia (Kingdom of) ....................................................................................... 80 24 Turkey ........................................................................................................................... 83 25 Russia ........................................................................................................................... 85 26 United Arab Emirates................................................................................................. 87 27 United States of America .......................................................................................... 90 APPENDIX D: BENCHMARKING ............................................................................................ 94 28 Australia ...................................................................................................................... 94 29 Thailand ..................................................................................................................... 101 30 Singapore.................................................................................................................. 108 31 Additional lessons from Malaysia, Dubai and the USA ....................................... 113

Prepared by Kaiser EDP, Imarat Consultants and NYZ Afripeak `

1

APPENDIX A: BIBLIOGRAPHY OF USEFUL HALAL LITERATURE AND SOURCES

Useful halal information portals:

1. www.halalfocus.net

2. www.salaamgateway.com

Key Halal overview and global market reports:

3. Doing Business in the Halal Market – products, trends and growth opportunities

by Euromonitor International 2015

4. Global Consumer Survey of Halal Consumption and Attitudes, Ethnic Focus

2015

5. Halal Goes Global, ITC, 2015

6. Standards in the Halal Food Industry by Oxford Analytica 2015

7. The Shariah Compliant Consumer – Driving Demand by the Economist

Intelligence Unit, 2012

8. The State of the Global Islamic Economy, DinarStandard, Thomson Reuters,

2013-14, 2014-15, 2015-16

Sector-specific reports:

9. Global Halal Food M&A Activity and Opportunities by Salaam Gateway

(written by DinarStandard) 2015

10. Addressing the Halal Ingredients Opportunity by Salaam Gateway (written by

DinarStandard) 2015

11. Resolving the Current Inefficiencies in the Global Regulation of Halal Food by

Salaam Gateway (written by DinarStandard) 2015

Useful Articles by DinarStandard & Imarat Consultants published on Salaam Gateway

2015-16

12. Addressing the demand for Halal gelatine in food products

13. South Korea aiming to boost Halal food exports by a third to $1.23 billion by

2017

14. Overview – Online Halal food takeout and delivery in Muslim-minority countries

15. Overview – Halal food opportunities in Iran’s $61 billion F&B market

16. Overview – Thailand’s $6 billion food market

17. Overview – Kazakhstan’s $3 billion Halal food market

18. Case Study – Tahira, a leading food brand in Europe

19. Regional Initiatives in Halal standards and accreditation

20. Halal Cosmetics and Personal Care: Sector growth and consumer education

21. Halal Food Hubs - Failures, successes & building a real value-proposition

22. Halal Food Logistics – has the time for it arrived?

23. Compliance Concerns for Multinationals targeting OIC countries

24. Tayyib, Organic and Healthy in the Halal Food Sector

25. Preferences and habits among Western Muslim food consumers

26. Development and Growth of Halal Pharmaceuticals

http://www.halalfocus.net/

http://www.salaamgateway.com/


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APPENDIX B: ANALYSIS BY VALUE CHAIN

1 Meats and related products

The section below splits meat into three broad categories which are investigated

separately (along with related products), namely: ostrich, game meat and red

meats. This covers a large part of South African meat production (pork and chicken

are the major groups excluded here).

Meat production in the Western Cape and South Africa has faced several

constraints in the past five years:

An outbreak of avian flu led to large scale culling of ostrich stocks, and export

bans to Europe

An outbreak of foot-and-mouth disease led an export ban on beef

Rapidly rising input costs (e.g. diesel and imported feed due to rand

depreciation)

Increased import competition on domestic markets (although this has mainly

been felt more intensely by the poultry industry)

These internal and external pressures have led to poor export performance across all

the main categories (see table below). Only lamb and mutton, ostrich products and

cured beef showed any growth – and the high ostrich growth is a recovery (and a

shift to processed ostrich meat to circumvent the export ban).

2011 2012 2013 2014 2015 CAGR

Beef 24,990,413 37,756,568 70,884,449 180,542,320 20,510,972 -4.8%

Beef (kg) 594,482 794,514 1,514,568 3,477,418 642,644 2.0%

Beef, cured 634,262 678,834 633,671 1,786,083 941,983 10.4%

Beef, cured (kg) 26,686 17,241 10,665 35,490 13,013 -16.4%

Chicken 260,166,181 186,563,922 98,108,457 118,772,119 21,830,472 -46.2%

Chicken (kg) 18,417,996 18,591,043 6,871,999 8,453,099 2,151,294 -41.5%

Other poultry 10,530,626 5,643,910 12,652,943 9,794,291 6,319,068 -12.0%

Other poultry (kg) 407,392 358,172 854,675 567,354 458,054 3.0%

Goat 426,268 12,234 131,964 417,250 6,828 -64.4%

Goat (kg) 77,905 158 2,788 12,379 40 -85.0%

Lamb and mutton 5,204,549 4,841,989 6,573,939 15,520,618 12,960,826 25.6%

Lamb and mutton(kg) 111,453 87,235 120,589 381,275 219,595 18.5%

Ostrich 76,310,713 1,604,269 4,359,718 7,225,254 133,155,857 14.9%

Ostrich(kg) 957,477 22,515 44,816 86,228 650,798 -9.2%

Processed ostrich meat 6,000 21,433,894 53,621,893 72,446,176 122,295,513 1094.9%

Processed ostrich meat (kg) 300 208,293 483,588 585,545 1,003,229 660.4%

Other meat 47,235,627 8,410,044 20,568,218 17,196,828 36,666,253 -6.1%

Other meat (kg) 627,443 148,330 290,143 435,446 562,603 -2.7%

Other processed meats 126,014,332 156,265,275 136,046,013 124,602,148 127,118,302 0.2%

Other processed meats (kg) 8,587,021 9,826,889 7,576,905 5,730,004 6,260,003 -7.6%

Meat 551,518,971 423,210,939 403,581,265 548,303,087 481,806,074 -3.3%

Meat (kg) 29,808,156 30,054,389 17,770,735 19,764,237 11,961,271 -20.4% Note: Blue indicates a growth rate above average growth rate of exports from Western Cape


3

The table below shows that at least 6 of the current 11 export certified abattoirs in

the Western Cape are also halal certified.

Abattoir Name Reg# Types of animals Location Halal certified?

Klein Karoo

International

Abattoir no. 1

ZA 92 Ostrich and game Oudtshoorn, Eden Yes (MJC)

Mosstrich ZA 24 Ostrich Mossel Bay, Eden Yes (SANHA)

Osdam

Abattoir

ZA 69 Red meat Ceres, Cape

Winelands Yes (MJC)

Ostriswell ZA

118

Ostrich Swellendam,

Overberg

?

SA Farm

Assured Meat

Robertson

ZA

284

Red meat Robertson, Cape

Winelands Yes (MJC)

Swartland

Volstruise Bpk

Abattoir

ZA 26 Ostrich, red meat Malmesbury,

Swartland

?

The Duck Farm ZA

265

Poultry (duck, chicken)

Rabbit

Kraaifontein,

Cape Town

Yes (SANHA)

Tomis Abattoir ZA

235

Red meat Wellington, Cape

Winelands

(ICSA in 2014,

possibly not

currently)

Elgin Poultry

Abattoir

ZA 70 Poultry Elgin, Overberg ?

County Fair

Abattoir

(Hocroft)

ZA 75 Poultry Cape Town Yes (MJC)

RCL Foods

Consumer

(Pty) Ltd -

Chicken

Worcester

ZA 25 Poultry, Meat Worcester, Cape

Winelands

?


4

1.1 Ostrich

The ostrich value chain consists of all the inputs into raising ostriches to produce

meat, feathers and hides which are sold on the local and international market. The

figure below shows an overall value chain for ostrich, as well as halal-specific

considerations on the right.

Feed

Design and supply of nutritious food (crops/ minerals/ vitamins/ animal products) for all life stages of the ostrich

Need traceability

of all feed to ensure no

Haram products Egg

producers

Genetics, incubation, hatching, feeding, inoculation, sorting and rearing of young chicks

Bird rearing

Specialist feeder companies working with large farms

Specialist hatcheriesIntegrated farmsVeterinary services

Processing

Sales &

marketing

Raise healthy ostriches able to produce maximum meat,

and quality leather and feathers

FarmsVeterinary servicesTransport firm (or in-house)

Abattoirs

Slaughter, portioning, deboning, mincing, packaging, freezing/ chilling, quality control, prepare hides and feathers

Private export-certified abattoirsAbattoirs linked to farms

Distribution to market + marketing and advertising

Transport and logisticsDomestic and international agents, wholesalers, retailers and specialist sellers (e.g. butcheries or restaurants)

Halal process and

certificationNo stunning / mechanical

slaughter preference

Tayyib and ethical

treatment

Activities

Actors

Production in Western Cape and South Africa South Africa produces 70% of world ostrich meat, feathers and leathers1

Of this the Western Cape accounts for 77% - mainly in Klein Karoo

Majority of meat and products are exported (90%): Mainly to Europe

Approximately R255 million exported in 2015 (see figure below)

o Strong recovery from avian flu outbreak in 2011 which led to export

ban and culling of birds

o Export meat ban only applied to uncooked meat, therefore producers

shifted to exporting heat-treated meat

o In 2015 exports from raw and processed meat were roughly equal

1 DAFF. 2012. A profile of the South African ostrich meat market value chain


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Western Cape ostrich exports, 2011 - 2015

Ostrich meat Processed ostrich meat

Ostrich meat (tons) - rhs Processed ostrich meat (tons) - rhs

Revenue split: Meat (62%), leather (32%), feathers (6%)2

About 588 registered farms

10 abattoirs and 10 tanneries (2 dedicated to ostrich)

Estimated 16,000 workers in SA ostrich industry post avian flu (based on share of

production, more than 12,000 employed in W. Cape)

Represented by South African Ostrich Business Chamber, however some

concerns about lack of coordination on research and international marketing3

International demand and trends

The exotic meat market is growing at a rate of 10% due to both local and

international demand4

However, many markets remain underdeveloped for ostrich meat (including

major meat markets like the US)

Currently Muslim majority countries are not a major export destination for

ostrich meat, feathers, or leather

Barriers to growth

Access to export markets have been restricted by avian flu outbreak in 2011

o EU ban on South African exports of fresh meat was only lifted in August

2015

o The flu outbreak is estimated to have resulted in culling of 40 000 birds5

Prior to the outbreak South Africa was slaughtering 230 000 ostriches annually6

o The outbreak, and trade embargo saw the number fall to 120 000

o Following the unbanning the number of birds slaughtered in 2015

reached 181 000

Market is concentrated: Approximately 70% of ostrich products controlled by a

few players (Klein Karoo International, Mosstrich, Grahamstown Ostrich

2 South African Ostrich Business Chamber (http://www.ostrichsa.co.za/faq.php) 3 DAFF. 2012. A profile of the South African ostrich meat market value chain 4 Wesgro 5 http://www.bbc.com/news/world-africa-16275280 6 http://www.bloomberg.com/news/photo-essays/2016-05-03/selling-the-world-an-ostrich-steak

http://www.ostrichsa.co.za/faq.php


6

Abattoir, Swartland Ostriches, Camdeboo Meat Processors, Exon, Marowe,

Philippe Genuine Ostrich Products and Camexo)

Five breeder/hatchers produce approximately 90% of the day-old chicks

High barriers to entry: Capital intensive farming, high start-up costs, high risk

industry (e.g. disease and changing standards), cash-flow, exchange rate risks

Halal specific considerations and concerns

At least 3 of the main ostrich abattoirs in the Western Cape are already halal

certified.

However, there would be challenges in applying “no stun” preference in

ostrich slaughter given NDA ostrich abattoir regulations7, stress levels of

ostriches impacting on meat quality, safety risk to workers, and potential

damage to feathers etc.

Most ostrich meat and products already adhere to high phyto standards to

access EU market (e.g. quarantine for 14 days prior to slaughter, residue

testing, tick infection testing, no hormonal or growth stimulants, inoculation, full

traceability from registered farm)

Traceability (including animal feed) and labelling concerns

Ostrich is not a well-recognised meat in Muslim markets, and its production cost

structure means it needs to play in the premium market; therefore careful

market positioning and promotion would be required

o There are successful examples of introduction of new meat products

such as halal turkey into Muslim markets8

Ensuring no haram ingredients in ostrich feed

Tayyib – ethical treatment of animals

Slaughter – no stunning and non-mechanical slaughter requirements of some

markets vs. practicalities/risks/worker safety during ostrich slaughter

Summary

Western Cape strengths

o South Africa produces 70% of world ostrich meat, feathers and

leathers; the Western Cape accounts for 77% of this - mainly in Klein

Karoo

o Strong export capability

o Some of the main players are already halal certified

Constraints to growth

o Supply – disease burden (avian flu), recovering after ban/cull

o Market access uncertainty (bans, lack of clarity on import market

requirements)

o Production costs means it has to have a relatively premium market

position

o Need to also grow the leather demand in tandem in order to make

that the industry is viable; this is determined by fashion fluctuations and

the industry has had limited success in influencing these trends

o Marketing/awareness (not a traditional/known meat in Muslim markets,

even in markets where it is known it is a niche)

Western Cape producers have an advantage in ostrich production and the

Muslim market is currently underserved, hence it provides a growth

opportunity

7 http://www.nda.agric.za/vetweb/Legislation/Meat%20safety/OstrichRegulations.pdf 8 See www.halalvolys.com/

http://www.nda.agric.za/vetweb/Legislation/Meat%20safety/OstrichRegulations.pdf

http://www.halalvolys.com/


7

1.2 Game meat9

Game meat consists of meat from springbok, kudu, zebra, and other antelope. An

overall game meat value chain is shown and discussed below, as well as halal-

specific considerations on the right.

Farm

maintenance

Creating optimal conditions through pest and disease control, hunting control, security and safety, and water control

Hunting/

harvesting

Hunting, field slaughter, herding for harvesting, transport to

abattoirs

Processing

Farms plus specialist companies

Private hunters“Harvesting” by farmAbattoirs

Sales

Portioning, deboning, mincing, drying, packaging, freezing/ chilling, quality control


Transport and logisticsPrivate sellingDomestic and international wholesalers, retailers and specialist sellers (e.g. butcheries or restaurants)

Halal process and

certification at abattoirs

or field slaughter

Complexity of ensuring

hunting is Halal

Lack of quality

control of private selling

Private processing (e.g. biltong)On-farm processing (i.e.in-the-field processing)

AbattoirsTransporters

Activities

Actors

Genetics and

breeding

Selection for preferred characteristics, trading, breeding

Breeders, auction houses, investors

Production in the Western Cape and South Africa

Game meat has evolved from traditional dried forms– e.g. biltong and

droewors – to be used in a large number of dishes at restaurants and homes

Difficult to measure activity and exports in game (some hunting classified as

tourism, private slaughter and sales isn’t recorded, not all countries require

export certification, and game meat doesn’t have its own HS Code in trade

statistics)

o The value of game animals sold on formal auctions alone has

increased from R93 million in 2005 to more than R1.8 billion in 2014 (but

much of this is driven by investment speculation around individual high

value animals (including disease-free, large-horn span buffalo, colour

variants); however, some experts feel that this is a bubble that is

unlikely to be sustained10

o Hunting estimated to be a R6.3 billion industry (2013)11

9 DAFF. 2010. Game industry value chain 10 http://www.grainsa.co.za/growth-expectations-for-the-south-african-game-ranching-industry 11 Cloete, P.C., Van der Merwe, P. & Saayman, M. 2015. In Press. Profitability of the game ranching

industry in South Africa, Second edition. Pretoria: Caxton Publisher;


8

o Related spending (i.e. food, fuel, accommodation and ammunition)

on hunting has outgrown spending on animals (300% to 25% between

2005 and 2013)12

Western Cape has a small role (2%), as most game farming occurs in the

northern part of the country (Limpopo and Northern Cape account for 68% of

production), however, Klein Karoo area has some hunting and game farming

activity

Exports are mainly destined for Europe

o This is a small part of total production (roughly 150,000 tons a year)13

o Low exports are partly due to a lack of clarity regarding the legislation

– Game Meat Scheme and the Game Meat Act – to safely produce

game meat for international use14

Industry represented by Game Abattoir and Meat Exporters of South Africa and

Wildlife Ranching SA (a non-profit organisation representing 1,500 members of

9,000 registered game ranches)

Game meat exporters include Camdeboo (near Graaff-Reinet), Mosstrich

(Mossel Bay), Swartland Abattoir (near Merrydale)

o Note the overlap with ostrich meat

Overall the hunting and game market – particularly in Western Cape – is

relatively small


According to Wildlife Ranching South Africa South Africa was exporting R200

million to R400 million a year prior to the foot-and-mouth related ban in 2011

(see below)15.

Game meat has an estimated R3bn export potential16. Note: This is an

ambitious estimate – currently only a fraction of this has been achieved17

New Zealand is South Africa’s direct competitor to the EU market. It exports

R3,4 billion worth of meat a year, the majority of it ranched fallow deer

venison18

o New Zealand’s exporters work together under one umbrella company

that markets its meat

Barriers to growth

Outbreak of foot-and-mouth disease in 2011 meant South Africa game meat

was banned from EU and many Middle East markets

o Industry argues outbreak was poorly handled by state vet services19

Policy uncertainty regarding Game Meat Scheme and the Game Meat Act –

to safely produce game meat for international use

http://www.biznews.com/briefs/2015/01/13/buffalo-bull-market-lures-south-african-billionaires-horns-

worth-millions/ 12 http://www.grainsa.co.za/growth-expectations-for-the-south-african-game-ranching-industry 13 http://www.bdlive.co.za/business/agriculture/2015/12/24/business-day-tv-outlook-for-game-farming-

industry 14 http://www.bdlive.co.za/business/agriculture/2015/12/24/business-day-tv-outlook-for-game-farming-

industry 15 http://www.bloomberg.com/news/articles/2015-01-16/south-africa-antelope-meat-exports-could-

surge-if-eu-access-won 16 http://www.farmersweekly.co.za/article.aspx?id=72026&h=Game-exports-after-FMD 17 The original study Dr Maretha van der Merwe is not available – it is likely that wider gains from game is

included for the R3bn calculation 18 http://www.farmersweekly.co.za/article.aspx?id=72026&h=Game-exports-after-FMD 19 http://www.farmersweekly.co.za/article.aspx?id=72026&h=Game-exports-after-FMD


9

Poor control across the value chain20

o D’Amato et al (2013) found game meat samples showed 76.5%

substitution (including pig, lamb, horse, giraffe, waterbuck, and zebra)

o Difficult to impose standards: meat from private hunts often sold into

domestic market


Some Halal game meat is already available on the South African market (for

example specialists such as Meat Cart and Khan’s Meat)

However, several potential constraints across value chain prevent better

integration into Halal market

o Numerous requirements need to be in place for hunting to be halal,

such as21:

The hunter must by Muslim

The name of Allah must be called during aiming/prior to shooting

The weapon must be sharp and pierce the body / result in blood-

letting e.g. arrow or bullet (some are of the view that the bullet

must exit the body)

If hunter reaches the animal prior to it dying, it should be killed

following halal principles

If hunting dogs are used, they should not have eaten part of the

animal

Some are the view that hunting is not halal if the main reason is

for sport/entertainment

The animal should not have fallen into a water body/potentially

have drowned

o Slaughter process needs to follow same process as other animals (with

similar preferences for no stunning and hand slaughter in many cases)

o Farm abattoirs are not approved and may not meet standards

(generally this meat is used for own consumption or sold to local

outlets), this processing is unlikely to meet Halal requirements

‘Harvested game’ does go through formal and well controlled process –

controlled by Veterinary Public Notices

Some concerns that Meat Safety Act (Act 40 of 2000) does not adequately

provide for the game industry)22

o Concerns particularly at the farm, during hunting and control after the

farm gate23

20 D’Amato, M,. Alechine, E, .Cloete, K., Davidson, S., and Corach, D. 2013. Where is the game? Wild

meat products authentication in South Africa: a case study. Investig Genet. 2013; 4: 6. 21 https://islamqa.info/en/121239; http://www.newmuslimguide.com/en/your-food-and-drink/66;

http://www.islamweb.net/emainpage/index.php?page=showfatwa&Option=FatwaId&Id=323752 22 Bekker, J., Louw C., and Jooste, H. 2009. International Research Forum on Game

Meat Hygiene (IRGMH) conference on Game meat in focus

https://www.vetmeduni.ac.at/fileadmin/_migrated/content_uploads/lect_bekker_ger_01.pdf 23 Bekker, J. 2011. A food safety plan for the game meat industry in South Africa

https://islamqa.info/en/121239

http://www.newmuslimguide.com/en/your-food-and-drink/66

http://www.islamweb.net/emainpage/index.php?page=showfatwa&Option=FatwaId&Id=323752

https://www.vetmeduni.ac.at/fileadmin/_migrated/content_uploads/lect_bekker_ger_01.pdf


10

Summary


o International tourism offering

o Export certified game abattoirs, some of which are also halal certified

(e.g. Karoo area)

Value chain constraints to growth

o Supply - W. Cape not the major hunting or game meat producer

location within SA, requirement for large land parcels (mostly Klein

Karoo)

o Processing – farm abattoirs not necessarily halal and export certified

o Market access e.g. bans after foot-and-mouth outbreaks in the region

Niche market around hunting tourisms packages along with wider appeal of

exotic meats to tourism market

1.3 Other red meat: beef, lamb, goat

Traditional red meat production includes beef and lamb/ mutton (goat, while more

common internationally is less common in South African production). Below is an

outline of an overall red meat value chain, as well as halal-specific considerations

on the right.

Genetics and

breeding

Genetics development and selection, breeding

Livestock

raising

and/or feedlot

Auction/sale, transport, livestock raising feeding, animal

health

Processing

Breeders, stock-owners, auction houses

Feed suppliers, integrated producers with feedlots Stock owners, grazing/pasture providersVeterinarians

Distribution

Sales &

marketing

Slaughter, grading, portioning, deboning, mincing, packaging, freezing/ chilling, quality control

Abattoirs (linked to feedlots and independent)

Cold chain management, transport and logistics, distribution

In-house transport

Specialist transport, logistics and custom clearance

Marketing, sales, branding, food service

Private sellingAgents, wholesalers, retailers and specialists (e.g. butcheries, restaurants, food service)Marketing and advertising

Need to ensure

traceability of all feed to

ensure no Haram

products

Tayyib and ethical

treatment

Mature, developed

market

Activities

Actors

Halal slaughter process,

oversight & certification

Preference for no stunning/ mechanical slaughter


11

Production in Western Cape and South Africa

Lamb and mutton, goat, and cured beef make up a small part of meat exports

(note different scales between the first graph below and second beef only

graph figure)

Beef and lamb/mutton industries are well represented across breeds (e.g.

Merino SA, Red Meat Industry Forum. South African Angus)

0

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Western Cape exports of goat, lamb and mutton, and cured beef, 2011 - 2015

Goat meat Lamb and mutton meat Beef, cured

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Western Cape beef and other meats exports, 2011 - 2015

Beef (rand, million) Other processed meatsBeef (tons) rhs Other processed meats (tons) rhs

Beef:

Beef production is predominantly vertically integrated in South Africa – driven

by the feedlot industry as large feedlots also own the abattoirs24

Processing mostly takes place near to feedlots, which are mostly close to maize

production (to reduce transport costs)

Approximately 60% of cattle are slaughtered at highly regulated abattoirs

Veld-raised / grass-fed beef has been identified by some other processes as a

potential premium segment with the potential to integrate

communal/traditional cattle owners and emerging producers, but this relies on

suitable grazing/sweet veld, and is currently a very small niche market (e.g.

“Farmer Angus and Oak Valley in W.Cape

Beef exports fell to only R20 million in 2015 (see figure below), due to a fall in

beef prices (despite the depreciating rand), the domestic drought and a shift

to domestic markets

o The growth of beef exports since 2011 highlights a recovery of the sector

(until 2014) rather than an expanding industry

Other processed meats – a catch-all category for processed meats – is one of

the largest export categories of meat

24 NAMC (2003) ‘Chapter 4: The Value Chain for Red Meat’ Food Price Monitoring Committee Final

Report


12

o Unfortunately, it is difficult to determine what products are in this category

o While the size of this category implies some competitive advantages,

without understanding what is in the category (which is likely to include

low cost and well as high quality products) no further analysis is possible

Western Cape beef accounts for only 4% of production (2011)25, but it

accounts for 12% of sheep production.26

Burger King has a JV with Excellent Meats in a factory for halal burger patties in

Elsies River, to serve Burger King’s expanding SA market, as well as planned

regional expansions and wider export27. As at 2015, the factory was operating

at 15% capacity. Grand Parade Investments, which has the master franchise

agreement for Burger King in Southern Africa, has acquired a stake in Excellent

Meats, and plans to own the entire supply chain28

Lamb and mutton:

There are approximately 8 000 commercial sheep farms around the country

employing approximately 35 000 workers29

Most lamb and mutton is consumed locally currently due to production

shortages, less than 15% was exported in 2011

Lamb and mutton exports experienced strong overall growth between 2011

and 2015, but with a dip in 2015 (see figure below)

o Volume growth shows exporters have increased competitiveness in global

markets (as well as an expanding global market)

o Rand depreciation in 2015 meant that although volumes fell substantially

from 380 tonnes to 220 tonnes, the value of exports did not decline as

sharply

Concerns were raised in the stakeholder about the threat to carrying capacity in

the Karoo due to natural gas/shale exploration or exploitation

Goat:

South Africa is a relatively small goat producer (less than 1% of global

production). Western Cape only accounts for 3% of SA production.

o A South African breed – the Boer Goat – is now found most breeding

countries

o But South Africa still has competitive advantage, including genetics, and

determination of breed standards30

Barriers to growth

Outbreak of foot-and-mouth disease in 2011 led to ban of beef exports to

certain Middle East countries (ban only lifted in 2015)

The beef industry in South Africa is highly integrated, with eight companies

controlling 77% of the domestic supply. These companies own their own

feedlots, abattoirs, and meat processing facilities, as well as coordinate their

own distribution to market. Some also own their own feeder cattle farms

25 DAFF. 2012. A profile of the South African beef market value chain 26 DAFF. 2012. A profile of the South African mutton value chain 27 http://afkinsider.com/54350/burger-opens-meat-patty-factory-ahead-skyrocketing-sa-growth/;

http://www.grandparadeintegratedreport2015.co.za/investment-review/excellent-meat-burger-plant/ 28 http://www.bdlive.co.za/business/retail/2015/09/09/grand-parade-moves-towards-owning-entire-

burger-king-supply-chain 29 DAFF. 2012. A profile of the South African mutton value chain 30 http://www.boergoats.co.za/

http://afkinsider.com/54350/burger-opens-meat-patty-factory-ahead-skyrocketing-sa-growth/


13

Domestic distribution channels include formal retail (supermarkets, delis,

butcheries) and informal retail (spazas and hawkers)

o The informal market is estimated to constitute 47% of the South African beef

industry31


Slaughter – halal slaughter process and oversight, as well as preference for

stunning, mechanical slaughter

Ensuring export certified abattoirs are also halal certified

Tayyib – ethical treatment of animals, healthy/"clean"/organic

Many abattoirs and meat producers in the W. Cape are already halal certified,

and producers of beef and lamb already supply Halal meat to the local and

international market

The value chain is mature and integrated

Introduction of smaller scale farmers into the market is likely to be hampered by

general market concentration and barriers to entry, rather than Halal

requirements

Internationally, independent retailers (trusted corner butcheries) selling Halal

meat remains a large part of the market32

o Positive: Arguably easier to access supply chain

o Negative: Likely to lack volume, thus requiring deals with several

retailers which complicating logistics (e.g. delivery times, volumes)

o However, it is expected that the trend is towards mainstream

supermarkets increasing their market share

Summary


o Export certified abattoirs

o Many producers are already halal certified

o Food processing capability, quality and reliability

o Traceability systems


o Supply constraints and supply cycles (access to suitable land,

water/droughts, stock levels) e.g. currently SA cannot meet own

demand for lamb, W. Cape only produced 4% of SA's beef and 12% of

lamb in 2011

o Market access e.g. bans after foot-and-mouth outbreaks in the region

o Cost of animal feed and transport (maize and feedlots mostly in Free

State)

o Veterinary service - meat industry relationships (service responsiveness

and industry compliance)

o Limited opportunity for conventional feedlot beef

Limited opportunity to significantly increase current red-meat offering

Can include red meat promotion in wider value offering, particularly through

veld-raised, “Karoo meat” (which can include Tayyib considerations)

31 Labuschagne et al (2011) ‘A consumer-oriented study of the South African beef supply chain’; p.75 32 Euromonitor. 2015. Doing Business in the Halal Market


14

2 Dairy

Dairy goods are manufactured by processing milk into products like cheese,

yoghurt, butter, and ice cream. An overall dairy value chain is shown below, as well

as halal-specific considerations on the right.

Milk

production

Milking, cooling, testing, standardisation, separation, pasteurisation, homogenisation, storage of milk

Distribution

Collection and delivery, cold-chain, vehicle/ tank maintenance, storage

Product

development

& processing

Large scale commercial farms

CooperativesSmall scale farmers

Large scale commercial farmsSpecialist transporters

Sales &

marketing

Recipe development, product and packaging development, food techHeating and cooling, inoculation/ adding enzymes, mixing, blending, draining, ageing


Wholesalers, retailersBrand owners and brand buildersDirect salesInstitutional buyers (e.g. schools)

Large dairy multinationals; local integrated farmer-producers / national producers, niche/artisanal producersPackaging producers

Avoiding haram

ingredients/ contaminants

e.g. Non-halal

enzymes, gelatine, rennet, pepsin

Activities

Actors


The South African dairy market is divided into 60% liquid and 40% concentrated

products. Pasteurized liquid milk and UHT milk are the major liquid products,

while hard and semi cheese is the major concentrated product33

o Yoghurt forms 13% of liquid products (less than 7.8% overall diary)

o Cheese (hard, semi and other) forms 54% of concentrated products

(21.6% of overall diary)

Proximity to consumer markets is important for dairy products with a short shelf

life such as yoghurt, cream and soft cheese, and thus manufacturing plants

are located on the fringe of urban centres

o This also limits export potential (although South Africa imports from low

cost producers, e.g. New Zealand, and exports to the region)

Western Cape accounts for 26% of milk production34

Consolidation of industry in last decade which has improved competitiveness,

but UHT imports are placing substantial stress on producers

The industry is well represented, including by the Milk Producers’ Organisation

and Milk South Africa

Trends: Packaging innovations to enhanced portability of standard yoghurts –

drinkable formats. Aiming to market yoghurt as a lunchbox/on the move

snack

33 DAFF. 2012. A profile of the South African dairy market value chain 34 DAFF. 2012. A profile of the South African dairy market value chain


15

Growth in artisanal cheese offerings and local customers more knowledgeable

and aware of the great variety of cheeses on offer35

o These include Western Cape cheese-makers, e.g. Fairview, Dalewood,

Simonsberg, Hoekwil Dragonfly Farm (Napier), Ganzvlei farm (Knysna),

Gay's Guernsey Dairy (Prince Albert), La Montanara (Breede River

Valley), Buffalo Ridge (water buffalo mozzarella)

Barriers to growth

While there are many dairy farmers (estimated 196036), the processing market is

dominated by large international and domestic players (including retailers

which have backward integrated through in-store brands)

High barriers to entry throughout value chain (e.g. low margin for farming, high

capital costs for processing)

Processors of diary control the value chain, along with large retailers. Farmers

are generally price takers

o Farmer only receives about 1/3rd of final retail price37


Dairy was traditionally considered naturally Halal, but there is increasing

pressure for certification

Key considerations for dairy products are added cultures, preservatives,

enzymes, fortification agents and in some cases gelatine (e.g. some yogurts)

o Gelatine manufactured in South Africa also carries the SABS (49 of

1985) and Halal marks, thus, this gelatine is safe to use as a food

ingredient at any level38.

o Cheese enzymes can be of animal origin (e.g. Rennet and pepsin) and

can be sourced from stomach lining of animals (including swine)

o Added Vitamin D in milk can also be derived from animal sources

(including swine)

In general, the diary market in South Africa (and globally) is a well-developed,

mature market

There are some growth avenues, which are likely to closely follow general diary

trends (e.g. on-the-go products, drinkable yogurts, health trends)

Summary


− Mainstream dairy production (cow milk, yoghurt, cheese)

− Higher-end artisanal production (speciality cheeses, goat cheese)

− Innovation - recipe development, product design, packaging

− Industry organisation

− Exports to the region

− Halal certified gelatine available in SA


− Distribution and distance from main Muslim consumer markets - short shelf

life on many products, and logistics cost as a ratio of product value

− Market access constraints to some key markets until recently e.g. EU

35 http://www.southafrica.net/za/en/articles/entry/article-south-africas-cheesemakers1 36 DAFF. 2012. A profile of the South African dairy market value chain 37 NAMC. 2012. Identification of the forces that determine competitiveness in the South African Dairy

Value Chain – A desktop study 38 http://www.gelatin.co.za/dairy.htm


16

3 Fruit (overall and fresh fruit)

South Africa farmers grow a variety of fruit, including citrus, apples, grapes, pears,

peaches, bananas, pineapples and mangoes. These are exported as fresh fruit, or

processed into a variety of juices and other fruit products. A general value chain is

shown below. Fresh fruit is naturally halal and there are therefore no halal-specific

considerations, although there may still be specific market preferences.

Genetics / plant material

R&D, varietal development, stock development, plant health maintenance

Farming and harvesting

Farming, harvesting, transport

Processing

Researchers, varietal rights owners , nurseries

Commercial farmers, cooperatives and small farmSpecialist suppliers (e.g. fertiliser, pesticides, equipment)

Sales

First level: grading, washing, sorting, consolidation, storage [Further processing: extraction, pulping, drying, mixing, flavouring, bottling, cold storage]

PackhousesVertically integrated producers / marketing companiesPhytosanitary and quality inspection e.g. PPECB

Distribution to market, brand development, marketing and advertising

Transport and logistics companies

Wholesalers and retailers, institutional buyersExport agents and distributors, vertically integrated fruit marketing companies e.g. CapeSpan

Activities

Actors


South Africa is a major producer of fruits – particularly citrus and grape

o Western Cape accounts for 14% share of citrus production39

Most citrus is exported unprocessed (68% of oranges, 87% of soft citrus), and

only a small part is processed (6% of soft citrus, 20% of oranges)

o Europe is the main destination of unprocessed fruits

o Products include fruit juices, canned fruit, dried fruit, and processed

fruit as inputs into other industries (e.g. confectionery and baking)

Phytosanitary standards and quality is critical for fresh fruit exports

The industry is well represented by Fruit South Africa, Citrus Growers’

Association, SA Fruit & Vegetable Canners’ Association, South African Fruit &

Vegetable Canners' Export Council, and Fresh Produce Exporters Forum

Some companies moving into processed fruits with higher selling price

o E.g. At Source, a dried fruit producer, started in 2002, at Koelfontein

(Boland) 40. Initially only processing fruit from farm, but due to growth

now sources from region41. Supported by IDC

First focussed on house brands (Woolworths and Pick n Pay), but now have

own brand (to control marketing, and product). It supplies international

retailers including Marks & Spencer, and Spinneys in the United Arab Emirates

39 DAFF. 2014. A profile of the South African fruit market value chain 40 http://www.bdlive.co.za/business/retail/2013/04/22/at-source-is-growing-the-dried-fruit-export-market 41 http://www.farmersweekly.co.za/article.aspx?id=35992&h=A-%E2%80%98soft%E2%80%99-revolution-

in-dried-tree-fruit


17

Barriers to growth

Phytosanitary and non-tariff barriers complicate exports

o PPECB is considered as contributing to perceived quality and

compliance of W. Cape fruit

Consumer requirements (especially the look of fruit)

Fruit producers relatively concentrated

o But potential for derivatives – e.g. dried fruit

Retailers have power in value chain

Market access, including tariff and non-tariff barriers

o Recent success through joint efforts by FPEF and government to

improve access to markets such as China; still challenges around

markets such as Indonesia


Fruit is deemed naturally Halal, and traditionally these foods and their

derivatives have simply been considered Halal

Some demand peaks relate to religious events e.g. dates at Ramadan

o Socio-political preferences of consumers related to these e.g., Muslim

consumers have boycotted dates sourced from Israel by mainstream

UK supermarkets

Indonesia is currently attempting to require halal certification for all imported

products including fruit, it is likely that this will be difficult to sustain

Summary


− Fruit production and export, in particular table grapes, other deciduous fruit

such as apples and pears, stone fruit, and to some degree citrus

− Quality control and reputation for quality and strict phytosanitary processes

− Industry organisation and promotion


− Supply –water supply, production lead times of around 5 years, land reform

policy certainty and competition of land uses, etc.

− Market access – tariff and non-tariff barriers (efforts are underway to open up

markets like China and India)

Scope to expand fruit exports to Muslim markets and to leverage off fruit exports

to Muslim majority/minority markets to promote a wider range of W. Cape halal

products


18

4 Juices and non-alcoholic beverages

The figure below shows a general value chain for the production of juices and non-

alcoholic beverages, halal-specific considerations on the right. Note that

carbonated soda drinks have a slightly simpler value chain.

Inputs

Fruit production (lower grade and specialist fruit for juice)

Provision of other ingredients – teas, flavourants, colourants, nutritional additives, sweeteners, preservatives, water, etc.

Product

develop-

ment &

processing

Commercial farmers and coops, consolidators, vertically integrated companies

Sales &

marketing

Product development (recipe, differentiation, packaging

etc)Extraction, pulping, concentrating, clarification, blending, dilution, flavouring, carbonation, bottling, cold storage


Transport and logisticsWholesalers and retailers

Institutional buyers (e.g. schools)

Activities

Actors

Process (no fermentation)

Concerns around naming / labeling

“Halal” beer” / wine/ “sparkling

wineBranding and

packaging preferences

Avoiding haram ingredients/

contaminants e.g. alcohol, carmine,

cochineal

Muslim market consumer

preferences e.g. juice thickness,

not from concentrate

ConcentratorsBlendersBrand ownersFood technologists


Soft drinks, iced teas, and sports drinks use a syrup, or extract to flavour water

Rooibos and Honeybush have shown strong growth in flavouring extracts in

food and drinks

o But it currently forms a small part of this market (e.g. in some products

Rooibos represents 0.5% of the total ingredients used)

Exports of beverages are dominated by fruit juices; beverages which are not

fruit based (and non-alcoholic) accounted for only 3% of exports in 2015

o Western Cape exported only R64 million of “other non-alcoholic

beverages” in 2015 and a further R10 million of water

o While exports are small, the production of these beverages is

substantial. However, the beverages are produced for the domestic

market

o For example, large volumes of Coca Cola are manufactured by

Peninsula Beverage, but this is only for the Western and Northern Cape

market

Juice is typically processed into frozen or aseptic concentrate in areas close to

production, and then the concentrate is traded internationally to reduce

volume, storage and transportation costs

o However, ‘not from concentrate’ juices have shown strong growth

Niche brands (e.g. Bos Ice Tea) have been able to break into the market

through a strong focus on packaging, quality of product and marketing

Large diary companies also produce beverages (e.g. Clover’s Tropika)


19


Global market dominated by carbonated soft drinks (45% of revenue),

followed by fruit juice (15%), bottled water (13%), and functional beverages

(9%)42

Global trend is towards heathier drinks (including super fruits, lower sugar

content, and functional juices – probiotics, fibre-based juice drinks)

Some signs that beverages industry will follow beer industry towards craft

brands

o But already large retailers have also moved into this space. PepsiCo

launched a craft soda called "Caleb's Kola" that comes in glass bottles

similar to bottles from 1960s

Some growth potential in non-alcoholic wines/sparkling wines and beers for the

Muslim market, but the market is still small

o Concerns around method (no fermentation – alcohol cannot be

removed) and trace elements of alcohol (current main stream

products still have trace – less than 0.5% -of alcohol)

o Concerns around marketing – e.g. “Halal champagne”

o Examples of wines and beers targeted at Muslim communities include

African Equations (working with Van Loveren Wine Estate)43, Kevser

Tabak (Germany), Night Orient (Belgium)

o Wines and champagne can target high end customers through

marketing and packaging

In the Middle East and Africa region, non-alcoholic beer has grown at an

average rate of 11.5% a year between 2008 and 201344

o A total of 1.43 billion litres of non-alcoholic beer were sold in the region

in 2013

o This accounts for a third of all global non-alcoholic sales45

o However, per capita consumption rates of non-alcoholic beer are still

far below Western beer consumption rates

Non-alcoholic beer is offered as part of major brewers’ product lines, which

means

o The price point is competitive (beer has large economies of scale),

o There is existing brand awareness (brewers can offer non-alcoholic

versions of well-established beers)

o Brewers have high marketing and promotion budgets

o Brewers can use existing distribution channels

Therefore, the non-alcoholic beer space is not suitable for small scale suppliers

Barriers to growth

Traditional drinks market is characterised by high concentration across the

value chain

o Large, integrated producers of beverages

o Multinational firms control flavour extracts

o Retailers also have some coordinating and bargaining power

42 NPLAN. 2012. Breaking Down the Chain: A Guide to the soft drink Industry 43 http://city-press.news24.com/Business/Muslims-can-now-raise-their-glasses-to-halaal-bubbly-20150502 44 http://www.wsj.com/articles/no-alcohol-but-is-this-beer-halal-1424845656 45 http://www.economist.com/blogs/economist-explains/2013/08/economist-explains-3


20

o Fruit juices compete against other fruit juice producers, but also against

the entire non-alcoholic beverage industry dominated by large players

with substantial advertising budgets, and economies of scale

Tariff and non-tariff barriers to access some key juice and beverage target

markets for the W. Cape

The imposition of sugar taxes domestically and its increased use internationally

may affect demand along with a greater focus on healthy drinks


Concerns around any fermentation that might occur in fruit juices (although in

negligible quantities, it is still not permissible)

o This does not seem to be a consistent concern46, in most market fruit

juice is assumed to be Halal

o Avoid other haram additives such as cochineal and carmine

Ingredient labelling/ transparency

Non-alcoholic beer is not permissible if the alcohol is extracted following

fermentation

o Non-alcoholic beer also faces constraints in terms of marketing,

labelling (including the word “beer” on bottle), and social stigma –

particularly in majority Muslim countries

o A more widely accepted certification system could open opportunities

Muslim consumer preferences may vary from other market around thickness,

whether or not from concentrate, fruit combinations and flavours, package

size and style etc.

o Also an interest in beverages for specific needs e.g. wedding

celebrations

Summary


− Strong existing exports of fruit juices, flavoured mineral waters (as well as highly

resourced and established wine industry that is interested in opportunities

around non-alcoholic sparkling grape juice)

− Emerging innovations and product development around non-alcoholic

sparkling grape juice (positioned for celebrations, beautifully packaged)

− Unique flavours associated with W. Cape e.g. rooibos, honeybush, and buchu

− Design and packaging capabilities

Value chain constraints to growth:

− Supply – fruit for juice is typically a ratio of total fruit production (processing vs

export grade) – associated issues of water supply, production lead times of

around 5 years, land reform policy certainty and competition of land uses, etc.

− High barriers to entry for new players in the mainstream segment

46 For example, the Fatwa Committee of the National Council for Islamic Religious Affairs Malaysia

(2011) stated that products containing natural alcohol, such as fruits, nuts or grains, or its extract, or

containing alcohol produced during the manufacturing process are not najs and can be consumed.


21

5 Confectionery (sweets, snacks, chocolates)

Confectionery covers a wide assortment of sweet products. The segment is often

divided into two broad categories, bakers’ confectioneries and sugar confections

(e.g. candy or chocolate). The figure below shows a generalised confectionery

value chain, as well as halal-specific considerations on the right.

Raw

materials

Production, sourcing, and transport of sugar, cocoa, coffee, other flavourants, and preservatives

Product

development

& processing

FarmersFlavour extractors

Wholesalers/agents, importers auction housesIntegrated multinationals

Distribution

Sales &

marketing

Product development (recipe, differentiation, packaging

etc.) Formulating, blending, baking, processing, boiling,molding, packaging, food safety systems

Multinational firms

Large food corporates e.g. Tiger BrandsArtisanal producers

Transport, logistics, and customs clearance

Multinational firms

Transport and logistics specialists


Domestic and international wholesalers, retailers and specialist buyers (e.g. delis, sweet shops), informal tradersInstitutional and food service buyers

Halal process and

certification

Tayyib and ethical

sourcing

Activities

Actors


contaminants e.g. alcohol, carmine,

cochineal, gelatine


South African confectionery market is valued between R12.4bn and R13.5bn47

Chocolate confectionery, valued at R6bn, is dominated by three multinational

companies, Mondelez South Africa, Tiger Brands and Nestlé

o But some smaller manufacturers also operate nationally (e.g. Beyers)

Sugar confectionery manufacturers include Lodestone Brands which

manufactures Candy Tops sweets, Trade Kings, a Zambian company which

expanded into South Africa in 2005, and Manhattan, which has been owned

by Premier Foods since May 2013.48

Due to economic uncertainty and rising costs, manufacturers chose to

innovate with existing strong brands rather than risk launching new ones49.

o Examples of innovation to existing brands included Tiger Consumer

Brands’ white chocolate-coated Jelly Tots and sour grape and

raspberry flavoured Fizzers.

Niche, artisanal chocolate and other confectionery market is growing

o This is also the case in Western Cape, for example Honest Artisanal

Chocolate, Chocolate by Tomes, De Villiers Artisan Chocolate and

Rococoa

47 Gatestreet. 2016. The Confectionery Industry in South Africa 2016 48 Gatestreet. 2016. The Confectionery Industry in South Africa 2016 49 Euromonitor. 2015. Confectionery in South Africa


22

Many processing inputs also increasingly imported

No coordination at the confectionary level (larger multinational and domestic

firms are represented through other associations)

Confectionery exports have shown strong growth (annual growth of 25%)

o However, this was partly due to rand depreciation as volume growth

was 4.6% per annum

o Volume growth is still strong, which indicates that exporters have

managed to increase their presence in the foreign markets

0

1000

2000

3000

4000

5000

6000

7000

8000

0

50

100

150

200

250

2011 2012 2013 2014 2015

Vo

lum

e (

ton

s)

Vla

ue

, ra

nd

(m

illio

ns)

Western Cape exports of confectionery and baked goods, 2011 - 2015

Confectionery Confectionery (tons), rhs


Products claiming to serve specific dietary requirements have seen strong

growth in the chocolate category, with low/no/reduced allergen, gluten-free

and organic claims posting large gains since 201250

Trend towards healthier snacks

o Greater awareness of sugar-related diseases

Middle Eastern and North Africa countries have shown strong growth in

demand

o E.g. cholate sales grew by an annual rate of 11.9% in Algeria, 11.6% in

United Arab Emirates, and 11.5% in Saudi Arabia between 2010 and

201551

o Chocolate markets are still less consolidated in these markets, offering

market entry opportunities (particularly to premium brands)

Barriers to growth

Traditional production dominated by large, multinational firms

Buyer-driven value chain (but with intense competition at retailer stage)

Range of fine food niche opportunities, despite lack of access into larger retail

chains


Consumers are increasingly requiring transparency to ensure that specific of

haram ingredients or contaminants are avoided e.g. non-halal gelatine,

50 http://www.candyindustry.com/articles/87183-chocolate-trends-popular-flavors-growing-claims-and-

reconnecting-with-adults 51 http://www.confectionerynews.com/Markets/10-fastest-growing-chocolate-markets-globally


23

cochineal/carmine (derived from insects), L-cysteine in the case of baked

goods (often derived from feathers and potentially also human hair)

Increasingly Muslim consumers may also seek Tayyib products – wholesome,

healthy and natural - e.g. less artificial ingredients and sugar

Not all multinationals have converted to Halal certification, leaving a gap in

the market

o However, this is changing. E.g. Nestle Malaysia produces range of 300

Halal products which are exported to 50 countries52

Will demand for Halal confectionary follow overall, global trends, or are there

more distinct flavours?

Artisanal firms may struggle with additional costs of certification, and

traceability of inputs (although chocolatiers may rely on single source as part

of value offering

Summary


− Innovation and product development, recipe development, packaging

− Artisanal production – chocolates, sweets, snacks, including serving market

segments looking for low carb, sugar free, gluten free, natural, healthy, organic

− Unique flavours associated with W. Cape e.g. rooibos, honeybush, buchu, and

fynbos flavours


− Production – mainstream confectionary struggling to compete on cost with

imports

− Certification: not all mainstream or artisanal producers are halal certified

52 http://www.nestle.com/Media/NewsAndFeatures/Nestle-Malaysia-Halal


24

6 Sauces, seasoning, spices

Sauces, seasoning and spices are all used to add flavour to food. Although the final

products are distinct, their value chains overlap and are shown below, as well as

halal-specific considerations on the right.

Raw

materials

Farming, drying, initial processing

Product

development

& processing

FarmersFlavour extractorsWholesalers, auction houses, importersIntegrated multinationals

Distribution

Sales &

marketing

Product development: recipe, differentiated flavours and packagingDrying, mixing, blending, milling, sterilising, packaging

Multinational and large local firmsSpecialist/artisanal producers, contract manufacturersPackaging companies


Multinational firmsTransport specialists


Domestic and international wholesalers, retailers and specialist outlets Institutional buyers – e.g. fast food chains

Halal process and

certification

Tayyib and ethical

sourcing

Activities

Actors


contaminants e.g. alcohol, vinegar, gelatine, animal

fats


The final market for herbs and spices in South Africa is large (as an input into

sauce and food production and for final consumption)

o Imports of spices were US$73 million of in 2014 (approximately R800

million)53

It is not known how much production of inputs occurs in South Africa or the

Western Cape vs. reliance on imported ingredients

Western Cape exports of seasoning and spices in 2015 was R969 million

o Exports were mainly in the “other spices” category54, while imports are

mainly pepper, ‘seeds of anise, fennel, coriander, cumin or caraway’

and ‘other’

o Strong export growth (17% per annum), helped by dollar price increase

of spices and rand depreciation55

o While volume growth was slower (9% per annum), this still implies a

rapid expansion into international markets

o Over 65% of exports are to African countries

53

UNCTAD stats 54 Based on the Harmonised System of classifying international trade 55

UNCTAD stats


25

512

543

705

823

970

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014 2015

Vo

lum

e (

ton

s)

Va

lue

, ra

nd

(m

illio

ns)

Western Cape export of sauces and seasoning, 2011 - 2015

Sauces and seasonings Sauces and seasonings (tons), rhs

Note: Exports volumes of 2012 was excluded due to an error in the data. Volumes for 2011 (also not

shown) was 29,534 tons

Some farmers have moved into herb production to diversify crops

o Allee Blue – a wine and fruit farm – now produces 30 tonnes of herbs a

year

Established large and niche spice producers in the W. Cape e.g. Spice Mecca,

Deli Spices, Crown National, Cape Herb & Spice Company, Nomu

Sauces market is dominated by multinational firms with multiple brands and

offerings (e.g. Tiger Brands)

Some successes by smaller, specialist sauces

o E.g. Banditos/ Mama Africa, Afoodable (unbranded sauces), Princess

Pesto

Some expansion of sauces into foreign markets through fast food chain (e.g.

Spur and Steers expansion into SADC, Nando’s expansion into UK and North

America


Global market expected to show continued strong growth, growing at a CAGR

of 4% from 2014 to 2021 to a value of $25 billion in 202156

Local and international trend towards hot sauces and Asian-inspired sauces57

Urbanisation plays an important role in the growth of the sauces market –

exposing people to new foods and flavours.58

Increasing focus on health aspects59

o Nearly 45% of cooking sauce products and 38% of table sauce

products introduced in 2011 featured health claims of some kind.

o More than 50% of salad sauces and dressings introduced health claims

of some kind

o 30% of sauce launches featured the claims “natural” recipes and “no

additives/preservatives.”

56 Research and Markets. 2016. Global sauces, condiments, and dressings market 57 Euromonitor. 2015. Sauces, Dressings and Condiments in South Africa 58 http://www.transparencymarketresearch.com/pressrelease/condiments-sauces-market.htm 59 http://www.saladaday.org/research-identifies-new-global-trends-sauces


26

Barriers to growth

Production (including blending) and distribution is often through large

companies

Growers consists of small farmers which sell to traders, while commercial

farmers are integrated into large production firms

But some small and medium sized firms also operate in this product category

Retailers have buying power in value chain


Many spice and sauce suppliers already have Halal certification (e.g. Crown

National, Deli Spices, Cape Herb and Spice)

Producers need to avoid haram ingredients or contamination, and increasingly

consumers expect transparency on all ingredients

o e.g. animal fats, colourants, flavourants, gelatine

Muslim consumers with different cultural backgrounds, as well as different

generational, are likely to have different taste and packaging preferences

(younger Global Urban Muslims are more urban to new/”exotic” taste

experiences)

Summary


− Innovation, recipe development, blending

− Mix of large corporate and artisanal producers

− Some products following the health trend

− Strong brand-building and marketing

− Existing exports

− Many producers are already halal certified


− Market concentration


27

7 Natural ingredients

Natural ingredients are produced from wild and farmed herbs, plants and animals to

produce extracts, enzymes, flavours, and (functional) foods. The focus is often on

indigenous plants with specific properties (e.g. health, smell or taste). Natural

ingredients therefore serve as inputs across multiple value chains (food, cosmetics

and pharmaceuticals). The diagram below shows the value chain of natural

ingredients – with the end point shown as the start of food, cosmetic and

pharmaceutical value chains.

Raw

materials

inputs

Farming, harvesting, initial processing (e.g. drying, separating)

R&D &

certification

Manufacturers, farmersImportersIntegrated multinationals

Processing

Distribution

Bioprospecting, design, small batch production, testing, clinical studies, regulatory approval, patenting

Research units (private, public, university linked)

Specialist high-tech developer-manufacturersPharmaceutical firmsCosmetic firms

Distillation, separation, filtration, drying, synthesis, conversion, mixing, processing, quality control, packaging

Vertically integrated firms

Specialist ingredient manufacturers


Transport and logistics firmsIngredient consolidators / agents

Activities

Actors

End use

manufactur-

ing

Production of cosmetics, food, pharmaceuticals

Pharmaceutical companiesCosmetic manufacturers

Food processors and food services

Tayyib and ethical

sourcing

Transparent labeling and

Halal certification

No animal testingUse of

alcohols, animal fats, and harsh chemicals


There is some primary production of plants for extraction, and various initiatives

to promote essential oils; there are also some community-based natural

resource harvesting initiatives

o The Department of Science and Technology (through CSIR as

implementing agent) has invested in 11 essential oils projects

o Two in Western Cape: buchu and rose geranium

o Unsure of success of these programmes, but anecdotal evidence

suggest mixed results, including long delays to economic benefit60

o Rollout of community benefit sharing has experienced challenges, and

some multinationals have apparently been cautious to invest due to

60 See for example Melin (2009) A bitter pill to swallow: A case study of the trade and harvest of aloe

ferox in the Eastern Cape, South Africa and http://siyakholwa.co.za/rose-geranium-essential-oils/

http://siyakholwa.co.za/rose-geranium-essential-oils/


28

the high time requirement for these negotiations and/or difficulties in

negotiating a win-win revenue sharing arrangement

Exports of ingredients (including enzymes, plant ingredients, and other

ingredients) amounted to R1.1 billion in 2015

o Value of exports grew by 22.5% per annum

o Matched by strong volume growth (19.2% per annum)

o Food preparations accounted for 34% of exports and enzymes

accounted for 22%

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

-

200

400

600

800

1,000

1,200

1,400

2011 2012 2013 2014 2015

Vo

lum

e (

ton

s)

Va

lue

, ra

nd

s (m

illio

ns)

Western Cape exports of ingredients, 2011 - 2015

Ingredients Ingredients (tons), rhs

Export of enzymes has experienced strong growth in terms of value (21% per

annum reaching R257 million in 2015) and volume (28% per annum)

o Enzymes is a broad category. Food enzymes help with the digestion of

foods, but also used in inedible products (e.g. laundry detergents)

o Food enzymes are benefiting from the health and wellness trend, with

many consumers

o One company is already producing halal enzymes in the Western

Cape and exporting them (they import pancreas as local pancreas

volumes are insufficient)

o Enzymes are also used by manufacturers to lower costs in many

products

o Industry is dominated by multinationals, which integrate into other

large food production firms

o Overall, the enzyme market forms a small part of the total ingredients

market61

For nearly all natural ingredients the value chain power sits with international

buyers, not South African producers

o Most of the value addition occurs after export62, which results in South

African firms receiving less than 5% of the total value add63

o Some intermediaries are active in trying to enable more balanced

negotiations e.g. Phytotrade Africa

61 http://www.marketsandmarkets.com/Market-Reports/speciality-food-ingredients-market-

252775011.html 62

Bennet, 2006. Using value chain analysis to understand power and governance in the Southern

African Devil’s Claw industry 63

Wynberg et al, 2008.


29

Globally between 60% and 80% of the essential oil trade goes directly from

producers to processing importers – mainly large multinational flavour houses

Niche cosmetics brands are developing based on appeal of natural and

traditional products. These firms compete in the high end market

o E.g. African Extracts Rooibos Skincare, Absolute Bamboo Cosmetics

South Africa, The Olive Workshop, African Aromatics


There is a growing interest in natural plant-based remedies as a source for

commercial products64

10 European companies dominate international trade65

As halal is becoming more mainstream, multinational companies are actively

seeking suppliers of halal certified ingredients (e.g. Nestle Malaysia, L’Oreal)

Barriers to growth

The mainstream market is controlled by large, integrated firms

o The top 10 firms account for 80% of global flavour sales66

o These flavour sales are then distributed across various industries (e.g.

food, cosmetics, pharmaceuticals)

o This is also the case for other ingredients, oils and enzymes where large

firms control the value chain and are able to capture a large share of

the final price

Regulatory complexities which differ by market and by claim (e.g. natural,

organic, Kosher, Halal, and GMO-free)

In certain markets (geographical and product) a lack of standards and false

claims harms perception of smaller brands

o E.g. functional food health benefit claims or cosmetic beauty claims

Verifying claims is expensive and long approval lead times


Avoiding contamination of haram additives and alcohol (some opinions are

that alcohol cannot be used in the extraction method, others are that it is

acceptable, or acceptable if it is not grape alcohol)

No animal testing and increased focus in Tayyib – healthy, non-harmful,

wholesome

Overlap between organic, natural, Fair Trade, Beauty without Cruelty, and

Halal

Summary


− Biodiversity asset base, and development of bioeconomy strategy to support

economic benefits from this asset base

− Some base of research and technical capacity

− Some extraction capacity and links to into global buyers


− R&D - Cost of new ingredient discovery, facilitating bio-prospecting and

benefit sharing, testing and registering

64

Street et al. Commercially Important Medicinal Plants of South Africa: A Review 65

Wynberg et al, 2008. Value adding in the Southern African natural products sector: how much do

patents matter? 66 http://blog.euromonitor.com/2014/07/major-new-entrant-to-the-global-flavours-industry.html


30

− Supply – access and scale of indigenous plant harvesting, cultivation,

maintaining good community relations and benefit sharing

− Standards/certification – Compliance with MNC’s standards and international

certifications

− Value chain governance, sales, distribution – access to and negotiation with

large ingredient buyers and multi-nationals


31

8 Cosmetics and personal care

The cosmetic and personal care industry produces items that enhance, or

maintains, one’s physical appearance and personal hygiene. This can include

soaps, shampoos, deodorants, bath products, lotions and make-up. The figure

below shows the cosmetic value chain, as well as halal-specific considerations on

the right.

Inputs

Extraction essential oils, synthesis, manufacturing of basic chemicals, preservatives, colourants, active ingredients, thickeners, and surfactants

R&D, product

development

Farmers, community harvesting coopsIntegrated multinationalsFlavour houses and extractors, aggregators

Production

Distribution

Design, small batch production, testing, clinical studiesBlending, consumer testing, design and packaging

Multinational firms, entrepreneursResearchers, testing labsCertification and registration bodies

Synthesis, conversion, mixing, processing, quality control,

packaging

Multinational firmsNiche producers


Transport and logistics firms

Multinational firms

Halal process and

certification

Tayyib and ethical

sourcing

Activities

Actors

Sales & marketing


Transport and logisticsDomestic and international wholesalers, retailers and specialist sellers (e.g. beauty salons, spas)

No animal testing

No use of alcohols,

animal fats, and harsh chemicals


The local retail of cosmetics is estimated to be R25 billion67.

The cosmetics and personal care sector in South Africa is estimated to have

contributed about 1.2% to total manufacturing value-add in 201368.

Despite a slowdown in domestic household income growth, the cosmetic

industry continues to expand, growing by more than 10% in 201469.

Niche brands are developing based on appeal of natural and traditional

products. These firms compete in the high end market

o E.g. Rain, Pure Beginnings, African Extracts Rooibos Skincare, Absolute

Bamboo Cosmetics South Africa, The Olive Workshop, African

Aromatics, Afrinaturals, Africology

o Many of these niche brands link into non-mainstream channels to

market such as spas, online sales and specialist natural shops

67 Who owns whom. 2014. Manufacture of cosmetics and other toilet preparations 68 Dti. 2015. Industrial Policy Action Plan 69 Euromonitor. 2014. Beauty and personal care in South Africa


32

A few W. Cape cosmetics and personal care companies are already halal

certified, but it is still an underexplored area

Western Cape’s cosmetics and personal care exports was R1.7 billion in 2015

(see figure below)

o Strong value growth of 17% per annum, but volume growth was only

3% over the period. This suggest values were supported by rising prices

(including rand depreciation)

o However, 3% still indicates some improvement in competitiveness and

this is improving as there was strong growth in value and volume in

2014 and 2015

o Note: a large portion of this exports relates to a sunscreen product, and

it is not yet clear whether or not this product is manufactured in the W.

Cape, or whether the trade data indicates a registered office or

distribution centre

Six of the top 10 markets were African countries; Zimbabwe is the top

destination

-

5,000

10,000

15,000

20,000

-

500

1,000

1,500

2,000

2011 2012 2013 2014 2015

Vo

lum

e (

ton

s)

Va

lue

, ra

nd

(m

illio

ns)

Western Cape exports of cosmetics and personal care,2011 - 2015

Cosmetics and Personal Care Cosmetics and Personal Care (tons), rhs


Global spending on cosmetics by Muslim consumers reached $46 billion in 2013

(6.8% of total global spend)70

However, the focus on Halal cosmetics is relatively new – the use of halal

cosmetics is not universally enforced in Islam

o Based on Google Trends, online searches for "halal makeup" were

virtually non-existent before 2013 and have held a steady interest since

Large multinationals have been slow to adapt, giving niche players such as

Wardah (Indonesia) a foothold in the market.

The demand goes beyond halal ingredients to wider Sharia compliance

o E.g. Inglot has developed a breathable nail polish; while it was not

specifically designed with Muslim consumers in mind, it is growing in

popularity as it does not block ritual cleaning before prayer

Push for Halal cosmetics overlaps with other trends – reliance on natural

ingredients and anti-animal tested products

Consumers increasingly want packaging to be transparent on how it was

made, and what chemicals it contains.

70 Thomson Reuters. 2014. State of the global Islamic Economy


33

Barriers to growth

The industry is highly concentrated. International players such as Unilever SA,

P&G, Colgate-Palmolive and L’Oréal South Africa dominate local market,

accounting for 90% of the market share71.

High start-up costs, particularly if R&D is involved

High costs to enter market (e.g. advertising, promotions, packaging)


Avoid haram ingredients e.g. cochineal, carmine, alcohol (in some schools of

thought only grape-derived alcohol), blood products and placenta

Avoid haram growth mediums

Avoid contamination in production process, including from equipment and

cleaning processes

Labelling and advertising that complies with Islamic and relevant cultural

requirements e.g. modesty

Wider Sharia compliance e.g. products that do not interfere with cleansing

prior to prayers (e.g. breathable nail polish, hair treatments that do not fully

coat the hair follicle)

Increased interest in Tayyib - non-harmful, wholesome, high animal welfare

Cultural preferences and requirements e.g. during Ramadan, treatments for

veiled hair

Currently unclear when Halal certification is necessary, or whether transparent

labeling is enough

o Use of Halal certification as marketing tool

o Use of Halal certification as non-tariff barrier

o Halal may become a necessary condition for cosmetics sales (but this

view is still far from being universal), but is not a sufficient measure – the

product must still be in line with global beauty preferences, styles, and

quality

Debate still exist around the use of alcohols in products not intended for

consumption

o The Fatwa Committee of the National Council for Islamic Religious

Affairs Malaysia in 2011 stated that processed products not made with

the intention to produce alcohol and containing alcohol below the

level of 1% of the total volume can be consumed

Summary

See also Ingredients section


− Innovation and new product development

− Links to natural environment and tourism (lifestyle associations, spas, hospitality

industry)


− Product development and registration – high cost and time of new product

− Trend of declining exports from W. Cape

− Industry concentration – barriers to entry for new players

71 Who owns whom. 2014. Manufacture of cosmetics and other toilet preparations


34

9 Pharmaceuticals and vaccines

The pharmaceutical industry discovers, develops, produces, and markets drugs for

use as medications. Vaccine development has also been included in this section as

an opportunity to explore. A general value chain of the industry is shown below,

with halal-specific considerations on the right.

Inputs

Synthesis, manufacturing of basic chemicals, active ingredients, preservatives, thickeners, and surfactants

R&D

ManufacturersFarmers

Integrated multinationals

Production

Distribution

Design, small batch production, testing, clinical studies, regulatory approval, patenting

Multinational firmsResearchers

Synthesis, conversion, mixing, processing, quality control, packaging

Multinational firmsNiche producers


Transport and logistics firmsMultinational firms

Activities

Actors

Sales & marketing


Transport and logisticsDomestic and international wholesalers, retailers and specialist sellers (e.g. pharmaceuticals)

Halal process and

certification

Transparent labeling

No animal testing

No use of animal fats, and harsh chemicals

Halal blood product inputs

Restrictions on alcohol

use/residue


The South African pharmaceutical market was valued at R32.4 billion in 2013

o Mostly private sector (87%), the public sector only accounted for 13%

However, most pharmaceuticals are imported

o South Africa imports 65% of its pharmaceuticals and up to 95% of its

APIs

o There are two leading locally-based pharmaceutical producing

companies – Adcock Ingram and Aspen Pharmacare (mainly

generics)

Most of the imports are through large, integrated healthcare firms (e.g. J&J,

Pfizer, and GSK)

Bioprospecting – the commercialisation of indigenous medical plants – has not

been as successful as initially hoped

o Few prospecting licenses have been issued, farmers have struggled to

cultivate and grow wild plants, and there have been disagreements

over who owns the intellectual property related to these plants

Exports are mainly into the region – much of this is likely to be re-exports

(although no data exists to measure the extent of re-exports)


35

Human vaccine production capability was defunded in 1990s and in 2011 no

human vaccines were made in South Africa72

However, capacity still exists in vaccines, including the National Health

Laboratory Service (NHLS) - a public health laboratory service which operates

in nine provinces73

o The South African Vaccine Producers falls under NHLS produces anti-

venom for snakes and spiders

The Biovac Institute was established in 2003 as a public-private partnership with

the aim of restructuring state vaccine assets to ensure domestic capacity in

vaccine production, as well as a local skills base74

o Pfizer has recently partnered with the Biovac Institute to produce a

pneumonia vaccine for infants75

o The five-year partnership will see technology transfer and skills

upgraded for the production of 'Prevenar 13' vaccine

o Initially vaccines will still be imported, but by 2020 production should

occur locally


The global pharmaceutical market had an estimated value of $1,000bn in

201476

Increased awareness among Muslims regarding wellness and medicines is

driving shift towards transparency and Halal pharmaceuticals

Globally the market is restrained due to a lack of sufficient R&D for halal

medicines

Currently no Halal vaccine production capabilities

o The world’s first vaccine facility is being developed in Malaysia and is

expected to scale up to produce up to 1,000 vaccines

o It is expected to start producing in 2018

o Joint venture between Malaysia and Saudi-based AJ Pharma Holdings

costing RM120 million (roughly R400 million)77

Barriers to growth

Delays to medicine approvals through the Medicines Control Council (which

can be up to 5 years)

Need to import active pharmaceutical ingredients which are not produced

locally

Concentrated market with high barriers to entry (e.g. R&D costs, and large, up-

front capital costs)


Currently, Halal certification is not widespread in the pharmaceutical market

o For example, only five of the 120 pharmaceutical and cosmetic

companies operating in Indonesia has official halal certification78

72 http://mg.co.za/article/2011-07-01-made-in-china-protected-africa 73 http://www.savp.co.za/ 74 http://www.southafrica.info/about/health/south-africa-pharmaceutical-

manufacturing051115.htm#.V-rBhvkrLIU 75 http://www.reuters.com/article/us-safrica-pfizer-idUSKCN0SS0JC20151103 76 Thomson Reuters. 2015. Global pharma sales to reach $1.3 trillion 77 http://halalfocus.net/malaysia-plans-halal-vaccine-production/ 78 AT Kearney, Unleashing Pharma from the R&D Value Chain


36

Avoiding haram ingredients e.g. animal derived gelatine (veg gel caps),

alcohol (grape derived), porcine or human blood products and placenta

Avoiding haram growth medium

One of the key constraints for manufacturers is avoiding cross contamination

between halal and haram production lines79

The main concern is the use of animal derivatives and gelatines in painkillers,

allergy medications and vaccines.

Some flexibility in the principles governing the use of medicine containing

ingredients otherwise deemed as Haram:80

o The medicine containing Haram ingredients must be necessary for the

life of the person who takes it (e.g. insulin or vaccines such as the Ebola

vaccine – from human antibodies – and H1N1 vaccine)

o A knowledgeable and trustworthy Muslim physician should

recommend such types of medicine containing Haram ingredients.

o The person is not allowed to take this particular type of medicine while

there are other lawful medicines available

There is currently no consensus on the use of genetically modified materials81

Summary


− Strong R&D base (medical research at universities and hospitals)

− Production of generics

− Recent developments to promote vaccine industry in the W. Cape

− Regional exports

− Health and wellness capabilities (medical facilities, nutrition etc.)


− Challenges around global competitiveness of W. Cape pharmaceutical

production – net importer, falling exports, challenges of cost of separation of

production for halal and non-halal products to avoid cross-contamination

− Market access and regulatory environment – high barriers to entry, high cost

and time of registration, new regulatory requirements around natural

medicines

79 http://www.in-pharmatechnologist.com/Processing/Halal-accessing-the-untapped-30bn-pharma-

market 80 Regulatory Focus. 2012. Halal Pharmaceuticals 81 Regulatory Focus. 2012. Halal Pharmaceuticals


37

10 Food service

The food service industry covers all provision of meals outside of the home. It

therefore includes hotels, fast food and restaurants, food stalls, airlines, events

(sporting events, conferences, festivals etc.), outside caterings and institutional food

service (corporate canteens, hospitals, military rations, food aid and disaster relief

etc.). A general value chain is shown below, with halal-specific considerations on

the right.

Inputs

Sourcing of inputs for all food production – e.g. meat, fruit, vegetables, dairy herbs and spices, flavourants, preservatives

Product

development & processing

FarmersWholesalers and retailersIntegrated multinationals

On site

service,

support and

sales

Recipe development and testing, cooking/ baking/ frying

meals, packaging, cold storage, freezing

Multinational firmsSpecialist catering firmsRestaurants

Procurement, on-site production, food safety management, service

Transport and logisticsDomestic and international intermediate, suppliers, wholesalers, retailers and specialist seller (e.g. bakeries, restaurants), institutional buyersFood safety inspectors and certifying bodiesBrand building and marketing

Halal process, certification ,

mutual recognition

Tayyib and ethical

sourcing, avoiding haram

ingredients or contamination

Activities

Actors

Halal process and food safety ,

traceability

In some cases, no alcohol

allowed on site


Overall the South Africa catering industry was worth R8 billion in 201582

o 73% food sales, 18% from bar sales, and 9% other

There are several large firms which focus on the bigger, institutional, contracts83

o E.g. Fedics, Kagiso Khulani Supervision Food Services, and Royal

Mnandi (owned by MvelaServe Group), Bidvest Foodservice, Famous

Brands Ltd., Spur Corporation Limited, Taste Holdings

Most major fast food franchises have Halal certified outlets (e.g. Debonairs,

Nando’s, Kauai, KFC, Spur), many hospitals also have halal certified food

There are also many small operators in the catering businesses, focusing on

private or corporate events

However, Halal options in catering and at sit-down and higher end restaurants

in Western Cape are often limited (particularly in areas beyond Muslim

communities)

In terms of restaurants the Western Cape is renowned for its quality and diverse

restaurant offerings

o E.g. Test Kitchen, La Colombe, and The Tasting Room

o However, the connection between fine dining and wine means that

the Muslim market is often not targeted

82 StatsSA. 2016. Food and Beverage 83 Euromonitor. 2016. Consumer Foodservice in South Africa


38

Hotels and restaurant sales depend on tourism

South African hotels tend to source 32% of food from specialists, 28% direct

from manufacturers, and 20% from catering wholesalers84

Food aid and disaster relief also has a base in the W. Cape, through NGOs

such as Gift of the Givers, Mustadafin


Food service trends have followed the larger global food trends towards85

o Meals-on-the-go resulting in strong growth of pre-made meals

o Functional foods focusing on health aspects of food

o Organic food movement focusing on sourcing, nutrition and safety

o Innovative products and packaging

o Diversifying palate and willingness/ interest to try new flavours and

tastes

International disaster relief and aid food for Muslims tends to be manufactured

in the Arabian Gulf86

o However, there seems to be little coordination on Halal relief food

o Agencies have traditionally used dry food (e.g. lentils) which requires

scarce water resources to cook

o Companies, e.g. Tayyib Foods, have started moving into providing

ready-to-eat meals for aid relief

o Tayyib Foods got a large contract when the United Arab Emirates

created an aid corridor and companies who bought its meals were

able to send them to Gaza, which was delivered on the ground by the

United Nations Relief and Works Agency for Palestine Refugees in the

Near East

Barriers to growth

Although there are large firms operating in the food service market, it has

relatively low barriers to entry and is characterised by smaller firms (e.g.

independent restaurants, specialist caterers)

High-end restaurants in the Western Cape are closely integrated with wine

sales, which may constrain growth of halal

Contracts with international aid agencies often have additional specifications

(e.g. where the food is produced) and requires scale

Internationalised food service franchises tend to try to localise their supply in

order to reduce cost and shorten delivery time; this limits the demand pull

that would be felt by the brand country of origin (e.g. Nandos has localised

contract manufacturers for its marinades and sauces close to their 1,200

restaurants across 30 countries87, and sources chickens in country)


Avoiding any haram ingredients

Avoiding cross-contamination by haram ingredients, including alcohol, pork

Transparency of information on ingredients and production conditions

Certification and accreditation for relevant markets

84 USDA. 2014. South Africa HRI Sector Report 2014 85 PWC. 2014. Fresh Insights 86 http://www.thenational.ae/business/retail/british-banker-dumps-high-life-to-produce-halal-food-in-

abu-dhabi-for-the-poor 87 http://www.africanbusinessreview.co.za/Nando's/profiles/145/From-street-food-to-high-street


39

Taste preferences of Muslim consumers

Full traceability is not always the focus in catering, which may be unaware of

some of the ingredients used (e.g. whether animals were used to make

gelatin, rennet in cheeses, alcohol in sauces)

Lack of understanding/ knowledge of Halal requirements by caterers, hotels

and restaurants (diners complain that Halal enquiries are often met with

“blank stares”)

Summary

See also ingredients section


− Many fast food chains already halal certified

− Some institutional caterers are already certified e.g. hospital, airline catering

− Differentiated tastes and flavours (e.g. Cape Malay)

− Presence of major Islamic disaster relief agencies

− Tourism–food links (restaurants, airlines)

− Food technology, product development and testing capabilities (e.g. Nigerian

businessman working with CPUT Food Technology Station to develop military

rations for Nigerian army using egusi)


− International market access/proximity

− Integration of high-end restaurant experiences with wine


40

11 “Family friendly” / Halal tourism

The value chain of tourism is different from a generic manufacturing value chain as it

doesn’t follow a linear flow from raw materials inputs to final customer. Instead there

are multiple entry points into the value chain (e.g. interaction with travel agents

before, during and after the trip). Furthermore, the steps in the value chain, shown

below, tend to be more blurred in reality (e.g. hotels may offer regional transport

and excursions).

Marketing,

sales and

distribution

Advertising, marketing, sales, web search optimisation, web information, travel advisory, itinerary planning

International

transport

Tour operator, travel agentsIndependent sales

Word of mouth, social media

Regional

transport

Attractions

and activities

Travel, customs clearance

International airline carriersCruise ships

Domestic travel by car, airplane, train, or bus

National tour operator

Travel agentDomestic airlinesCar hirePrivate and public transport

Adventure, leisure, cultural/heritage sites, food, natural beauty, flora and fauna, beach, retail, health/medical, shopping events/festivals

Tour operatorsParks (public and private)Attraction owners, retail and shopping mallsRestaurants, food markets

Local travel agent and guides

Activities

Actors

Lodging

Accommodation, food, travel assistance (e.g. bookings), excursions and activities

Hotels, guest houses, B&, resortsPrivate home and room rentals (including Airbnb)Friends and family

Halal restaurants and hotels,

prayer rooms,

directional signage, separate male and

female pools/spa

areas

OU

TBO

UN

D C

OU

NTR

YIN

BO

UN

D C

OU

NTR

Y

Information on halal-friendly options

Halal tourism rating

indices


The tourism sector in South Africa is a substantial contributor to GDP (R323

billion) and employment (1.4 million)88.

Tourism is also of vital importance to the Western Cape

Statistics on Muslim travelers and families visiting the Western Cape are limited

However, Cape Town and South Africa are already well placed in many

rankings

o South Africa is ranked 3rd in ArabianBusiness.com Halal friendly holiday

spots89

o South Africa is ranked 30th in MasterCard/ CresentRating Global Muslim

Travel Index 201690 (but ranked top 10 for non-OIC countries) - weak

88

Department of Tourism. 2015. Annual Report 2014/2015 89 SGIE, 2015


41

scores for awareness, accommodation, visitor arrivals (see figure

below)

o South Africa is ranked 10th in HalaTrip.com’s list of Halal friendly places

to visits (but is not included in the “family-friendly top 10 list)91

Cape Town is already considered travel friendly for Muslims, given strong

Muslim community, number of mosques, and Halal-friendly restaurants92

o The ability to offer Halal tourism is likely to be lower in the rest of the

Western Cape

There are already some attempts to market Western Cape as Halal friendly or

to help with information, e.g.

o Cape Town Travel: Halal restaurant list

o www.Hungryforhalaal.co.za

o Stayhalaal.co.za (although seems to have limited offerings)

o International websites (e.g. TripAdvisor, www.halaltrip.com)

However, no comprehensive, up-to-date marketing site (e.g. under

capetown.travel)

Note: Scored out of 100, purple denotes SA, blue is average for Top 40 destinations


Rising disposable income for the growing Muslim population in Asia Pacific

resulted in increased travel for leisure purposes in recent years.

Muslim tourists globally represent a major niche market worth $142 billion in

201593, an estimated 11% of the global travel expenditure.

Muslim travellers who, by and large, travel in larger family groups, stay for

longer and therefore spend more money than most other travel

demographics.

MENA markets represent 60% of the total global Muslim tourist outbound

expenditure in 2011.

Top three considerations when picking a holiday destination “Halaal Food”

(67%), “Overall price” (53%) and “Muslim-friendly experience” (49%)94.

90 https://www.crescentrating.com/gmti/detail.html?spot=30&s=1 91 https://www.halaltrip.com/other/blog/the-best-10-places-to-visit-in-2016/ 92 See for example http://www.capetown.travel/visitors/eat-drink/restaurants/breakfast/halaal-

restaurants-in-cape-town 93 DinarStandard. 2012. Global Muslim Lifestyle Travel Market: Landscape & Consumer Needs 94 Ibid

http://www.hungryforhalaal.co.za/

http://www.halaltrip.com/


42

Malaysia was a pioneer in the development of tourism geared towards Arab

tourists, and there is clear evidence of this in downtown Kuala Lumpur,

especially during the GCC summer months.

Other niches within the travel sector are emerging. Thailand, for example, is

promoting medical tourism to the Arab market; Japan is seeing the potential

of developing its Halal-friendliness for the 2020 Olympics; the Australian Gold

Coast is making its resorts more Muslim-friendly, and even Cambodia and

Vietnam are looking to take advantage this potential market with the

assistance of Malaysia.

Dedicated ‘Muslim-friendly’ travel expos have been held in Granada, Istanbul

and Abu Dhabi.

Barriers to growth

Visa and travel restrictions

Cost involved with partnering and promoting/marketing in outbound countries

o Rise of social media may shift this somewhat


There is no consensus as to what Halal travel means

There are different interpretations around the world to the extent of faith and

what is/ is not the permissible

This complicates any offerings to Muslims as a distinct target market, e.g.:

o Some Muslims are willing to eat in a restaurant which serves alcohol or

pork, while some may not be

o A hotel could provide praying facilities, Qurans in the bedrooms for

Muslim guests, but some may still avoid it as the hotel still serves

alcohol, serves pork at the restaurant, and have common swimming

facilities for male and females95

Alignment of product offering to be more halal friendly, e.g.

o Hotels: direction signage to Mecca, prayer spaces, alcohol free mini-

bars, no gambling on site, halal restaurants, separate swimming and

spa facilities for male and female guests

o Halal-friendly / family-friendly experiences, attractions and events (e.g.

suitable for larger groups, halal food available, prayer rooms, modest

dress)

There is still a lack of understanding/ knowledge of Halal requirements by more

mainstream caterers, hotels and restaurants (diners complain that Halal

enquiries are often met with “blank stares”)

o Information on halal offerings, and working to improving ranking on

halal indices e.g. CrescentRating

Different approaches to positioning halal tourism e.g. halal vs. “family-friendly”

to appeal to a wider market, avoid alienating other tourists, consider that not

all Muslim travellers would like to be targeted as halal travellers, etc.

95 http://sociableearth.com/what-is-halal-travel/


43

Summary


− Overall tolerant social context (welcoming to Muslim visitors)

− Already a somewhat Muslim-friendly destination –culturally diverse,

availability of mosques and halal food, malls already have prayer spaces,

lower political sensitivity around Muslim travellers / more welcoming than

e.g. European destinations

− Established and well-recognised international tourism destination

− Diversity of product and experiences, including existing family-oriented

offerings e.g. nature-based, Garden Route family attractions

− Cultural and historical links – including Cape Malay, kramats

− Direct air connectivity to key majority-Muslim destinations (e.g. Dubai,

Qatar)


− Lack of information – limited information on current Muslim tourism numbers

and preferences, statistics not considered reliable due to people travelling on

dual passports, current websites with halal tourism listings have limited

coverage

− Promotions – limited promotions and marketing budgets, diverse source

countries and information needs /appropriate channels

This is an opportunity with great potential, and initial constraints can be addressed

through relatively small changes and budget.

Promoting tourism also has strong links with all the other sectors, which benefit

from sales and valuable exposure to foreign consumers.


44

12 Halal education

The term Halal education is not a common term. It is used here to refer to the study

of the techniques and processes to create food and products which are permissible

under Islamic law, the “business of halal”, and understanding Muslim consumer

preferences. It can also be extended to include other aspects such as the

relationship between halal and Islamic finance, logistics etc. Islamic religious studies

are available at many universities and institutes, and would not be considered part

of the halal education focus.

Activities in the Western Cape and South Africa

The Western Cape benefits from four universities in the region (University of

Cape Town, Stellenbosch University, University of the Western Cape, Cape

Peninsula University of Technology)

These universities have varying levels of focus on food science and technology

(none of the universities currently offer a specialised degree in Halal food

science, but aspects and requirements of Halal food may be included in the

general degree)

o Stellenbosch University has a Department of Food Science offering

undergraduate and post-graduate degrees

o Cape Peninsular University of Technology offers a BTech Food

Technology as well as a Btech Consumer Science: Food and Nutrition

o University of Cape Town does not offer specialised food science

degrees, but some aspects form part of more general studies offered

by the Faculty of Science and the Faculty of Engineering and the Built

Environment (e.g. Department of Chemical Engineering)

o University of Western Cape does not offer a specialised food science

degree, but some aspects form part of more general studies offered

by the Department of Biotechnology and the Department of

Chemistry

Three of these universities also offer MBAs, and already have significant

numbers of foreign students

These universities have several competitive advantages, including English

tuition (Stellenbosch is dual-medium), relatively low cost of tuition compared

to international universities with similar rankings (supported further by the

weak rand), and a strong Muslim community in Cape Town

There are also numerous tourism and hospitality training options available in the

Western Cape, including chef academies/institutes, hotel schools

The province also has agricultural degrees, training and colleges, including

University of Stellenbosch, Elsenburg

More widely, the W. Cape has been an affordable and good lifestyle option

destination for foreigners wishing to learn English as a foreign language

Recently the W. Cape has also developed globally competitive online learning

businesses e.g. GetSmarter, which offers online short courses


The Halal Research Council (Pakistan) offers a Post Graduate Diploma on Halal

Industry (long distance diploma)

The International Islamic University of Malaysia’s has a dedicated institute –

International Institute for Halal Research and Training (INHART) – which offers

multiple courses


45

o Including M.A. Halal Industry Management, M.Sc. Halal Industry

Science, and PhD Halal Industry

Many universities have Halal courses as part of their general food science/

technology degrees, e.g.

o Monash University, Cornell University, Taylor University

o Michigan State University offers a course on Halal food as part of their

Master’s degree in global food law

Many online courses (including free Massive Online and Open Courses) include

a focus on Halal food

o Washington State University

o Kansas State University offers Fundamentals of Food Processing and

Kosher and Halal Food Regulations

o University of Guelph

o EdX Ethics of Eating (from Cornell University)

Many universities already offer programmes in Islamic Finance and Banking

o London School of Business and Finance (MBA in Islamic Banking and

Finance)

o University of East London (MBA in Islamic Finance)

o Durham University (M.Sc. Islamic Finance)

o INCEIF (Masters in Islamic Finance Practice)

o Geneva Business School (Master in Islamic Finance)

o University of Malaya Graduate School of Business (MBA Islamic

Finance)

o International Islamic University of Malaysia (MBA Islamic Finance)

o Many other offer courses as part of a general MBA

Barriers to growth

Introducing new curriculum into universities – particularly new degrees – is

generally a slow process and depends on many factors beyond demand (e.g.

current lecture load of professors, availability of funds to hire new lecturers/

professors, availability of venues, and the alignment with overall strategic

direction of department)

Unclear what current demand is for an agriculture, food technology degree or

MBA specialising in Halal products from students (e.g. students may prefer a

degree which gives them access to wider job opportunities) and companies

Current protests and disruptions at South African universities are likely to reduce

appeal to international students


46

Summary


− Established universities with a good international reputation, and relevant

courses around agriculture, food technology, business, hospitality

− Existing base of international education in the province e.g. English language,

aviation, MBA programmes

Considered a good value for money location, and with good lifestyle for

learners

Already included Muslim learners, options for home stay with Muslim families

etc., less antagonists towards Muslims


− Long processes for registration of new courses, curriculum development

− Marketing to potential global students

− Student visa requirements

− Current instability in the SA university funding system, and possible negative

international perceptions of the student unrest


47

APPENDIX C: GEOGRAPHICAL MARKET ANALYSIS

There are roughly 1.6 billion Muslims in the world. While there are Muslims throughout

the world, seven countries (Indonesia, Bangladesh, India, Pakistan, Egypt, Nigeria,

Turkey, and Iran) account for 63% of total population. The map below show the

weighted distribution of the Muslim population (so that the more Muslims the larger

the country size).

Useful sources for further reading on geographical markets

Data on religion by country: http://www.pewforum.org/data/

European focus

PlanetRetail. 2013. European grocery retailing: change is the only constant

− https://www.planetretail.net/presentations/ApexBrasilPresentation.pdf

Muslim Council of Britain’s Research & Documentation Committee. 2015. British

Muslims in Numbers

− www.mcb.org.uk

ASIDCOM. 2012. The Muslim Consumer as the Key Player in Halal (French market

focus)

− https://www.asidcom.org/IMG/pdf/ASIDCOM_Report-

french_muslim_consumers.pdf

EBLEX Halal Steering Group. 2010. UK Halal Market

USDA GAIN. 2013. Report on French Halal Food Market

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Halal%20Food%20Market_

Paris_France_11-15-2013.pdf

http://www.pewforum.org/data/

https://www.planetretail.net/presentations/ApexBrasilPresentation.pdf

http://www.mcb.org.uk/

https://www.asidcom.org/IMG/pdf/ASIDCOM_Report-french_muslim_consumers.pdf

https://www.asidcom.org/IMG/pdf/ASIDCOM_Report-french_muslim_consumers.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Halal%20Food%20Market_Paris_France_11-15-2013.pdf

http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Halal%20Food%20Market_Paris_France_11-15-2013.pdf


48

MENA focus

Nielsen. 2015. Africa: How to navigate the retail distribution labyrinth

− http://www.nielsen.com/content/dam/nielsenglobal/ssa/docs/reports/20

15/africa-report-navigating-the-retail-dist-labyrinth-feb-2015.pdf

Zogby. 2016. Muslim Millennial Attitudes on Religion & Religious Leadership

− Covers Morocco, Egypt, Palestine, Jordan, Saudi Arabia, Kuwait, and UAE

− http://www.zogbyresearchservices.com/new-gallery-3/

ATKearney. 2014. Seizing Africa’s retail opportunities

− https://www.atkearney.com/documents/711784/4377189/Seizing+Africas+

Retail+Opportunities.pdf/730ba912-da69-4e09-9b5d-69b063a3f139

Economist Intelligence Unit. 201. The GCC in 2020: Resources for the Future

− http://graphics.eiu.com/upload/eb/GCC_in_2020_Resources_WEB.pdf

Euromonitor. 2015. Top 5 beverage trends in the Middle East and North Africa

− http://www.thaihalalfoods.com/upload/articles/Top5BevMENA.pdf

Credit Suisse. 2015. Emerging consumer survey

− https://www.credit-suisse.com/media/am/docs/asset-

management/emerging-consumer-survey-2015.pdf?source=text

Asian focus

Nielsen. 2012. Understanding India’s New Breed of Shoppers

− Also includes good regional comparisons

− http://www.nielsen.com/content/dam/corporate/india/reports/2012/Feat

ured%20Insights_Understanding%20India's%20New%20Breed%20of%20Shop

pers.pdf

McKinsey&Co. 2013. The evolving Indonesian consumer

− www.mckinsey.com/global.../understanding-the-diversity-of-indonesias-

consumers

MillwardBrown. 2016. Marketing to Muslims: Too diverse to stereotype

− Highlights diverse market needs

− https://www.millwardbrown.com/Insights/Point-of-

View/Marketing_to_Muslims_Too_Diverse_to_Stereotype/

−

PWC. 2015. Retailing 2020: Winning in a polarized world

− www.pwc.com/us/retailandconsumer

Ethnic Focus. 2015. Global consumer survey of halal consumption and attitudes

− Includes Pakistan, Malaysia, Morocco, Qatar, UAE, Turkey, Bangladesh,

Denmark, France, Germany, South Africa, USA, Spain, and UK

− http://halalinfo.ifrpd.ku.ac.th/index.php/en/general/95-halal-article/209-

global-consumer-survey-of-halal-consumption-and-attitudes-consumer-

preference-for-halal-positioning-en

Deloitte. 2015. China Power of Retailing 2015

− https://www2.deloitte.com/cn/en/pages/consumer-

business/articles/china-powers-of-retailing-2015.html

American focus

DinarStandard. 2011. Consumer Behaviour & Demand Gaps: American Muslim

Consumer Advocacy Survey Results

− http://2014.americanmuslimconsumer.com/

See also country and market reports by Wesgro and DEDAT

http://www.nielsen.com/content/dam/nielsenglobal/ssa/docs/reports/2015/africa-report-navigating-the-retail-dist-labyrinth-feb-2015.pdf

http://www.nielsen.com/content/dam/nielsenglobal/ssa/docs/reports/2015/africa-report-navigating-the-retail-dist-labyrinth-feb-2015.pdf

http://www.zogbyresearchservices.com/new-gallery-3/

https://www.atkearney.com/documents/711784/4377189/Seizing+Africas+Retail+Opportunities.pdf/730ba912-da69-4e09-9b5d-69b063a3f139

https://www.atkearney.com/documents/711784/4377189/Seizing+Africas+Retail+Opportunities.pdf/730ba912-da69-4e09-9b5d-69b063a3f139

http://graphics.eiu.com/upload/eb/GCC_in_2020_Resources_WEB.pdf

http://www.thaihalalfoods.com/upload/articles/Top5BevMENA.pdf

https://www.credit-suisse.com/media/am/docs/asset-management/emerging-consumer-survey-2015.pdf?source=text

https://www.credit-suisse.com/media/am/docs/asset-management/emerging-consumer-survey-2015.pdf?source=text

http://www.nielsen.com/content/dam/corporate/india/reports/2012/Featured%20Insights_Understanding%20India's%20New%20Breed%20of%20Shoppers.pdf



http://www.mckinsey.com/global.../understanding-the-diversity-of-indonesias-consumers

http://www.mckinsey.com/global.../understanding-the-diversity-of-indonesias-consumers

https://www.millwardbrown.com/Insights/Point-of-View/Marketing_to_Muslims_Too_Diverse_to_Stereotype/

https://www.millwardbrown.com/Insights/Point-of-View/Marketing_to_Muslims_Too_Diverse_to_Stereotype/

http://www.pwc.com/us/retailandconsumer

http://halalinfo.ifrpd.ku.ac.th/index.php/en/general/95-halal-article/209-global-consumer-survey-of-halal-consumption-and-attitudes-consumer-preference-for-halal-positioning-en



https://www2.deloitte.com/cn/en/pages/consumer-business/articles/china-powers-of-retailing-2015.html

https://www2.deloitte.com/cn/en/pages/consumer-business/articles/china-powers-of-retailing-2015.html

http://2014.americanmuslimconsumer.com/


49

13 Bangladesh

Population:

% Muslim

population 90.4%

Total Muslim

population

(m)

152.7 % under 35

years 69% % urban 34%

Income:

GNI per capita

($) 3 550 GDP growth 6.1%

Gini

coefficient

32.1

(2010)

Population

below

poverty line

31.5%

(2010)

Trade:

2015 Total

Halal relevant

imports ($m)

6 140

Total Halal

relevant

import

growth

-7.7% Western Cape share of Halal

relevant imports 0.46%

2015 W. Cape

Halal relevant

exports ($m)

28.4

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

26.3%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (99.6%)

Other pharma and Healthcare

(0.2%)

Enzymes (0.1%)

Other fruit (0.1%)

Cosmetics (0.1%)

Recent developments

Bangladesh has experienced strong growth over the last decade

o However, much of the population remains poor (GNI per capita is low,

and a third of the population remains below the poverty line)

o Strong growth has been driven by rapid expansion of the garment

industry

o However, several pay, safety, and work place conditions scandals

have highlighted that workers have not benefitted from the rapid

export expansion

Consumer profiles and preferences

High growth rates have led to a growing disposable income and an expanding

urban middle class96

o This has increased demand for non-essential items which grew strongly

between 2009 – 2013

o E.g. beauty and personal care products (CAGR 15%), home care

(CAGR 12%) and tissue and hygiene (CAGR 20%)

By 2025, middle and affluent class Bangladeshis (individuals with annual

household income of $5,000 or more) will account for 17% of the population97

A recent survey found that98

o 4 out of 5 consumers care highly about brands in their purchasing

decisions, along with budget and quality

96 Euromonitor. 2014. Markets of the Future in Bangladesh 97 http://www.lightcastlebd.com/blog/2015/12/10-key-points-from-the-bangladesh-consumer-market-

report-by-bcg 98 BCG. 2015. Bangladesh: The Surging Consumer Market Nobody Saw Coming


50

o 68% of middle and affluent class Bangladeshis own internet enabled

smartphones

o Discounts are not exciting for most Bangladeshi consumers; less than

40% Bangladeshi consumers care about discounts

o 94% Bangladeshis shop at traditional retail outlets and e-commerce is

still in its early days with only 15% of middle and affluent class

individuals shopping online

o Consumers intend to spend but are wary of debt: 60% report that they

expect their incomes to rise over the next 12 months, and 69 percent

say that there are more things they want to buy, but are concerned

about debt

o Most Bangladeshi consumers — more than 80 percent in the case of

durables — cite brand as a top factor that influences their buying

decisions (note however, that this occurs within a set budget – which

implies that price is still a major determining factor)

Main channels99

Retail trade is a traditional business in Bangladesh; ‘modern retail’ constitutes

only around 10% of total sales

o However, modern retailers are growing fast – revenues increased by

15% annually between 2009 – 2013 (double that of the overall retail

environment)

Packaged food sales (e.g. dairy, baby food, noodles, and pasta) grew

strongly, a trend which is expected to continue in the medium term

Domestic producers hold strong positions in nearly all consumer goods

categories due to lower prices, making it difficult for multinational companies

to compete

o As a result, foreign companies in Bangladesh are mainly targeting the

growing urban middle class population

99 Euromonitor. 2014. Markets of the Future in Bangladesh


51

14 China

Population:

% Muslim

population 1.8%

Total Muslim

population

(m)

24.6 % under 35


Income:

GNI per

capita ($) 14 160 GDP growth 7.4%

Gini

coefficient 46.9

Population

below

poverty line

6.1%

(2013

est.)*

Trade:

2015 Total

Halal relevant

imports ($m)

122 537

Total

Halal

relevant

import

growth

9.5% Western Cape share of Halal


2015 W. Cape

Halal relevant

exports ($m)

79.3

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

20.9%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (37.2%)

Fish and meat meal (22.0%)

Preserved fruit (18.8%)

Lobster (5.7%)

Fats, oils and veg waxes (3.2%)

Muslims are a minority in China – only 1.8% of the population – but still form a

substantial community of over 24 million. Muslim communities tend to be in the more

rural interior parts of China, particularly the northern and western parts, e.g. Xinjiang

Uyghur Autonomous Region, Ningxia Hui Autonomous Region, Gansu, as shown in

the map below.


52

Recent developments

Three decades of strong growth has lifted nearly 800 million people out of

poverty

o However, per capita income remains low

China reached all the Millennium Development Goals (MDGs) by 2015 and

made a major contribution to the achievement of the MDGs globally

However, growth has slowed in recent years (it is expected to fall below 7% in

2016)

o Slower growth has had major global repercussions, particularly on

commodity prices

Many challenges persists, including high inequality; rapid urbanization;

challenges to environmental sustainability; and external imbalances100

Chinese government has identified the Halal industry as a potential growth

avenue101

o However, thus far producers have not been able to break into major

export markets (only 0.1% of a world Halal market)

o It is already the fastest growing exporter of Kosher goods (in late 2000s)

despite no local market

At the same time the government has also taken steps against Muslims,

including

100 http://www.worldbank.org/en/country/china/overview 101 http://foreignpolicy.com/2016/05/02/why-china-is-trying-and-failing-to-woo-the-worlds-muslims-with-

food-halal-market/

http://www.worldbank.org/en/country/china/overview

http://foreignpolicy.com/2016/05/02/why-china-is-trying-and-failing-to-woo-the-worlds-muslims-with-food-halal-market/



53

o Banning civil servants, students and teachers in its mainly Muslim

Xinjiang region from fasting during Ramadan and ordered restaurants

to stay open102

o Requiring Muslim store owners in Xinjiang to prominently display and sell

alcohol and tobacco products103

China has a strong and growing domestic Halal industry of its own, valued at

$20 billion, to serve its own Muslims, of whom there are about 25 million

However, the domestic Halal food industry has been plagued by scandals104

o In 2013, Shaanxi provincial officials seized more than 40,000 pounds of

meat, sold as beef but made using pork products

o In 2015, crowds vandalized a Halal bakery after pork was found in its

delivery van

o Some Chinese companies have reportedly admitted to mislabeling

their food with Malaysian Halal certification to increase domestic sales

The government has recently announced the end of the one child policy,

which means that approximately 90 million couples will be allowed to have a

second child

o It is unclear what effect this will have on consumption and on Muslim

community


Chinese consumers, lifestyles and cultures are distinct throughout the country's

various regions

Developing trends include105:

o Greater willingness to try foreign flavours

o Pressure on consumer income from slower growth likely to cause

shoppers to revert back to known and trusted brands

Main channels

The industry is highly decentralized, with local companies, mostly without

nationally recognized brands, serving pockets of Muslims thinly dispersed across

the vast country106

China lacks national Halal standards – most certification occurs on the local or

provincial level – and obtaining internationally recognized halal certification

has posed a challenge

Supermarkets and hypermarkets already dominate the markets of larger cities,

and their continued expansion from major cities into smaller cities is expected

to further drive competition in the grocery retail sector

o However, markets and small shops are still an important part of the

retail space

Successful grocery retailers have been able to tailor their store format and

product offerings that cater to local tastes. As a result, in some markets and

102 http://www.aljazeera.com/news/2015/06/china-bans-ramadan-fasting-muslim-region-

150618070016245.html 103 https://www.washingtonpost.com/news/worldviews/wp/2015/05/05/china-orders-muslim-

shopkeepers-to-sell-alcohol-cigarettes-to-weaken-islam/ 104 http://foreignpolicy.com/2016/05/02/why-china-is-trying-and-failing-to-woo-the-worlds-muslims-with-

food-halal-market/ 105 Smollan. 2015. Retail trends in China 106 http://foreignpolicy.com/2016/05/02/why-china-is-trying-and-failing-to-woo-the-worlds-muslims-with-

food-halal-market/

http://www.aljazeera.com/news/2015/06/china-bans-ramadan-fasting-muslim-region-150618070016245.html

http://www.aljazeera.com/news/2015/06/china-bans-ramadan-fasting-muslim-region-150618070016245.html

https://www.washingtonpost.com/news/worldviews/wp/2015/05/05/china-orders-muslim-shopkeepers-to-sell-alcohol-cigarettes-to-weaken-islam/

https://www.washingtonpost.com/news/worldviews/wp/2015/05/05/china-orders-muslim-shopkeepers-to-sell-alcohol-cigarettes-to-weaken-islam/






54

grocery categories, domestic companies have an advantage over foreign

companies107

Urban consumers are following global trends towards convenience, health and

wellness, fresh foods and cost consciousness

In 2014, revenue from online shopping accounted for about 11% of the total

retail sales of consumer goods108

107 http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-

information/agriculture-and-food-market-information-by-region/asia/market-intelligence/consumer-

and-retail-trends-in-china/?id=1421864821481 108 Deloitte. 2015. China Power of Retailing 2015

http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-information/agriculture-and-food-market-information-by-region/asia/market-intelligence/consumer-and-retail-trends-in-china/?id=1421864821481




55

15 East Africa (Kenya, Tanzania, Ethiopia, Somalia)

KENYA

Population:

% Muslim

population 9.7%

Total Muslim

population

(m)

4.5 % under 35


Income:

GNI per capita

($) 3 060 GDP growth 5.3%

Gini

coefficient

42.5

(2008

est.)

Population

below

poverty line

43.4%

(2012 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

2 297

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

17.1

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

21.9%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (80.2%)

Other animal feed (3.6%)

Mixed juices (2.8%)

Grains, cereals, flours (2.2%)

Sauces and seasonings (2.0%)

TANZANIA

Population:

% Muslim

population 35.2%

Total Muslim

population

(m)

18.0 % under 35


Income:

GNI per capita

($) 2 620 GDP growth 6.6%

Gini

coefficient

37.6

(2007)

Population

below

poverty line

67.9%

(2011 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

1 417

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

6.3

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

15.2%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (38.1%)

Mixed juices (18.7%)


(11.7%)

Other juices (7.1%)

Apple juice (5.1%)


56

Recent developments

Tanzania: Overall macroeconomic performance remains strong with a high

rate of growth and a low rate of inflation

o However, a large part of the population lives below the poverty line

(67%) and per capita income remains low

Kenya: Strong growth is expected: 5.9% in 2016 and 6.1 % in 2017

o Kenya has managed to achieve some Millennium Development Goals

(reduced child mortality, and universal primary enrollment)

o However, 43% of population are still below the poverty line

o Some political unrest has sporadically occurred in Kenya since the 2007

election (and then following 2013 election)

o Protest and violence may escalate ahead of elections in 2017

Somalia has faced civil war for two and a half decades

o In 2012 a new federal government was established (and recognised by

the international community); however terrorism and warlords continue

to be a major problem outside of Mogadishu

o War has led to per capita income being the fourth lowest in the world

Ethiopia is the second-most populous country in sub-Sahara Africa

o Approximately 30 million Muslims

o The economy has experienced strong and broad based growth over

the past decade, averaging 10.8% per year in 2003/04 - 2013/14109

o Extreme poverty has fallen from close to 40% in 2004 to 29% in 2014

o Political protests started in November 2015 by the Oromia and Amhara

due to perceived exclusion from economic development and political

access

o Government has been accused of being increasingly autocratic and

using violence against protesters


Kenya: Consumers shop less often than other parts of Africa (e.g. Nigeria), but

still go shopping an average of 38 times a month110

o Go to nearby, often informal, shops for day-to-day goods (e.g. airtime)

combined with less frequent trips to formal retailers

Ethiopia: More than 80 ethnic groups – many with particular, local tastes and

preferences

o Shoppers are generally price sensitive, shopping for groceries at small

kiosks called souks, buying small quantities several times a week

o Growing middle- and upper-class are increasingly looking for

packaged food

o Modern distribution is gaining in Addis Ababa (previously there were

restriction on foreign investment in retail) – the city now has 40

supermarkets, 100 minimarkets and 18,000 kiosks

o High inflation remains a problem, eroding purchasing power of families

Tanzania: Consumers focus on price and availability

o Most purchases at small, family owned shops

o Supermarkets are gaining ground – especially for higher income

families

109 http://www.worldbank.org/en/country/ethiopia/overview 110 http://mgafrica.com/article/2015-02-26-incomes-are-rising-and-consumer-demand-growing-but-

where-do-they-shop

http://www.worldbank.org/en/country/ethiopia/overview

http://mgafrica.com/article/2015-02-26-incomes-are-rising-and-consumer-demand-growing-but-where-do-they-shop



57

o The average rural household has 4 to 6 family-members, while a peri-

urban household usually consists of 2 to 4 family-members111

Large Muslim communities in Somalia, Ethiopia, and Tanzania

o However, there is limited market intelligence on preferences,

behaviour or market power

o Ethiopia has the largest Muslim community (29 million)

o Somalia is mainly Muslim, but population estimates are not recent and

are not likely to be accurate due to high fluctuation of refugees

o Kenya has 5.6 million Muslims and Tanzania has 17.8 million

Low levels of urbanisation (between 20% - 40%) complicates market access

and is further hampered by infrastructure constraints

Low incomes in Eretria, Somalia, Tanzania and Ethiopia means consumers are

price sensitive, have little disposable income, and therefore the market for

luxury items and items differentiated on quality is small

Main channels

Kenya is the largest retail market in East Africa, with a US$23.7 billion retail

market size in 2013

o However, 70% of sales are from traditional trade112

o 95% of shoppers frequent dukas (66% of the store universe); 92% kiosks

(24% of the universe); and 89% shop at supermarkets (less than 1% of

the store universe)

o Kenya Bureau of Halal Certification established in late 2000s

Formal retail is even smaller in Tanzania (10%), Somalia, Ethiopia (<1%), and

Eretria

Only a few large chain retailers operate in each market, e.g.

o Ethiopia had restrictions on FDI into retail (recently relaxed)

o In Tanzania, stores of larger format supermarkets – Shoprite,

Woolworths, Shoppers, Shrijee’s and Nakumatt – are mainly in Dar es

Salaam

o Products are aimed at the middle class and a large range of products

imported are from Kenya, South Africa, Dubai, India and Europe113

Formal retail struggles with supply chain issues in much of East Africa,

hampered by poor infrastructure, delays at ports and border crossings and a

dispersed market

The informality means that serving the market requires a product that can be

sold through formal retail channels, but also can be repackaged by vendors

and sold in smaller or single serving

A growing number of consumer good companies are establishing local

Tanzanian brands (e.g. Azam – juices, water, biscuits, dairy)

South African retailers that operate throughout the region offer an opportunity

to enter these market (but existing barriers into these supply chain still need to

be overcome)

111 Greenmax Capital. 2014. Tanzania Market Intelligence Report 112 ATKearney. 2014. Seizing Africa’s retail opportunities 113 http://trendtype.com/store/report/the-grocery-retail-market-in-tanzania/

http://trendtype.com/store/report/the-grocery-retail-market-in-tanzania/


58

16 Egypt

Population:

% Muslim

population 94.9%

Total Muslim

population

(m)

85.0 % under 35


Income:

GNI per capita

($) 10 690 GDP growth 2.7%

Gini

coefficient

30.8

(2008)

Population

below

poverty line

25.2%

(2011 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

13 476

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

3.3

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

18.7%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (52.8%)


Enzymes (20.7%)


(2.5%)

Apple juice (0.8%)

Recent developments

Egypt has seen political turmoil in the past five years, starting with the Arab

Spring in 2011 which forced President Hosni Mubarak to resign in February 2011,

after three decades in power.

o His replacement, President Morsi, was deposed by the military in June

2013 following Presidential decrees that granted far-reaching powers

o In December 2013, a constituent assembly finished drafting a new

constitution to replace the 2012 charter.

o The political transition process initiated in 2013 came to an end with the

election of the House of Representatives in December 2015

The economy started to recover in 2014/15, as the government scaled up

infrastructure spending and undertook important measures to restore

macroeconomic stability114

Egypt has made significant strides in human development indicators: child

mortality, life expectancy, primary and secondary school enrollment, and

literacy rates have improved dramatically in the past thirty years

Parliament agreed to the introduction of a 13% VAT

o Unclear what effect this will have on consumers

114 http://www.worldbank.org/en/country/egypt/overview

http://www.worldbank.org/en/country/egypt/overview


59


With 25% of the population living below the poverty line, consumer purchasing

power is limited

o Recent declines in income have led to more consumers opting to buy

smaller packs rather than buying larger quantities with bulk discounts115

o This includes shampoos, coffee, face care and butter

o Smaller serving sizes are also attractive to on-the-go consumers

Price continues to be the dominant factor in purchase decisions made by

Egyptian consumers116

Young consumers driving growth of modern retail117

There is a high rate of social networking

o About 23% of the Internet users in Egypt are going online via mobile

devices, up from 16% in 2012

Food and non-alcoholic drinks spending continues to dominate the household

budgets, accounting for a forecast 37.2% of the total expenditure in 2016118

Main channels

The traditionally family-run stores – although still dominant at 70% of sales – are

gradually declining as the number of modern supermarkets and hypermarkets

rises

o Especially in urban areas

o Acceptance of Western products is expected to bring more Western

chains into the country

Most foreign companies prefer to rely on a local partner (although some do

direct-to-sales)119

o Closer to the market

o Better understanding of customers

o Sales agents, distributors, and wholesalers tend to be registered with

the Ministry of Industry and Foreign Trade

o Most intermediaries remain generalists

Recent development of mass distribution (i.e. for large supermarkets) and only

caters for small number of people

o Carrefour dominates with 5 supermarkets

But discount supermarkets are also becoming popular, e.g. Awlad Ragab

Group

115 Nielsen. 2013. Small Sachets are a Big Trend In Egypt 116 https://en.portal.santandertrade.com/analyse-markets/egypt/reaching-the-consumers 117 Euromonitor. 2014. Consumer Lifestyles in Egypt 118 BMI. 2016. Egypt Retail Report 119 Santander. 2016. Egypt: Distributing a product

https://en.portal.santandertrade.com/analyse-markets/egypt/reaching-the-consumers


60

17 Europe (focusing on France, UK, Germany, France, Netherlands)

Recent developments

European recovery post 2011 has not been even, and many countries are still

struggling with low growth, high debt levels, and deflation

o This is likely to continue in medium term

o Spending power also varies greatly by country (and sub-segment)

The European Muslim market is a significant market segment: estimates put it at

25-30 million

o France has the largest Halal market outside of the majority Muslim

countries

While global brands and retailers have been slow to respond, they have now

started to specifically target Muslims. However, this has not been without

controversy

o Marks & Spencer selling ‘burkinis’ – full-cover swimsuits – in the UK

prompted debate but have sold well (including in France, despite a

temporary ban and some high profile incidents)

o H&M attracted attention with an ad featuring a model in a hijab in

2015

o Tesco ran a promotion for the Muslim holy month of Ramadan last June

– although it was ridiculed when one store included smokey bacon

flavoured crisps in its display

o Pizza Express in the UK was caught up in a controversy in 2014 after it

emerged that customers had not been informed that all chicken

served across its network was Halal

o While these incidents highlight the (narrow) views of certain

mainstream consumers – it also highlights poor understanding from

manufacturers and retailers (e.g. Tesco’s advert including bacon)

However, to improve the scope and depth of products the Halal market must

also be embraced by non-Muslim consumers. This has proven to be a

challenging task. While the industry seeks to appeal both segments, factors are

playing against this goal120:

o Halal certification –necessary for Muslim consumers – has an negative

perception from mainstream consumers and may discourage non-

Muslim consumers

o 81% of respondents in Denmark had negative responses to the word

“Halal”, followed by France (72%), Spain (69%), Germany (65%), and

UK (53%)121

o Application of Islamic law – particularly stunning of animals, without

which the slaughtering is perceived (particularly by non-Muslims) as

cruel

UK: 51% of all UK education authorities now require Halal meat and production

of halal meat – 10-15% of total meat sales – outsizes the proportion of the

population that is Muslim (less than 5%)

o This implies producers are aiming to appeal to Muslims without

alienating non-Muslim customers

120 Euromonitor. 2015 Doing Business In The Halal Market 121 Ethnic Focus Global. 2015. Global consumer survey of halal consumptions and attitudes


61

o Ramadan is now considered the third-biggest sales period for retailers

after Christmas and Easter122

o Tesco has led the way in targeting the Muslim consumer market in

recent years and is reaping the benefit – it sells about half of all Halal

food in Britain’s supermarkets


Generally, Muslim families are larger than average European family size (e.g.

UK Muslim family size is 4.5 compared to 2.3 for the national average)

o Greater number of young people to target

o Greater long term payoffs to brand loyalty in a family

In the UK: 47% of Muslims are UK-born and 73% of Muslims state that their only

national identity is British

The Muslim population is ethnically diverse: while 68% are Asian, there are also

large African, Caribbean, and European Muslim communities

o This can make targeting beyond food requirements difficult due to

differing tastes

Muslim consumers still feel under-served by the mainstream market particularly

when it comes to fashion and fun, e.g. entertainment, travel and cosmetics123

o This has opened a gap for start-up firms

o Many of these start-ups appeal to a relatively new cohort of young,

affluent Muslims, second- or third-generation immigrants who want to

maintain the values of their faith while participating in the consumer

culture in which they have grown up

o Another feature of this new Muslim market is that it is driven strongly by

women. As they bear most of the responsibility of the faith in terms of

modesty, they have the greatest incentive to look for products that

preserve faith and culture, but offer them some style and luxury at the

same time

Main channels

While much of Muslim consumption follows overall shopping patterns in Europe

– i.e. large supermarkets – meat still tends to be bought at independent Halal

butcheries

The hypermarket/ supermarket channel has more than 50% market share of

overall sales in the UK

However, the hypermarket/ supermarket retail channel has lost market share in

recent years to124

o Growing online sales

o Trends towards smaller, specialised stores

Major retailers and food companies operate in this space o Nestle, for example, has about 20 factories in Europe with halal-

certified production lines

The move by major international producers and retailers into Halal products

has led to more intense competition

o Generally, this results in price competition, and a greater focus on

branding to distinguish products from competitors

o In the Halal market it can also lead to a greater range of products,

including personal healthcare, toiletries and cosmetics

122 http://www.economist.com/news/britain/21699971-british-muslims-are-growing-market-modesty-sells 123 http://www.economist.com/news/britain/21699971-british-muslims-are-growing-market-modesty-sells 124 http://www.bain.com/about/press/press-releases/Retail-Shifts-in-CPG-Press-Release.aspx

http://www.economist.com/news/britain/21699971-british-muslims-are-growing-market-modesty-sells

http://www.economist.com/news/britain/21699971-british-muslims-are-growing-market-modesty-sells

http://www.bain.com/about/press/press-releases/Retail-Shifts-in-CPG-Press-Release.aspx


62

Global Urban Muslim

European countries have high levels of urbanisation, and Muslims tend to be

urban (76% of Muslims in the UK are urban) 125

Muslims also tend to be younger than their peers

o In 2010, the median age of Muslims throughout Europe was 32, eight

years younger than the median for all Europeans126

The combination of these factors increases the size and appeal of the Global

Urban Muslim

However, Muslims household tend to be poorer than the average household127

o In the UK 46% (1.22 million) of the Muslim population resides in the 10%

most deprived areas; 28% of Muslim households occupy social housing;

and 29% of Muslim women between the ages of 16 to 24 are in

employment compared to approximately half of the overall

population.

The higher income category – which overlaps with the Global Urban Muslim

segment – is therefore relatively small

o The proportion of Muslims in the ‘Higher professional occupation’

category is 5.5%, which is comparable to the overall population –

7.6%128

o Given the relatively small overall community, it means only about

300,000 Muslims fall into this category

This is also the case in Europe where the average annual income of Muslims lag

those of contemporaries in France, Spain, and Germany

o The percentage of low income households compared to the average

household was 18% higher in France and Germany, and 23% higher in

Spain129

o This also means that worries about joblessness is high, 84% of French

Muslims are concerned about unemployment, mirrored by Spanish

Muslims (83%), German Muslims (81%), and British Muslims (78%)130

This means that the Global Urban Muslim is likely to be a niche segment in UK

and Europe

o However, since Muslims falling in this market segment has more

disposable income, it can still be a lucrative segment

125 Muslim Council of Britain. 2015. British Muslims in Numbers 126 http://www.pewresearch.org/fact-tank/2016/07/19/5-facts-about-the-muslim-population-in-europe/ 127 Muslim Council of Britain. 2015. British Muslims in Numbers 128 Muslim Council of Britain. 2015. British Muslims in Numbers 129 Pew Centre Research. 2007. Muslim Americans: Middle class and mostly mainstream 130 http://www.pewresearch.org/2006/08/17/the-frenchmuslim-connection/


63

18 India

Population:

% Muslim

population 14.4%

Total Muslim

population

(m)

180.2 % under 35


Income:

GNI per capita

($) 6 020 GDP growth 6.8%

Gini

coefficient

33.6

(2012)

Population

below

poverty line

29.8%

(2010 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

25 199

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

12.4

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

15.3%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (79.4%)

Cosmetics (5.7%)

Enzymes (4.0%)

Other seafood (3.0%)


While Muslims only make up 14.4% of the Indian population, it makes up one of the

largest Muslim communities in the world. Within India, Muslims tend to live in the

northern parts of the country. Based on census data most Muslims are living in four

states Uttar Pradesh (38 million:19% of provincial population), West Bengal (24 million

-27%), Bihar (17 million -16%), Maharashtra (13 million -11%), Assam (11 million – 34%).

These 5 states account for 60% of all Muslims, while 30 other states account for the

remaining population.


64

Figure: % Muslim population by Indian state131

Recent developments

India has continued to experience strong economic growth

o 53 million people were lifted out of poverty between 2005 and 2010

o However, poverty rates remain high (almost 30% of population falls

below the poverty line)

Census data in 2015 showed that Hindus declined to just below 80% of the

population, while Muslims make up 14%

o However, fertility rates have stabilised across the population suggesting

that population dynamics will now remain relatively stable

Based on growth rates India will, at some stage in the 2020s, become the

largest Muslim community in the world (surpassing Indonesia and Pakistan)

Largest Muslim communities found in Uttar Pratesh (38 million), West Bengal (24

million), and Bihar (17 million)


The rapid growth over the past few decades has created a middle class

o This has led consumers to undergo a change in behaviour towards

their retail preferences132

o Consumers are prioritising quality and convenience offered by a retail

channels over other parameters, and are more willing to spend a

131 Ministry of Home Affairs. 2001. Census of India: Population by religious communities 132 Euromonitor. 2016. Retailing in India


65

higher amount for the comfort of home delivery, better quality,

premium design, better store location and experience

The population is relatively young

In India, the average fertility rate for Muslims is 3.2133 - higher than the national

average

Indian consumers tend to buy brand they recognise

o Therefore necessary to invest in advertising and marketing of a new

product

Main channels

Most Indian manufacturers use the traditional three-tier selling and distribution

structure: redistribution stockists, wholesalers, and retailers134

However, formal retailing is still small to the overall market

India does not allow FDI into the retailing sector, so foreign companies need to

partner with local companies135

New product launches through sachets have fuelled growth over the years.

The growth in the number of low-volume packs was 31.1% from 2009 to 2010.

The rate then dropped to 10.5% from 2012 to 2013.136

o Allows for piecemeal purchases rather than lumpy outlays which may

not be affordable

Growth of mobile internet and modern retail, but Indian FMCG consumers still

prefer traditional trade outlets

o 1 out of 5 urban Indian shoppers now shop regularly at modern trade

stores rather than traditional outlets

o Over half of shoppers seek promotions and deals

o A third of shoppers choose ‘bulk packs’ as a strategy to beat price

increases

o The two opposing trends (bulk buying and small packet sizes) can

arguably explained in that they are driven by different market

segments

Paan Plus stores, usually small kiosks selling tobacco-based products and

located near transport hubs like railway stations and bus stops or in residential

areas and slums, are increasingly carrying a greater assortment of consumer

goods, making them another important channel for FMCG manufacturers.

o These stands and small shops allow for impulse, as well as regular

purchases137

133 In India, the average fertility rate for Muslims is 3.2 134 Santader. 2016. India: Distributing a product 135 Santader. 2016. India: Distributing a product 136 Nielsen. 2014. What’s in store for India’s FMCG market 137 Nielsen. 2014. India’s retail revolution


66

Direct selling (e.g. telemarketing and mail order) a rapidly growing segment

(20% over the past three years)

Global urban Muslim

Indian consumers display a strong preference for domestic goods138

o Preference for domestic goods is decreasing in income, but 66% of

high income respondents still mildly or strongly prefer domestic brands

(compared to 78% of low income respondents)

o This is substantially higher than the average across countries (38%

prefer domestic products for high income)

o Unclear whether Muslim consumer profile – particularly at higher

incomes – holds same preferences

Overall India has low levels of urbanisation

o Muslims tend to be more urban than Hindus (40% compared to 29%),

which is in line with other religious minorities (e.g. Christians and

Buddhists)139

The number of Muslims falling into the Global Urban Muslim is likely to be

relatively small (compared to overall Muslim population)

o Muslims in India are more likely to have variable income (in urban India

Muslims have the highest proportion of households with self-

employment as the major source of income – 50 per cent)140

o Overall, Muslims have the lowest monthly per capita expenditure: a

Muslim household spent 980 Rupees (R204141) versus average of 1,125

138 Credit Suisse. 2015. Emerging market trends 139 http://articles.economictimes.indiatimes.com/2015-08-26/news/65886912_1_urban-areas-

population-muslim 140 NSSO. 2011. Employment and unemployment situation among major religious groups in India 141 Based on average exchange rate for 24 October 2016 of 1 Rupee = 0.21 rand


67

Rupees (R234) and 1,543 Rupees (R321)for Hindus and Christians

respectively.142

o Urban Muslims still have relatively low education attainment – among

persons of age 0-29 years, current attendance rate in educational

institutions was the lowest among Muslims (47% for urban males and

46.3% for urban females)

o In West Bengal (north-eastern India), urban Muslim boys and girls have

the highest drop-out rates in the state

142 NSSO. 2011. Employment and unemployment situation among major religious groups in India


68

19 Indonesia

Population:

% Muslim

population 87.2%

Total Muslim

population

(m)

221.9 % under 35


Income:

GNI per capita

($) 10 680 GDP growth 5.3%

Gini

coefficient

36.8

(2009)

Population

below

poverty line

11.3%

(2010 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

16 322

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

6.1

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

-9.5%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (75.0%)


Cosmetics (9.1%)

Other juices (1.4%)


Overview and recent developments

Indonesia has the fourth highest population in the world (250 million), but

citizens are spread out across more than 6 000 islands

o Although urbanisation is 54%, accessing the market across islands and

cities remains complex

Due to weaker demand for commodities – the fuel for Indonesia’s economic

boom in the past decade – Indonesia’s GDP growth has been slowing since

2012

Large gains in poverty reduction cutting the poverty rate to more than half

since 1999, to 11.2% in 2015

Strong government control in terms of foreign investments

o Negative Investment List specifies business activities which are either

entirely closed or conditionally open to foreign investment


Strong growth in gross national income per capita from US$560 in the year 2000

to US$3,630 in 2014143

o Greater disposable income for households

Relatively young population – nearly 60 percent is below 30 years of age144

Strong internet penetration

o In a recent survey 68% of the respondents indicated they use internet

every day145

143 http://www.worldbank.org/en/country/indonesia/overview 144 McKinsey. 2013. The evolving Indonesian consumer 145 MarketPlus Insight. 2015. Over two thirds in Pontianak access internet daily, late teen youth most

active netizen

http://www.worldbank.org/en/country/indonesia/overview


69

o Despite reasonable penetration, there are still issues regarding

broadband speed and connectivity

o Jakarta is the most active Twitter city in the world (29 million users)

o But online retailing remains low, less than 10% of digitally connected

consumers are shopping online146

Women tend to make the majority of FMCG and electronics purchasing

decisions

o Almost all female respondents admitted to having the authority on

regulating household expenses, compared with 77% male

respondents147

Consumers, especially those with average or low income, are very aware of

prices and the economic situation148

o They tend to be risk-averse; they live within their means and avoid

borrowing149

o This makes them late adopters of new products and technology

Upper end consumers are increasingly self-rewarding (i.e. luxury items), early

adopters and willing to try premium productions150

o This segment forms about 20 million people

Across most categories Indonesians are brand loyal and have a strong

preference for local brands151

o Particularly in the food and pharmaceutical industries

o However, foreign companies have been successful in capturing

market share by appearing to be locally made

o E.g. Danone created a local biscuit brand, Biskaut, which is today the

leading brand (and was acquired by Kraft)

Main channels

Indonesian retail is dominated by small independent store owners152

o Making products available to the large and dispersed population

requires partnering with the country’s multiple retailers, which operate

a combined 4.1 million stores

o Traditional retail represents 95% of all retailers and 56% of sales153

Traditional media – particularly television – is the dominant source of product

information, but word-of-mouth recommendations are still seen as the most

credible source of information

Consumer goods are traditionally sold in markets

For modern markets most manufacturing firms do not distribute their products

themselves – as this is too expensive154

o Instead they call on specialised distribution companies, who use

traditional channels

For most commercial activity, foreign companies have to work with a local

agent

146 McKinsey. 2013. The evolving Indonesian consumer 147 MarketPlus Insight. 2015. MarkPlus Insight Indonesia Consumer Profile 148 https://en.portal.santandertrade.com/analyse-markets/indonesia/reaching-the-consumers 149 McKinsey. 2013. The evolving Indonesian consumer 150 McKinsey. 2013. The evolving Indonesian consumer 151 McKinsey. 2013. The evolving Indonesian consumer 152 McKinsey. 2015. Winning in Indonesia’s consumer-goods market 153 Santander. 2016. Indonesia: Distributing a product 154 Santander. 2016. Indonesia: Distributing a product

https://en.portal.santandertrade.com/analyse-markets/indonesia/reaching-the-consumers


70

Global urban Muslim

Relatively low levels of urbanisation (54%), but young demographic (63% under

35 years)

o Muslim urbanisation matches overall levels (estimated at 50%)155

o Therefore, there are approximately 110 million urban Muslims in

Indonesia

Urban households tend to have more disposable income and fewer

households fall below the poverty line (8% compared to 14%)156

Consumers still prefer domestic brands, which resonate with culture and

values157

o This preference increases with income levels, which are likely to be

urban consumers

o 67% of high income respondents mildly or strongly prefer domestic

brands compared to 58% of low income earners

o Along with India, this is the highest bias towards domestic brands

(average in sample across countries was 38% of high income earners

prefer local brands)

Attitudes towards shopping is quite similar among classes

o With the exception of engaged shoppers and digital engagement

(both key elements of Global Urban Muslim)

155 http://data.un.org/Data.aspx?d=POP&f=tableCode%3A28 156 http://www.indonesia-investments.com/finance/macroeconomic-indicators/poverty/item301 157 Credit Suisse. 2015. Emerging markets survey


71

20 Malaysia

Population:

% Muslim

population 63.7%

Total Muslim

population

(m)

19.0 % under 35


Income:

GNI per capita

($) 26 140 GDP growth 5.3%

Gini

coefficient

46.2

Population

below

poverty line

3.8%

(2009 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

16 780

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

89.2

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

19.9%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (94.0%)


Cosmetics (1.3%)

Frozen fish (1.0%)

Other fruit (0.7%)

Recent developments

Introduction of sales tax in 2015 is likely to depress consumer demand in 2016

and 2017158

Malaysia introduced a new standard for halal pharmaceuticals to strengthen

the integrity within the manufacturing and servicing of medicines and health

supplements

o “The Malaysian Standard MS2424:2010 (P): Halal Pharmaceuticals

General Guidelines” addresses the entire pharmaceutical industry’s

supply chain from processing to handling, packaging, labelling,

distribution, storage and display of medicines and health supplements


87% of the country's citizens aged 15 and above used internet at least once

per day

Muslim consumers spent an average 14% of their food budget on meat

o 60% of the halal meat is imported from India, Australia and New

Zealand.

Halal cosmetics contribute 10% – 20% of the local cosmetics market

o This is substantially lower than the Muslim percentage of population

(63%)

o This likely reflects that cosmetics are not inherently Haram, and

therefore Muslims also buy non-Halal labelled cosmetics (rather than

reflecting lower purchasing power)

Pressure on consumers has led to a shift towards cheaper private label

products159

158 BMI. 2016. Malaysia Retail Report


72

o Growing selection of private labels (although still relatively small)

Higher end customers are moving away from deal hunters to brand savvy

shoppers

There is a growing prevalence of conveniently packaged food products

designed for consumption both at and away from home

o Increasing demand for single-serving/ convenience food

Main channels

In 2015, international retailers were aggressive in terms of expanding their outlet

networks and supporting their products with creative marketing campaigns,

intended to attract new customers and retain the loyalty of existing ones

Internet retailing recorded the most dynamic pace of growth among the main

retail channels in 2015, gaining increasing popularity amongst consumers,

particularly younger, IT savvy and more sophisticated consumers160

Hypermarkets/large format stores are the dominant format in urban areas (50

to 60 %)161

household shoppers using them as the main outlet for the majority of their

packaged groceries.

Global Urban Muslim

High degree of urbanisation (75%) and relatively young demographic (65%

under 35 years old) means that the size of this market segment is likely to be

large

Upper middle income country with relatively high income per capita means

that consumer purchasing power is strong

159 http://www.mbie.govt.nz/info-services/sectors-industries/food-beverage/documents-image-

library/Malaysia%20Food%20and%20Beverage%20market%20profile%20report%202011%20-

PDF%20402%20KB.pdf 160 Euromonitor. 2016. Retailing in Malaysia 161 USDA. 2016. Malaysia Export Guide


73

The global urban market segment suggests common linkages through religious

beliefs, technology, and outlook, but this ignores domestic dynamics which

can outweigh common bonds across countries

o Haque et al (2011) found that respondents were more influenced by

corporate image and ethnocentrism than religiosity when making

purchasing decisions

o While corporate image itself needs to conform to certain religious

requirements (which makes categorisation difficult), the main finding is

that young Muslim consumers show a strong preference for local,

Malaysian goods

o Therefore, while global preferences may overlap – particularly in terms

of corporate image – these are trumped by knowledge of local

dynamics

Research has shown that young consumers have different patterns of

behaviour compared to the older generation. They are heavier consumers,

knowledge-based in their choices, brand conscious and trendsetters.162

Strong internet penetration is changing behaviour and gives consumers

greater decision making power

o High average internet usage time per day (5 hours) and high average

hours of mobile users using mobile internet (3 hours)163

o Over 10 million daily active Facebook users (8.7 million from mobile)

o This can exacerbate findings that the majority of consumers will share

negative experiences with friends and family if a brand has offended

Muslims in any way

162 Khalek, A. 2015. A study on factors influencing young Muslims’ behavioural intention in consuming

Halal food in Malaysia 163 http://blog.malaysia-asia.my/2015/03/malaysia-social-media-statistics-2014.html


74

21 Mozambique

Population:

% Muslim

population 18.0%

Total Muslim

population

(m)

4.6 % under 35


Income:

GNI per capita

($) 1 170 GDP growth 7.0%

Gini

coefficient

45.6

(2008)

Population

below

poverty line

52%

(2009 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

1 241

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

45.0

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

23.5%

Top 5 W.

Cape

export sub-

sectors

(2015)

Frozen fish (16.8%)

Mixed juices (12.7%)


Fresh fruit (7.3%)

Other processed food (6.6%)

Recent developments

Mozambique’s economic growth slowed in 2015 as the economy adjusted to

lower world commodity prices and decreased inflows of Foreign Direct

Investments

o However, the pace of growth is still high, averaging 7% since 2012

Rising food costs and the depreciation of the Metical has driven an increase in

consumer prices

There have been increasing political tension in recent years, particularly

following the elections in 2015

o Renamo, the former rebel group turned political party, disputed the

results as fraudulent and has proposed a further decentralization of the

current political system164

Mozambique’s rapid economic expansion over the past decades has had only

a moderate impact on poverty reduction – more than half of the population

falls below the poverty line

Along with a high disease burden, it also faces other challenges such as

increasing malnutrition, and stunting


There is little information available on consumer profiles and preferences,

particularly for the Muslim community

Muslim communities tend to be more prevalent in the north of Mozambique

o Generally rural and low income households

o Limited infrastructure available which limits retail access

Main channels

Mainly informal market and traditional stores

164 http://www.worldbank.org/en/country/mozambique/overview


75

o Underdeveloped nature of the market means limited market

intelligence; retailers and manufacturers have to enter with limited

understanding of the market

o Low level of urbanisation slows entry of formal retail

There is limited market saturation and low market maturity165

o Consumer spending is lower than in more mature markets

Main retailers present are South African

o E.g. Pick n Pay, Shoprite, Woolworths, and Game

o Likely to use the same, domestic, value chain (requires scale to enter

for manufacturers)

o Mostly limited to Maputo, but retail reach is extending

o On average Mozambicans visit formal retail stores once a month for

bulk purchases of basic goods (which can be cheaper than traditional

stores)

Retailers and producers have experienced many non-tariff barriers in getting

their goods to market

165 ATKearney. 2014. Seizing Africa’s retail opportunities


76

22 Nigeria

Population:

% Muslim

population 48.8%

Total Muslim

population

(m)

86.6 % under 35


Income:

GNI per capita

($) 5 800 GDP growth 4.6%

Gini

coefficient

43.7

(2003)

Population

below

poverty line

70%

(2010 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

6 407

Total Halal

relevant

import

growth

-

25.2%

Western Cape share of Halal


2015 W. Cape

Halal relevant

exports ($m)

63.9

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

50.8%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (75.0%)

Grape juice (6.6%)

"Food preparations" (6.4%)



Muslims tend to live in northern areas of Nigeria – see map below. The north tends to

be the poorer part of Nigeria as major cities – e.g. Lagos – and oil fields are in the

south. This strong north/ south along ethnic and religion has caused some civil unrest

in the past, as people tend to vote along these lines and politicians tend to use

ethnic and religious divides as political tools.


77

Figure: % Muslim population166

Recent developments

Low commodity prices have led to a recession in Nigeria167

o The Nigerian Bureau of Statistics said the non-oil sector declined due to

a weaker currency, while lower prices dragged the oil sector down

Nigeria continues to struggle with terrorist attacks, both in the south and the

north

Nigeria has held the Naira at 197-199 per dollar since March 2015, even as

other oil exporters from Russia to Colombia and Malaysia let their currencies

depreciate amid the slump in crude prices since mid-2014168

o Partly an attempt to keep inflation under control, but this has not

worked as consumer prices accelerated at the fastest pace in six years


Strong local culture continues to influence consumer preferences

o Although Western lifestyle has penetrated urban areas

Increased use of mobile devices, the internet and social media (although

internet penetration is only 38%)

Changing lifestyle patterns for middle-class consumers offers opportunities for

retailers

166 http://www.economist.com/blogs/graphicdetail/2015/04/nigeria-s-election 167 http://www.reuters.com/article/nigeria-gdp-idUSL8N1BC1PQ 168 http://www.bloomberg.com/news/articles/2016-05-25/nigerian-currency-crisis-explained-what-we-

know-and-don-t-know

http://www.economist.com/blogs/graphicdetail/2015/04/nigeria-s-election

http://www.reuters.com/article/nigeria-gdp-idUSL8N1BC1PQ

http://www.bloomberg.com/news/articles/2016-05-25/nigerian-currency-crisis-explained-what-we-know-and-don-t-know

http://www.bloomberg.com/news/articles/2016-05-25/nigerian-currency-crisis-explained-what-we-know-and-don-t-know


78

o However, 70% of the population still falls below the poverty line

When choosing a grocery store, 21%of Nigerians say they are willing to sacrifice

store environment for low prices, compared to 16% of South Africans and 12%

of Ethiopians169

But brand loyalty is high – 70% percent say they are brand loyal versus 59% in

Africa as a whole170

o For higher income consumers: perceived quality of brands – 51% of

these shoppers say that well-known brands are always of higher quality

o Low income shoppers: Unwillingness to try new things

There are important differences across regional, age and income

TV penetration is high

Main channels for Muslim

Wholesale and retail sales are already the third largest contributors to Nigeria’s

GDP (16%)

o Most of it through informal markets – estimates are as high as 98%171

o But formal retail is growing in urban areas

The most common shopping channel is the simple table-top: a stand set up on

the side of the road or in a local market to capture passing trade172

o 80% of consumer’s shop from these table-tops, of which there are no

less than 200,000 in Nigeria alone

The retail universe consists of about 745,000 outlets (including roadside table-

top, local kiosk and vegetable stall, up to formal supermarkets)

o The large disbursement makes marketing channels difficult

o In a six-month period, the highest selling new product measured in

Nielsen’s Retail Index was being sold in 65% of the retail universe, while

the next nine best-selling products were available in just 30% of these

outlets

o Therefore, companies need to identify and prioritise the best channels

– in Lagos laundry detergents are present in over 100,000 outlets which

is impossible for one manufacturer to reach

o However, by sales value there is concentration – in Lagos beverages

are sold in 61,000 outlets, but 24,000 of those outlets generate 80% of

sales

Food, personal care, and household products account for 37% of total monthly

household spend. Nine of 10 respondents normally shop at traditional channels

like neighborhood shops and open markets173

Global Urban Muslim

Low levels of urbanisation (48%), and high levels of poverty (more than 70% of

population fall below the poverty line), means the Global Urban Muslim

segment is likely to be relatively small

o There are relatively small Muslim populations in rich states, e.g. Rivers

State which accounts for 7% of GDP only has 115,000 Muslims (or 3%)

169 McKinsey. 2013. Africa’s growing giant: Nigeria’s new retail economy 170 McKinsey. 2013. Africa’s growing giant: Nigeria’s new retail economy 171 http://mgafrica.com/article/2015-02-26-incomes-are-rising-and-consumer-demand-growing-but-

where-do-they-shop 172 Nielsen. 2015. Africa; How to navigate the retail distribution labyrinth 173 Nielsen. 2014. Nigeria: Country snapshot




79

and Delta River – known for oil - contributes 6% of GDP but only has

3% Muslim population (155,000)

However, some southern states still have a large number of Muslims

o E.g. Lagos State is estimated to have 5 million Muslims (or 25% of state

population) and accounts for 12% of the GDP of Nigeria

o Oyo also has relatively high Muslim population (4 million or 30% of the

population) and accounts for 6% of GDP

Overall, 11 to18 percent of urban households – numbering over 2 million

households – have purchasing power and annual incomes over US$10,000,

which puts them in the modest affluent class174

o Half of the country’s growth in wealth will come from these households

o Unclear what proportion of these affluent households are Muslims

Differences remain even within the affluent, urban households175

o Residents of Lagos are more than twice as likely to try new things as

their peers in Kano (the capital city of Kano state in the north-west)

o In Abuja, only 14% of consumers prefer to wear traditional dress over

Western clothing. This preference is higher in Lagos (30%) and Kano

(31%).

o Residents of Abuja are most likely to view clothes as a statement about

who they are, with 64% agreeing with this statement, compared to just

39% in Lagos.

Most Muslims (64%) believe that there is no conflict between being a devout

Muslim and living in a modern society176

o In line with views of Muslims in developed countries and higher than

perceptions in many Muslim-majority countries, e.g. Pakistan (17%),

Indonesia (52%), Turkey (60%), Jordan (63%)

174 McKinsey. 2013. Africa’s growing giant: Nigeria new retail economy 175 McKinsey. 2013. Africa’s growing giant: Nigeria new retail economy 176 http://www.pewglobal.org/2006/06/22/the-great-divide-how-westerners-and-muslims-view-each-

other/


80

23 Saudi Arabia (Kingdom of)

Population:

% Muslim

population 93.0%

Total Muslim

population

(m)

28.7 % under 35


Income:

GNI per capita

($) 54 730 GDP growth 3.8%

Gini

coefficient

45.9

Population

below

poverty line

Unknown

Trade:

2015 Total

Halal relevant

imports ($m)

29 189

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

64.4

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

6.9%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (92.7%)


Cosmetics (1.5%)


Confectionery (0.5%)

Recent developments

The low oil price has led to several proposed reforms (including VAT in 2018, a

removal of subsidies, and change of employment terms – important for large

expatriate community)

o Employment changes may slow down growth of modern trade format

(hyper / super markets and self-service stores) 177


Slower (actual and expected) growth has led to consumers becoming

increasingly price-conscious178

o 54% of respondents say they enjoy taking the time to find bargains,

and 50% are cutting back on luxury items

o This affects growth of non-essential categories like impulse and

beverages more than grocery, personal care and household bands

o For grocery, personal care and dairy, consumers tend to find large

packs more attractive, as they seek to get more value for money

Emerging trends179

o High technology set to transform the way Saudis shop

o Air travel rising as preferred mode of travel

o Inadequate local healthcare facilities turning Saudi patients into

"global health consumers"

177 http://www.nielsen.com/sa/en/insights/news/2015/regulations-are-reconfiguring-retail-in-saudi-

arabia.html 178 http://www.nielsen.com/sa/en/insights/news/2016/spend-on-consumer-packaged-goods-slowing-

in-key-gcc-markets.html 179 http://www.euromonitor.com/consumer-lifestyles-in-saudi-arabia/report

http://www.nielsen.com/sa/en/insights/news/2015/regulations-are-reconfiguring-retail-in-saudi-arabia.html

http://www.nielsen.com/sa/en/insights/news/2015/regulations-are-reconfiguring-retail-in-saudi-arabia.html

http://www.nielsen.com/sa/en/insights/news/2016/spend-on-consumer-packaged-goods-slowing-in-key-gcc-markets.html

http://www.nielsen.com/sa/en/insights/news/2016/spend-on-consumer-packaged-goods-slowing-in-key-gcc-markets.html

http://www.euromonitor.com/consumer-lifestyles-in-saudi-arabia/report


81

o Growing demand for convenience due to busier lifestyles has led to an

increased demand for impulse single serve beverages and food

Consumption tends to increase over Ramadan (see figure below)

Household consumption formed 40% of GDP in 2015180. Consumption by

category is

o Food and non-alcoholic beverages 37.3%

o Clothing and footwear 8.2%

o Housing, water, electricity, gas and other fuels 15.7%

o Furnishings, household equipment and routine maintenance of the

house 9.7%

o Health 1.0%

o Transport 18.9%

o Recreation and culture 2.2%

o Miscellaneous goods and services 7.2%

Main channels

While the retail market is developing, 62% of sales still arise from traditional

trade181

Online retail has exhibited strong growth, but off a small base

Local large retailers such as Al-Azizia Panda United, Al Bandar Trading, Al Nahdi

Medical and Fawaz Abdulaziz Al Hokair managed to secure leading positions

in the market182

o Based on high-quality brands, widespread geographic presence,

aggressive marketing and sales promotion tactics and strong

distribution networks, against which international players are struggling

to compete

180 https://en.portal.santandertrade.com/analyse-markets/saudi-arabia/reaching-the-consumers 181 ATKearney. 2014. Seizing Africa’s retail opportunities 182 Euromonitor. 2014. Retailing in Saudi Arabia


82

Global Urban Muslim market

The high level of urbanisation (83%) combined with Muslim dominance means

that the majority of citizens are both urban and Muslim

However, this does not mean that all Saudi consumers fall into the Global

Urban Muslim category

o Relatively high portion of religious conservatives and societal

conformists (who believe in the importance of social norms) 183

o Only 16% of respondents in a millennials survey have attended a

university (but 81% live in a city)184

Approximately 1/3rd of respondents were identified as Global Urban Muslims –

religious individuals believing in societal progression, women’s rights, and free

media185

Strong presence and demand for Western brands (particularly luxury brands)

means market penetration can be easier than other countries (e.g. Indonesia

has high domestic preference)186

o 60% of respondents mildly or strongly prefer Western brands

High internet penetration (more than 60%)increases ability of urban consumers

to engage with global peers187

o High smartphone penetration (more than 80% of respondents’ access

internet through a smartphone)

o But online shopping is still small (only 25% of respondents have used

internet for online shopping), compared to more than 60% in China

183 Note the AMRB - The Modern Muslim Consumer – uses a classification they call “New Age Muslim”,

however for consistency the term Global Urban Muslim is used. 184 Zogby. 2016. Muslim Millennial Attitudes on Religion & Religious Leadership 185 Note the AMRB - The Modern Muslim Consumer – uses a classification they call “New Age Muslim”,

however for consistency the term Global Urban Muslim is used. 186 Credit Suisse. 2015. Emerging consumer survey 187 Credit Suisse. 2015. Emerging consumer survey


83

24 Turkey

Population:

% Muslim

population 98.0%

Total Muslim

population

(m)

76.0 % under 35


Income:

GNI per capita

($) 19 360 GDP growth 3.3%

Gini

coefficient

40.2m

(2010)

Population

below

poverty line

16.9%

(2010 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

16 283

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

14.8

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

21.2%

Top 5 W.

Cape

export sub-

sectors

(2015)


Fats, oils and veg waxes (7.4%)

Fresh fruit (3.2%)

Cosmetics (2.4%)


Recent developments

Turkey is one of the largest upper-middle income economies (South Africa is in

the same income category but is substantially smaller)

It has grown strongly in the recent decade – in part driven by higher consumer

expenditure

o Growth has led to extreme poverty falling from 13% to 4.5% and

moderate poverty falling from 44% to 21% between 2002 and 2012

o Higher incomes have driven strong investment into Turkey by major

retailers and producers (e.g. Tesco, Unilever, and PepsiCo)188

o Its main trading partner is the EU (around 40% of trade), but ascension

talks have stalled

However, there has been growing unrest in Turkey

o In part due to a destabilisation of the region – particularly in Syria

o But also domestic issues including election outcomes, corruption

allegations, and a recent attempted coup d’état

As a result, growth has slowed and experienced significant currency and

financial market volatility since mid-2013


Strong disposable incomes have been growing in Turkey (particularly into the

middle class and at the upper-end), which has given rise to increased living

standards and greater expenditure on luxury goods

Lower interest in ready meals and the private label than other parts of

Europe189

188 http://www.ft.com/cms/s/0/621efa4c-c215-11e1-8e7c-00144feabdc0.html#axzz4JVQudYqq 189 http://www.ft.com/cms/s/0/621efa4c-c215-11e1-8e7c-00144feabdc0.html#axzz4JVQudYqq

http://www.ft.com/cms/s/0/621efa4c-c215-11e1-8e7c-00144feabdc0.html#axzz4JVQudYqq

http://www.ft.com/cms/s/0/621efa4c-c215-11e1-8e7c-00144feabdc0.html#axzz4JVQudYqq


84

o Partly due to low labour force participation rate of women

Consumer tastes differ between urban and rural (but urban is 73% of

population)

o Unilever’s Turkey operations divides the market into villages and cities

Local flavours and tastes are important, e.g.

o Unilever’s production of ice cream versions of classic Turkish desserts

o Success of café chains with a local flavour, such as Simit Saray, which

sells Turkish-style bagels

Turkish population is relatively young, with almost half the population under 31

years of age190

o Youth are generally well educated

o High internet penetration and social media awareness (e.g. with 30

million Facebook users, Turkey ranks as the 7th country in the world)191

o However, online retailing is still small (less than 1%)

o Shift towards Western styles (e.g. clothing), but local food tastes remain

preferable to international preferences

Turkish consumers tend to be price and discount sensitive; the ecommerce

market has been and still is dominated by Flash Sale websites

Family sizes are generally larger than found in Europe192

o Therefore, consumers prefer economy- or family-size items when buying

household items

Main channels

Grocery retailers account for the biggest sales

o Market share of traditional retailers have been eroded over the past

few years as consumers shift towards mass grocery stores

o Large stores now have 57% of the market compared to 33% of

“bakkal” stores (traditional local stores)

o Food retail holds the largest share in the total retail sector with 60%193

Private label products are increasing their share against branded products and

the number of discount stores are still increasing at a fast pace194

190 http://www.invest.gov.tr/en-

US/investmentguide/investorsguide/Pages/DemographyAndLaborForces.aspx 191 http://www.idgdirect.com/blog-abstract/9995/insight-marketing-turkey 192 http://emerging-markets-research.hktdc.com/business-news/article/Turkey/5-2-The-Turkish-

consumer-profile/bgem/en/1/1X000000/1X07SJWJ.htm 193 USDA. 2015. Turkey: Retail Foods 194 USDA. 2015. Turkey: Retail Foods

http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/DemographyAndLaborForces.aspx

http://www.invest.gov.tr/en-US/investmentguide/investorsguide/Pages/DemographyAndLaborForces.aspx

http://www.idgdirect.com/blog-abstract/9995/insight-marketing-turkey

http://emerging-markets-research.hktdc.com/business-news/article/Turkey/5-2-The-Turkish-consumer-profile/bgem/en/1/1X000000/1X07SJWJ.htm

http://emerging-markets-research.hktdc.com/business-news/article/Turkey/5-2-The-Turkish-consumer-profile/bgem/en/1/1X000000/1X07SJWJ.htm


85

25 Russia

Population:

% Muslim

population 10.0%

Total Muslim

population

(m)

14.2 % under 35


Income:

GNI per capita

($) 23 790 GDP growth 0.5%

Gini

coefficient

42.0

Population

below

poverty line

11.2%

(2014 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

33 927

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

111.0

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

9.5%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (85.0%)


Cosmetics (0.2%)


Ostrich (0.2%)

Recent developments

Russia is currently suffering from adverse external environments – particularly

low commodity prices

International sanctions have also been put in place by the US and EU against

Russia after it backed separatists in eastern Ukraine

In response Russia has banned the import of food from countries supporting

international sanctions

o It has gone as far as publically destroying illegally imported food

The Russian rouble has fallen to record lows and the economy has moved into

recession

Main channels for Muslims

Moscow has an estimated 1.5 million Muslims (of a population of 12.5 million)195

o This is the largest Muslim population of any other European city where

the local population is not predominantly Muslim

o However, Moscow has only 6 mosques (plans to build more are often

met with protest)

Overall, Russia has a large number of Muslims (more than 14 million), yet

Muslims do not always feel welcome in the country196

o Muslim migrant workers from Asia and Africa have come to Russia

competing for low paying jobs

o VTsIOM, a state-owned pollster has found that almost one in seven

Russians don't want to have Muslim neighbours, one-fourth do not

195 http://www.aljazeera.com/indepth/features/2015/07/animosity-moscow-muslims-change-city-

150720093306298.html 196 http://www.aljazeera.com/indepth/features/2015/07/animosity-moscow-muslims-change-city-

150720093306298.html

http://www.aljazeera.com/indepth/features/2015/07/animosity-moscow-muslims-change-city-150720093306298.html





86

want to live near a Caucasus native, and 28 percent don't want

Central Asians next door. Some 45 percent of Russians support the

nationalist slogan of "Russia for ethnic Russians"

Despite this, Halal food has become a profitable business and many non-

Muslims concerned by the low quality of foodstuff produced in Russia, have

switched to halal meat

o However, success brought many knock-off products in traditional Halal

products (e.g. chicken) but also including oddities such as mineral

water, and snacks to go with beer

The share of sales of Halal meat in the Metro Cash & Carry network in Moscow

is 15 %197

The Russian government has also launched initiatives to attract Muslim tourists

including198

o Making more Halal food available

o Encouraging local hotels and restaurants to comply with halal

requirements

197 http://www.muslimeco.ru/eng/opubl/5/ 198 http://newshalal.com/article/250/tourism/Russia-looking-for-more-Muslim-tourists-through-Halal-

tourism

http://www.muslimeco.ru/eng/opubl/5/

http://newshalal.com/article/250/tourism/Russia-looking-for-more-Muslim-tourists-through-Halal-tourism

http://newshalal.com/article/250/tourism/Russia-looking-for-more-Muslim-tourists-through-Halal-tourism


87

26 United Arab Emirates

Population:

% Muslim

population 76.9%

Total Muslim

population

(m)

7.0 % under 35


Income:

GNI per

capita ($) 70 570 GDP growth 4.5%

Gini

coefficient

Unknown

Population

below

poverty line

Unknown

Trade:

2015 Total

Halal relevant

imports ($m)

18 004

Total Halal

relevant

import

growth



2015 W. Cape

Halal relevant

exports ($m)

135.8

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

23.7%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (96.7%)



Cosmetics (0.4%)


Recent developments

The government enforces a strict food price policy, including price caps and

negotiated agreements with retailers regarding various food and beverage

products199

Price caps protect consumers against large price swings based on currency

(most food and beverages are imported)

However, it places substantial pressure on manufacturers who cannot pass on

any input price increases


There is a distinct market split between low income (often immigrant) workers

and high income professionals (and tourists)

Despite low commodity prices luxury goods sales continue to show strong

growth200

o Consumers look for superior quality from known brands

o Also driven by tourism in Dubai and Abu Dhabi

Using Arabic-language packaging constitutes an advantage on the domestic

market201

The UAE has a relatively young population, which enjoys a high standard of

living

o Driving interest in new technologies and products, especially mobile

phones and information technology

199 Euromonitor. 2015. Top 5 beverage trends in the Middle East and North Africa 200 Euromonitor. 2016. Luxury goods in the United Arab Emirates 201 https://en.portal.santandertrade.com/analyse-markets/united-arab-emirates/reaching-the-

consumers

https://en.portal.santandertrade.com/analyse-markets/united-arab-emirates/reaching-the-consumers



88

o Image of brands is also important, particularly for clothing and luxury

products202

Consumers are developing more interest in healthier foods203

o Boosted by media coverage of the “diabetes epidemic”

o However, deep knowledge about nutritional benefits is rare, and

buying decisions are often based on a promising label or even recent

coverage of functional ingredients204

Packaging is increasingly important for beverages (e.g. shift towards slimmer

cans)

Main channels

Modern grocery retailers dominate the retail landscape over traditional

grocery retailers due to their wider range of products, larger retail space and

convenient locations205

Manufacturers (particularly foreign ones) tend to use a local agent206

o Many will choose a different partner or agent for each emirate

o Imports and exports of food is generally entrusted to specialists

o Government has recently abolished the monopoly of agents, it remains

to be seen what opening this sector will do to the structure of the

market and prices

Shopping centres are expanding throughout the UAE

Limited shift to online retailing

Dubai is becoming a global hub for Halal food, despite being a net importer of

food

Government has placed a large focus on developing the Halal food industry,

and is achieving this through several (mutually reinforcing) interventions207:

o Promotion of Halal food through major tradeshows which are broader

than Halal (e.g. Gulfood Manufacturing Trade Show)

o Internationally recognised accreditation which allows producers wide

access

o Marketing, e.g. through Global Islamic Economy Report

o Setting up specialty areas within existing business parks, e.g. Jebel Ali

Free Zone, TechnoPark, and Dubai Industrial City

Global Urban Muslim

The high level of urbanisation (85%) combined with Muslim majority means that

the Global Urban Muslim segment can potentially be quite large

o However, this does not mean that all UAE consumers fall into the

Global Urban Muslim category

o A recent survey of millennials found 89% of respondents had no

university degree (but 84% lived in cities)208

202 https://en.portal.santandertrade.com/analyse-markets/united-arab-emirates/reaching-the-

consumers 203 http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-

information/agriculture-and-food-market-information-by-region/middle-east-and-africa/market-

intelligence/grocery-retail-trends-in-the-united-arab-emirates/?id=1459445540542 204 Euromonitor. 2015. Top 5 beverage trends in the Middle East and North Africa 205 http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-

information/agriculture-and-food-market-information-by-region/middle-east-and-africa/market-

intelligence/grocery-retail-trends-in-the-united-arab-emirates/?id=1459445540542 206 Santander. 2016. UAE: Distributing a product 207 http://www.salaamgateway.com/en/food/story/dubai_the_gulfs_halal_hubsalam04092015082659



http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-information/agriculture-and-food-market-information-by-region/middle-east-and-africa/market-intelligence/grocery-retail-trends-in-the-united-arab-emirates/?id=1459445540542






http://www.salaamgateway.com/en/food/story/dubai_the_gulfs_halal_hubsalam04092015082659


89

Millennials interact relatively little on social media compared to other countries

o Only 3,800 interactions measured against 126,800 in Indonesia over

same time frame

o Most of interactions were in reference to Halal media and recreation –

the prevalence of Islamic finance, Halal food, and modest fashion

means that these are likely to be discussed less as an issue/ concern

Relatively more views aligned with Global Urban Muslims compared to GCC

countries (e.g. female empowerment, free media, societal progression)209

The UAE has strong established systems and offerings to Global Urban Muslims

o It is able to offer Islamic Finance and various food options, modest

fashion, travel, media and recreation, and cosmetics

o Support from Government-led Islamic Economy development initiatives

has given the UAE a strong platform for the development of all Islamic

Economy sectors.

208 Zogby. 2016. Muslim Millennial Attitudes on Religion & Religious Leadership 209 AMRB. The modern Muslim consumer


90

27 United States of America210

Population:

% Muslim

population 0.8%

Total Muslim

population

(m)

2.6 % under 35


Income:

GNI per capita

($) 56 430 GDP growth 2.1%

Gini

coefficient

45

(2007)

Population

below

poverty line

15.1%

(2010 est.)

Trade:

2015 Total

Halal relevant

imports ($m)

219 031

Total Halal

relevant

import

growth



2015 W.

Cape Halal

relevant

exports ($m)

108.2

W. Cape

Halal

relevant

export

growth

(CAGR 11-

15)

13.8%

Top 5 W.

Cape

export sub-

sectors

(2015)

Fresh fruit (38.8%)

Lobster (13.0%)

Cosmetics (10.7%)



Fifteen states across the US represent approximately 85% of the total American

Muslim population211. The spread (east/ west coast and north/south) means the

market is fractured, and in many cases it may be unfeasible to serve the entire

market (see figure below). For example, on the east coast it is estimated that

California has 500,000 Muslims while Washington has 40,000. This means producers

will need to pick the urban areas with the highest number of the target market,

rather than attempting to serve entire US Muslim market (or even entire Global

Urban Muslim segment), or target the product to a wider audience.

210 DinarStandard. 2014. The Muslim Green: American Muslim Market Study 2014-15 211 These are (in descending order of their Muslim population size): Texas, New York, Illinois, California,

Virginia, Florida, New Jersey, Michigan, Pennsylvania, Georgia, Massachusetts, Maryland, Ohio, North

Carolina, and Washington.


91

Figure: Muslim American population by major city

Recent developments

US growth has been relatively strong in recent years (although the recovery

from the 2009 was not V shaped)

o Unemployment has fallen to record lows

o US dollar has strengthened – supported by view as a safe-haven

currency and good growth

However, much of the gains from growth has not benefitted lower and middle

classes (continuing a trend that emerged from early 1980s)

American Muslims account for $98 billion in disposable income212


Muslim families are generally bigger and younger, and spend more on

education

o Muslim household size is an average of 3.3, compared to national

average of 2.5

o 36% of Muslims fall in the 18-29 age group, compared to national

average of 22%

o Education spend ranked 4th for Muslim households, but 9th for the

national average

Muslims are ethnically diverse: Arab, Caucasian, African American, Hispanic

and Asian213

o 65% of Muslim Americans are foreign born (mainly Arab region and

south Asia)

212 http://muslimobserver.com/muslim-buying-power-new-consumer-survey-highlights-muslim-american-

spending-power-increased-demand-for-ethical-islamic-goods/ 213 Pew Centre. 2007. Muslim Americans: Middle class and mostly mainstream

http://muslimobserver.com/muslim-buying-power-new-consumer-survey-highlights-muslim-american-spending-power-increased-demand-for-ethical-islamic-goods/

http://muslimobserver.com/muslim-buying-power-new-consumer-survey-highlights-muslim-american-spending-power-increased-demand-for-ethical-islamic-goods/


92

o Native born Muslim Americans (35%) then to be African Americans

(20%)

o This means that market is likely to be fractured beyond strict religious

requirements, e.g. in terms of flavour, branding, and appeal

Shift towards conscious consumerism (a trend beyond Muslim groups)

o Halal certification is not a sufficient condition for purchasing products;

customers are also searching for value, quality and proper Islamic

practice

o This overlaps with other conscious labels such as ‘all-natural’, ‘gluten-

free’, ‘non-GMO’, ‘antibiotic-free’, and ‘Fairtrade’

Market is still growing, 86% of respondents are eager to see more Halal

products available at local stores

Muslim expenditure by category214

o Food and food services - $12.5 billion (13% of total Muslim spend)

o Healthcare - $6.6 billion (7%)

o Personal care - $1.2 billion (1%)

o Entertainment - $4.7 billion (5%)

Main channels

E-commerce still represents a small part of retail (less than 10%)215

o But since 2000, fully three-quarters of retail sales growth has occurred

through online channels216

US landscape is expected to experience a significant increase in non-store

retail217

Trend is towards smaller stores, reversing trends of the last decades

o However, supercenter formats (Hyper/Mass Channel) still captures

almost half of all US retail

Global urban Muslims

The role of faith in American Muslim lives is uniformly important; more than any

other religious group in America218

o Muslims are likely to acknowledge the importance of religion in their

lives219

o This is even more significant for the youth within this group, with 77% of

young Muslim Americans saying that religion is an important aspect in

their lives, compared with 57% of young Catholic Americans and 42%

of young Jewish Americans

Muslim Americans tend to be younger and are among the most highly

educated of all religious groups in America.

Family income among Muslim Americans is roughly comparable with that of

the population as a whole220

Among adults nationwide, 44% report household incomes of $50,000 or more

annually, as do 41% of Muslim American adults

214 DinarStandard. 2014. The Muslim Green: American Muslim Market Study 2014-15 215 http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-

Growth/1010756 216 PWC. 2015. Retail trends 217 PWC. 2015. Retailing 2020: Winning in a polarized world 218 OgilvyNoor. 2013. A little empathy goes a long way: How brands can engage the American Muslim

consumer 219 Gallup and the Coexist Foundation. 2009. The Muslim West Facts Project. 220 Pew Centre Research. 2007. Muslim Americans: Middle class and mostly mainstream

http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756

http://www.emarketer.com/Article/Total-US-Retail-Sales-Top-3645-Trillion-2013-Outpace-GDP-Growth/1010756


93

A recent survey found that 98% of respondents believe that American brands

don’t actively reach out to Muslim consumers

o But younger, more connected consumers feel that it is mainly US firms

that are failing. More than 60% agreed that brands outside of the US

were more successful at engaging the Muslim consumer221

The positioning and offer of a brand or product is critical

o If a brand were to offend or alienate Muslims in the US today, then

almost 99% of respondents would stop using the brand, with a majority

of those (65%) saying that they would do so even if the available

alternatives were not as good. 222

Millennials: top social media discussions in Islamic economy was on Halal food

(46%) (in line with analysis above that market is underserved)223

o Despite relatively small size US millennial Muslims are fourth most

engaged on social media (measured by number of posts and

comments), highlighting technology and communication penetration

(only Indonesia, Malaysia, and Pakistan had more interactions)

It is unclear how many Muslim Americans are urban

o Given high levels of overall urbanisation (82%) it is likely that the

majority of Muslims are urban

221 OgilvyNoor. 2013. A little empathy goes a long way: How brands can engage the American Muslim

consumer 222 OgilvyNoor. 2013. A little empathy goes a long way: How brands can engage the American Muslim

consumer 223 DinarStandard.2016. State of the global Islamic economy


94

APPENDIX D: BENCHMARKING

28 Australia

Australia is a major exporter of Halal foods. In 2014 it exported US$1.6 billion of meat

and cattle to OIC countries (3rd largest exporter), US$720 million in fruit, vegetables

and nuts (9th largest), and US$8.1 billion of cereals and processed derivatives (6th

largest).224 Its proximity to the Asian market gives exporters a competitive advantage

over food exporters from other countries, including South Africa. However, Australia’s

export performance is not all due to geography (particularly given its distance to the

MENA market). The regulatory system put in place by the Australian government

gives its Halal food exporting firms an edge in OIC as well as Muslim-minority markets.

The Australian government has recognised the importance of the Halal industry and

has a long involvement in supporting exporters of food – particularly meat. While the

support is multifaceted (see below), the main supported offered to exporters of

Halal products is through a strong standards, certification, and accreditation system

regulated by the Department of Agriculture and Water Resources. This regulatory

framework ensures the integrity of Australian Halal produce.

Standards, certification and accreditation

The Australian Government Authorised Halal Programme (AGAHP) was established

in 2005. It brought together three agencies – Meat and Livestock Australia, the

Australian Meat Industry Council, and the Australian Quarantine Inspection

Service225 – to form the Halal Consultative Committee (HCC). The HCC also includes

exporting Halal meat processors and two representatives from each of the

Approved Islamic Organizations (AIOs). Only official AIOs are permitted to operate

within this programme, and they carry out all aspects of Halal compliance. Non-

approved Islamic organizations may not offer Halal certification services. The

programme and actors are shown below.

224 International Trade Centre. 2015. Halal goes global 225 Recently renamed Biosecurity Australia


95

The establishment of AGAHP effectively means that the Halal certification offered by

an approved AIO is fully compliant, monitored and supported by the Federal

Australian government. All Halal meat for final export receives an official Halal meat

certificate signed by both the Australian Department of Agriculture and Water

Resources and a recognized AIO representative.226 The involvement of government

in the issuing of Halal certification – which is not the case in many other countries

where the certification is privately issued – gives added authority to its Halal

compliance, and builds the reputation of the national brand.227

All producers wishing to obtain a Halal certificate must include a detailed Halal

programme – which forms part of their Approved Arrangement (AA). Any firm

wishing to trade in controlled export commodities228 must have an AA – it is not only

applicable for Halal producers229. The AA is essentially a ‘how to export’ document

which is tailored to a particular firm, including its processes and procedures for all

the commodities that the firm wants to export and the requirements of destination

markets. For Halal products the AA covers all aspect building up to the slaughter of

animals and the processing of food. Processors may employ only registered Muslim

slaughtermen, and a slaughterhouse must have 100% Halal slaughter in order to

qualify230. The AA must identify a specific AIO which the firm will work with, and must

also cover specific importing country requirements, e.g. from Malaysia or Saudi

Arabia, to ensure compliance with country specific requirements.231 Note, that the

226 http://www.australian-meat.com/Foodservice/Halal/ 227 International Trade Centre. 2015. Halal goes global 228 These are: dairy products; eggs and egg products; fish and fish products; fresh fruit and vegetables;

grains and seeds; hay and straw; live animals; meat and meat products; organic produce; plants and

plant products 229 http://www.agriculture.gov.au/export/from-australia 230 http://halaladvocates.net/site/our-resources/australia/ 231 Meat and Livestock Australia. 2014. Australian Halal beef and lamb goat fact sheet

http://www.australian-meat.com/Foodservice/Halal/

http://www.agriculture.gov.au/export/from-australia

http://halaladvocates.net/site/our-resources/australia/


96

AA is required to export Halal products – if a company decides to only produce for

the domestic market it faces far less government involvement232.

The AIOs are also bound by an AA and other legislation which cover their conduct,

supervision, and certification. AIOs that are approved by the government have sole

responsibility for the religious aspects of production of Halal meat. The Australian

Quarantine Inspection Service (which is part of the HCC) audits and verifies

compliance of all non-religious aspects of the production of Halal (and non-Halal)

foods. This ensures that the Halal product is prepared, packed, handled and stored

in a manner that addresses Halal integrity at all stages of production.

The AGAHP is run by the Department of Agriculture and Water Resources which

monitors all aspects of the program on a daily basis. It approves AIOs and monitors

the implementation of the AIOs programmes – particularly certification and training.

The Australian Quarantine Inspection Service also falls under the Department.

Ultimately the Department is responsible for issuing Halal stamps and the signing of

export and domestic transfer certificates.

However, the system is not without its faults. In 2015 a government committee

conducted an inquiry into third party food certification. As part of that process,

issues around Halal certification were examined and the following

recommendations were made (but it does not appear that any have been

implemented):

The government, through the Department of Agriculture, should become the

sole signatory on the government Halal certificate (i.e. create a single Halal

certification ‘brand’ for Australia’)

The government, through bilateral and multilateral forums, should promote

greater acceptance of a 'whole-of-country', government-led Halal

certification system

The government should consider requiring that Halal certification of goods in

the domestic market comply with the export standards

The Halal certification industry consider establishing a single Halal certification

authority and a single national registered certified trademark and meat

processors clearly label products sourced from animals’ subject to religious

slaughter.

Traceability

The AGAHP effectively ensures the traceability of all Halal meat products from the

farm to the abattoir and through to the logistics network. Furthermore, the

traceability of livestock is covered by the Exporter Supply Chain Assurance System

(ESCAS). It was implemented in 2011, following the public response to footage of

mistreatment of Australian animals in Indonesian abattoirs which led to trade

suspensions of cattle to Indonesia. The system was designed to ensure that

Australian livestock exported for feeder and slaughter purposes are handled in

accordance with international animal welfare standards and to provide a

mechanism to deal with animal welfare issues when they occur—preventing the

need for trade suspensions. It focusses on animal welfare, control through the supply

232 Zulfakar, M. 2015. Australia’s Halal Meat Supply Chain Operations


97

chain, traceability through the supply chain, and independent audits233. The cost of

implementation of improved supply chains in Indonesia is estimated to have been

$0.5 million per exporter234 (although some costs are one-off, upfront costs which

can be recouped over the longer term). In addition, industry estimated that on-

going costs of ESCAS equate to about $2.00 per animal for cattle and are likely

to be somewhat lower for sheep.235

Information sharing and awareness raising

Information is mainly shared through the large industry associations such as Australia

Meat Industry Council, Meat and Livestock Australia, and the Department of

Agriculture and Water Services. Information available includes certification

necessary for export (both Halal and non-Halal certifications), R&D reports, market

prices reports, and production data.

The Departmental website is particularly useful to potential and current exporters. It

contains all the forms and standards that are required. Documents that need to be

submitted to the Department can be completed and submitted online. It also

contains detailed information of all the Halal certifying bodies (there are more than

20) and which markets the certifying body covers, with specific requirements of

each market. An extract of the information is shown below.

Islamic

Organisatio

n236

Markets with specific listing requirements All other

markets

that

require

a halal

certifica

te

Indones

ia

Malaysi

a

Saudi

Arabi

a

Singapo

re

United

Arab

Emirat

es

Qat

ar

Kingdo

m of

Bahrain

Egy

pt

Adelaide

Mosque Islamic

Society of

South Australia

ADELAIDE SA

5000

Australian

Federation of

Islamic

Councils Inc.

ZETLAND NSW

2015

NSW only

Australian Halal

Authority and

Advisers

BROADMEADO

WS VIC 3047

VIC only

233 http://www.agriculture.gov.au/export/controlled-goods/live-animals/livestock/information-

exporters-industry/escas 234 Department of Agriculture. 2014. Inquiry into Australia’s Trade and Investment Relationships with

Countries of the Middle East 235 Department of Agriculture. 2014. Inquiry into Australia’s Trade and Investment Relationships with

Countries of the Middle East 236 For a full list see: http://www.agriculture.gov.au/export/controlled-goods/meat/elmer-3/list-islamic-

halal-certification

http://www.agriculture.gov.au/export/controlled-goods/live-animals/livestock/information-exporters-industry/escas

http://www.agriculture.gov.au/export/controlled-goods/live-animals/livestock/information-exporters-industry/escas

http://www.agriculture.gov.au/export/controlled-goods/meat/elmer-3/list-islamic-halal-certification

http://www.agriculture.gov.au/export/controlled-goods/meat/elmer-3/list-islamic-halal-certification


98

Removing market access barriers

The AGAHP and its responsible department has been able to adapt to changes in

the global Halal market. For example, Halal food products from Australia and New

Zealand are the first imports to be subject to the UAE’s new standards, which aim to

create a global mark of quality for the Islamic food industry.237 By early adoption of

the new standards, exporters are able to avoid any possible supply disruptions or

attempts at creating non-tariff barriers.

A recent inquiry into Australia’s trade relationships with MENA countries found that

while tariffs are generally low (mostly 5%), technical barriers to trade still have a large

impact. These include shelf life requirements, documentation certification and

additional testing (beyond Australia’s meat production system requirements).238 The

Australian government has signed several free trade agreements (FTAs) to ensure

better access. FTAs have been signed with China (which came into force on 20

December 2015), Japan, Korea, and Trans-Pacific Partnership countries (not yet

ratified)239.

In 2015, large meat exporters urged the Federal Government to reform Australia’s

Halal beef certification system, as meat processors felt that importing Muslim

countries had too much power to decide which individual or company can certify

meat as Halal. They argued that this has led to a monopoly, leaving them open to

the risk of losing market access at short notice if a certifier falls out of favour with the

importing country.240 These requests are in line with the recommendations from the

government committee in 2015. However, AIOs have resisted this push, saying that

importing countries can still block Australian exports if they do not accept the

government-issued Halal certificate241.

Promotion and marketing

While the government acknowledges the importance of the Halal food industry,

there is no explicit government policy to bolster Halal exports.242 The lack of

promotion and marketing support is partly due to domestic political issues – the most

notable of which was a sustained campaign by anti-Halal groups in 2014. The

campaign led to a dairy processor removing its Halal certification from its branding

and losing a lucrative Emirates Airline contract (ironically, it seems only the branding

was changed, processes remained the same). Interestingly, the opposition to Halal

was short lived, and their Halal certification was reinstated in 2015 and they won

back the contract with Emirates243

Marketing and promotion is run through the major associations such as Australian

Red Meat and Meat and Livestock Australia which designs and delivers marketing

237 http://halalfocus.net/global-mark-of-quality-for-halal-food-begins-with-australia-and-new-zealand-

exports-to-uae/ 238 Department of Agriculture. 2014. Inquiry into Australia’s Trade and Investment Relationships with

Countries of the Middle East 239 http://dfat.gov.au/trade/agreements/pages/trade-agreements.aspx 240 http://halalfocus.net/australian-halal-meat-processors-say-government-takeover-needed/ 241 http://halalfocus.net/australian-halal-meat-processors-say-government-takeover-needed/ 242 DinarStandard. 2016. Australia’s $13bn halal food industry 243 abd.net.au/news/2015-05-21/halal-certification-fleurieu-milk-yoghurt-emirates-deal/6488322


99

programs tailored to each market and distribution channel.244 Meat and Livestock

Australia, for example, has offices in the US, Dubai, Brussels, Beijing, Seoul, Tokyo, and

Jakarta. Each office has specific market channels to target the region and assist

with market access.

Addressing halal-specific skills and talent attraction requirements

The slaughtering and processing of meat may only be done by certified Muslim

slaughtermen. All workers (including supervisors, slaughtermen, and trainees) must

be registered with AUS-MEAT – an industry association responsible for establishing

and maintaining National Industry Standards for meat production and processing245

– and hold a current identity card which identifies the AIO-status Halal certifier that

they represent246. The AUS-MEAT identity cards must be renewed annually. Halal

Inspectors must also hold a current identity card under the same conditions as

Muslim slaughtermen.

It is the joint responsibility between the meat processor and the AIO to develop an

effective training programme247. To achieve this there are specific training

programmes in place, allowing trainee slaughtermen to work under the supervision

of a registered Muslim Slaughterman.

There does not appear to be a targeted government programme to support Halal-

related production skills.

Lessons for the Western Cape

Cooperation between industry and government is important

o Creates a transparent system with clear roles and mandates

o Allows for quick resolution of issues (e.g. market access, health scares,

lobbying)

o Unified goal of increasing exports while maintaining integrity of the

product

Federal involvement gives exporting firms and importing countries greater

certainty of the value and acceptance of the Halal certificate

However, this level of government oversight can also cause delays if not

implemented effectively

o Requires responsive government (if government agencies are unable

to perform tasks or cause delays – e.g. slow issuing of export permits –

then a government-run system may not be the best model)

The cooperation between government, AIOs, and exporters relies critically on

the acceptance of the Halal certificates by the importers

o Need to insure that any changes to certification in Western Cape/

South Africa can still secure access into all major markets

o May require bilateral negotiations which has to happen at a national

level

Islamic Organisations need to see the benefit of co-operation with

government

244 http://www.australian-meat.com/Foodservice/Resources/MLA_Provides_Marketing_Assistance/ 245 https://www.ausmeat.com.au/about-us.aspx 246 Zulfakar, M. 2015. Australia’s Halal Meat Supply Chain Operations 247 https://www.ausmeat.com.au/audits-accreditation/halal-information.aspx

http://www.australian-meat.com/Foodservice/Resources/MLA_Provides_Marketing_Assistance/


100

o In the Australian model the AIO has full authority of all religious

requirements, while the Australian Quarantine Inspection Service

focusses on all non-religious aspects

o The current push for Federal oversight only is likely to be met with

resistance from AIOs

o Even with the strong regulation there are reports of variance in terms

of services offered by AIOs (e.g. anecdotal evidence of poor

oversight)

o Problem may be worsened in domestic market, which does not

require an AA

Issues such as traceability in the value chain are larger than the Halal market

Additional traceability measures or standards can be costly

o Imposing onerous standards can decrease competitiveness of local

firms (especially if local standards are higher than importer standards

and if there is little differentiation of the final product)

o While larger firms are likely to adapt, it may harm smaller firms or new

exporters

Specific training and regulation of workers in the Halal value chain is likely to

improve compliance and may help move firms beyond focussing only on

compliance (move towards the intention of Halal and Tayyib)


101

29 Thailand

Agriculture accounts for a large part of the Thai economy – about 9% of GDP.

Similarly, agricultural accounts for 11% of total exports. However, Thailand has also

been able to leverage its agricultural sector through research, standards, food

safety, and a focus on quality to create and support a large food processing sector.

Currently there are 10,000 food processing companies which employ more than

900,000 workers248. About 80% of the food is cultivated and processed in Thailand,

and most of it is exported – more than 50% of production is sold outside the country

earning almost US$25 billion in 2012249. While most of the produce goes to the region

(ASEAN countries), the USA, Japan, China, Russia and the European Union are also

large importers.

The Thai food industry can be divided into 4 major categories: primary agricultural

products, livestock and poultry, fisheries and processed foods. Halal foods cut across

all of these categories and it is estimated that Thailand is the sixth largest exporter of

Halal food, supported by an estimated 3,500 facilities involved in halal food

production250.

The Thai government offers four general food support programmes:

1. Thai Kitchen of the World aims to increase food and raw material exports

through improved health and safety, quality and standards. It also focusses

on increasing Thai recipes and cooking, and the number of foreign Thai

restaurants (with the assumption that they buy Thai ingredients – but there are

also other benefits). Government support occurs through the Thailand

National Food Institute, the Ministry of Agriculture and Cooperatives, Ministry

of Industry, Ministry of Commerce, and Ministry of Public Health.251

2. Thai Delicious originated from the Thai Kitchen of the World programme in 2012

by the National Innovation Agency (NIA), the Ministry of Science and

Technology, and several universities’ food institutes252. It integrates Home

Economics, Food Science and Technology, and Sensory Science to develop

equipment to measure and analyse flavours of Thai food. By 2014 the NIA had

recorded 11 government-approved standard recipes, and had created two

taste measuring devices253. The project is estimated to cost 23.5 million baht

(R9 million) and has a total investment value of 130.6 million baht (R61 million).

While the project originally also aimed to certify restaurants that meet the

“Thai Delicious” standard, it seems that the certification approach was taken

over the Thai SELECT accreditation programme.

3. Thai SELECT certifies and promotes real Thai cuisine around the world. It offers a

seal of approval to domestic and international Thai restaurants as well as

ready-made meals that are able to meet quality and service standards. For

international restaurants there must be at least here must be at least 60

percent of Thai food on their menus. To date 1,301 restaurants have received

this certification (of an estimated 15,000 restaurants serving Thai food

248 http://www.boi.go.th/tir/issue/201310_23_10/42.htm 249 http://www.boi.go.th/tir/issue/201310_23_10/42.htm 250 http://www.boi.go.th/tir/issue/201310_23_10/42.htm 251 http://thaifoodtoworld.com/home/governmentproj.php 252 http://thainews.prd.go.th/website_en/news/news_detail/WNRPT5710010010001 253 http://thainews.prd.go.th/website_en/news/news_detail/WNRPT5710010010001


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internationally) 254. In South Africa there are 20 restaurants which meet the

Thai SELECT criteria (mainly the Simply Asia franchise) as well as 3 high-end

restaurants which have achieved the Thai SELECT Premium certificate.

However, it is unclear how well recognised this certificate is and whether it is

able to change purchasing decision.

4. One Tambon (village); One Product (OTOP) focusses on supporting rural

products/ farm projects to enter the market. Support is multi-faceted,

including technical support in terms of production, packaging, quality and

safety, funding, and marketing support. Products are rated from 1 star to 5

star, and qualifying products (generally 4 or 5 star) gets branded premium

and is further promoted to the export market through international fairs255

The sections below will discuss how Halal fits into these programmes (rather than a

full overview of each support programme) as well as Halal specific interventions.

These interventions are currently guided by the Halal Development Promotion

Strategy, the most recent of which (2016 – 2020) was accepted by Cabinet in 2015.

The strategy aims for Thailand to become one of the top five Halal exporters by 2020

(currently 13th) by promoting Thailand as a key manufacturing and export base in

the ASEAN region256. It consists of four elements:

1. Enhance the potential for development of Halal standards and certification

2. Enhance the potential for manufacturing of Halal products and services

3. Develop the Halal market

4. Improve R&D in Halal science to reinforce the country’s Halal industry

A total budget of 8 billion baht (R3 billion) will be devoted to improving

manufacturing capability, speeding up certification, research and development

and enhancing international marketing. It is a joint effort by the Industry, Foreign

Affairs, Commerce, Agriculture, Tourism and Sports ministries257.

Thailand is also a major player in tourism, attracting 29 million visitors in 2015 (with an

approximate spend of US$42 billion)258. Tourists are mostly East Asian (20 million);

Middle Eastern countries currently form a small share of visitors (roughly 2.5%). About

3 million visitors are Muslim (mainly from Malaysia and Indonesia). Similar to food,

there are direct attempts to promote Muslim tourists, but much of the marketing also

falls under wider support measures – these are mainly discussed under promotion

and marketing segment below.

Standards, certification, accreditation and traceability

In 2001 the Central Islamic Committee of Thailand (CICOT) set up regulations for

Halal certification / accreditation as a common standard for the whole country.

While certification has been in operation for many decades (since 1969259), an Act in

1997 gave CICOT the full and sole legal authority for certification. Since then CICOT

has set about formalising and standardising Halal certification. Thailand therefore

has a single certification body, which needs to ensure that the Halal certificate

254 http://www.thaiselect.com/main.php?filename=about_us 255 https://www.jircas.affrc.go.jp/program/proD/english/files/2014/03/2013-session-42.pdf 256 http://www.businessmirror.com.ph/thailand-takes-serious-efforts-to-grow-halal-tourism-exports/ 257 http://www.businessmirror.com.ph/thailand-takes-serious-efforts-to-grow-halal-tourism-exports/ 258 Department of Tourism. 2015. Tourism receipts from international tourism arrivals 259 Priyakorn, P. Thailand: Muslim friendly destination


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meets all religious and international trade requirements. This is in contrast to many

countries – including South Africa – which has multiple Islamic Organisations that are

able to issue Halal certificates.

Since the early 2000s the focus has evolved beyond strict religious compliance into

general food safety measures to include HACCP system – in line with the Thai

Kitchen of the World programme. A Halal Standard Institute of Thailand – which falls

under CICOT – was established to research, develop and establish Halal products

standards in conformity with Islamic Law and parallel to international food

standards260. The Institute was also mandated to identify and analyse barriers to the

Halal products standard accreditation process and to prescribe corrective actions.

It has worked with the Agriculture Commodity and Food Standards (responsible for

non-Halal food standards) to ultimately create a set of standards which complies

with (general) international standards and the Halal food standard of the United

Arab Emirates261. These certificates are also generally accepted in Malaysia,

Singapore, Thailand, and Indonesia (although they may require their own inspectors

in certain cases).

Currently there are about 3,600 Thai companies which hold Halal certification, and

this covers 120,000 product items. However, the certification can sometimes be a

stumbling block for manufacturers. Certifying Halal products is time-consuming,

taking about one year on average262.

The focus of the Thai government has also extended beyond standards to improving

the quality of Thai food. However, this is complicated since there is no geographical

indicator or any other protection on the Thai food brand (there are individual

indicators, e.g. Thai Hom Mali Rice263). Many restaurants and ready-to-eat products

(domestic and international) claim to offer Thai food, but the product may not

consist of authentic Thai flavours, or may be substandard. The Thai SELECT

certification and the Thai Delicious programme both attempt to address these

issues, as well as promote Thai food globally. The promotion of the Thai products and

Thai cooking naturally extends to support Halal Thai food and ingredients. But neither

programme directly promotes Halal certified food or ingredients.


There are several institutions involved support and information sharing in food

technology, standards, and research. These include the National Food Institute (NFI),

the Technological Services Department, the Agricultural Research Development

Agency, Kasetsart University Institute of Food Research and Product Development,

Kasetsart University Food Innovation Research and Services in Thailand, and the

Cassava and Starch Technology Research Unit. The number of research institutions

shows the importance of agriculture and food, and highlight the extent of

government support. There are also several industry associations which are able to

support producers with information distribution, lobbying, and networking264. These

260 Halal Standard Institute of Thailand. Halal Products Standard Certification Process 261 http://thailand.prd.go.th/thailand_illustrated/print.php?id=306 262 http://www.businessmirror.com.ph/thailand-takes-serious-efforts-to-grow-halal-tourism-exports/ 263 http://www.ananda-ip.com/files/List_Thai_Foreign_Registered_GIS_Thailand.pdf 264Industry association examples include the Food Processing Industry Club, the Thai Food Processors’

Association, Tuna Processors’ Group, Pineapple Processors’ Group and Food Ingredient and Ready-to-

eat Processors’ Group


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institutions do not focus directly on Halal products, but Halal producers arguably still

benefit from research and support.

In addition to the main programmes summarised above, the government also

launched a “Thailand Food Valley” project under the Minister of Industry to promote

linkage between food producers in all levels (SME, OTOP and industry) 265. The

programme – structured as a public-private partnership – focusses on three regions

to try to build clusters of excellence in sectors of the food industry. The aim was to

develop a productivity advantage through research and improving food

production stability, particularly before the ASEAN Economic Community (AEC)

started in late 2015266.

Product and service tailoring and innovation

One of the main drivers of innovation is the Halal Science Centre based at

Chulalongkorn University. The centre focusses on:

Testing alcohol levels and for other forbidden substances in raw and finished

products

Research and development of new systems and methodologies, product

innovation as well as reagent kits exploitable for halal food verification (e.g.

Hal-Q – a type of warehouse distribution management system to manage

Halal products throughout the value chain; and S.I.L.K – Shariah-Compliant

ICT Logistics Kontrol)

Business incubation of Halal entrepreneurs and SMEs in conjunction with Office

of Small and Medium Enterprises Promotion

Product development and design is a large part of OTOP. SMEs and communities

that are part of the programme – mainly local food producers and farmers – are

supported by research institutes and universities to meet international food

standards, but also to improve product development, packaging design, and shelf-

life stability. A good example of an OTOP success is banana products from “Banana

Society” – a community of farmers who grow bananas. Since the bananas have a

short shelf life they were processed into traditional banana products (e.g. sun-dried

banana and seasoning banana chips). However, there were problems of unstable

quality, shelf-life stability and safety of these traditional products. Through support of

food research institutes and universities appropriate products and process were

developed, as well as market channels267.

Promotion and marketing

Thailand government places emphasis on marketing and branding of Thailand and

Thai products. The “Thai kitchen to the world” policy aims to promote Thai food

products, create awareness of food security concerns, and produce high-quality

foods complying with international standards at competitive prices268. The project

was started in 2002 and the main strategies include

1. Expanding agriculture and food business

265 https://www.jircas.affrc.go.jp/program/proD/english/files/2014/03/2013-session-42.pdf 266 http://www.industrysourcing.com/article/kitchen-world-churning-out-orders 267 http://www.otop-germany.com/index.php/food-products.html 268 http://www.pattayamail.com/thailandnews/thai-pm-opens-thai-kitchen-to-the-world-event-to-

promote-thai-food-industry-13105

https://www.jircas.affrc.go.jp/program/proD/english/files/2014/03/2013-session-42.pdf

http://www.industrysourcing.com/article/kitchen-world-churning-out-orders

http://www.pattayamail.com/thailandnews/thai-pm-opens-thai-kitchen-to-the-world-event-to-promote-thai-food-industry-13105

http://www.pattayamail.com/thailandnews/thai-pm-opens-thai-kitchen-to-the-world-event-to-promote-thai-food-industry-13105


105

2. Adding value to agricultural produce with high-technology production

processes

3. Supporting cooperation at regional and international levels

4. Supporting Thai investments abroad, especially in building a network of

Thai restaurant overseas269

Promotion and marketing also occurs through OTOP. Products that are rated 4 or 5

stars are designated as premium products (which can be used on label) and

government promotes OTOP products at international trade expos.

Halal products benefit from these marketing efforts, but it also received direct

support. The Ministry of Industry has budgeted Bt180 million (R70 million) in 2016 to

promote exports of Halal products270.

The Tourism Authority of Thailand has identified Halal tourism as one of its main

markets to target. In order to position itself as Muslim friendly it has undertaken a

number of initiatives, including:

Launching a Muslim tourist application called Thailand Muslim Friendly to help

Muslim travellers locate Halal restaurants and hotels, and mosques, as well as

a rating system (allowing those who have been to the locations before to

comment on its appeal), a navigation system to get you from your location to

the place of interest, and search capability for nearby locations271

Offering incentives for Muslim travel agents and media to survey tourism

products and services for Muslim tourists in Pattaya, Hua Hin and Phuket

(which is gearing up to be a Halal food centre)272

Monitoring global travel trends to support local travel companies (including

identifying new and emerging markets), and connecting consumers, buyers

and media in those markets with Thai products and service offerings273.

Thailand already has a strong offering to international tourists, both Muslim and non-

Muslim. The MasterCard Crescent Rating Global Muslim Travel Index 2015 ranked

Thailand second as most popular destinations for Muslim tourists (Singapore was

ranked first). However, this ranking may be somewhat misleading as it excludes

Muslim majority countries – which still attract the majority of Muslim tourists274.

In 2014 the Halal Science Centre, the CICOT and Halal Standard Institute of Thailand

launched “Thailand Diamond Halal”, a label under which all Halal products and

services will be marketed, including Halal tourism and Halal medical tourism. The

branding can be adopted by hospitality companies, hotels and tour operators. This

will help customers to be assured that hotels will be equipped for Muslim travellers

(e.g. prayer facilities). It is unclear what success the project has had so far, and how

it interacts with the many other certification and promotional offerings.

Thailand is also able to attract tourists through some niche offerings such as medical

tourism (and even more niche – Halal medical tourism). It receives approximately

269 Varanyanond, W. Fostering food culture with Innovation: OTOP and Thai kitchen to the world 270 http://www.nationmultimedia.com/news/business/macroeconomics/30274097 271 http://www.huffingtonpost.co.uk/muhammad-zulfikar-rakhmat/halal-tourism-an-

importan_b_12229662.htm 272 https://www.imtj.com/news/thailand-targets-muslim-travellers/ 273 http://www.tatnews.org/pdf/Recommendedblog/Muslim-Friendly-Applicaton.pdf 274 https://www.imtj.com/news/thailand-targets-muslim-travellers/

https://www.imtj.com/news/thailand-targets-muslim-travellers/

http://www.tatnews.org/pdf/Recommendedblog/Muslim-Friendly-Applicaton.pdf

https://www.imtj.com/news/thailand-targets-muslim-travellers/


106

550,000 medical tourists annually (behind Malaysia in the region which receives

640,000)275. Thailand is popular with GCC visitors for its medical services, and many

hospitals strive to accommodate the religious and cultural needs of Arab patients276.

For example:

Bangkok Hospital launched an Arabic Medical Services wing in 2006. They

provide Arabic-speaking staff in addition to Halal food and prayer facilities

Some ‘Halal’ labelled tour operators combine health check-ups, sightseeing

and shopping trips

While marketing support seems to have been successful, one of the main challenges

for Halal tourism in Thailand is the limited availability of Halal food277. Much of the

Halal food industry is export focused, and it is unclear to what extent local

restaurants offer Halal options. Arguably the online presence of restaurants and

online chat forums will help alleviate part of this problem.

Access to appropriate distribution channels

The Thailand Halal Assembly – hosted in partnership with the Chulalongkorn

University, CICOT, Halal Science Centre, and Halal Standards Institute of Thailand – is

the major Thai trade show for Halal products. It draws a variety of domestic and

international sellers and buyers. The show has a strong regional focus, and also has a

strong travel and tourism presence.

Addressing Halal-specific skills and talent attraction requirements

A number of institutes support the training for food processing. The Department of

Skill Development is a key organization in coordinating and promoting training. The

department also sets guidelines appropriate for the labour development of different

groups. As part of the drive to improve the standards and quality of Thai food (and

to protect the image of Thai food) the department offers specific courses for Thai

cooks. It focusses on both theory (cooking and food safety) and practice (including

sourcing raw materials). The program totals 280 hours (two months), and after that

trainees are sent to undergo training in operational institutes for two more months.

Those who can pass the evaluation are awarded a certificate of labour

development expertise in the field of Thai cooking, and they receive a

recommendation letter from the operational institutes where they went for their

extra training278.

Halal specific training is offered through the two major universities and their institutes

(Kasetsart University Institute of Food Research and Product Development, Kasetsart

University Food Innovation Research and Services in Thailand, and Halal Science

Centre, Chulalongkorn University). Training is also offered through the Halal Standard

Institute of Thailand – which focusses on producing highly qualified personnel to

support production and expand export opportunities279.

275 http://sea-globe.com/southeast-asians-drive-medical-tourism/ 276http://www.salaamgateway.com/en/travel/story/healthy_growth_of_muslimfriendly_medical_touris

m_-salaam13072016052658/ 277 http://www.businessmirror.com.ph/thailand-takes-serious-efforts-to-grow-halal-tourism-exports/ 278 http://thailand.prd.go.th/ebook2/kitchen/ch6.html 279http://www.halalrc.org/images/Research%20Material/Report/Halal%20Product%20Standards%20Pro

ducts.pdf

http://sea-globe.com/southeast-asians-drive-medical-tourism/

http://thailand.prd.go.th/ebook2/kitchen/ch6.html


107


The focus on standards and quality of Thai food has had some success, but

arguably the most important factor is the brand awareness of Thai food/ culture

o Thai government has developed a clear definition of Thai food (i.e. it has

identified certain recipes as Thai) which allows it to focus marketing,

standards, and quality efforts

o Western Cape and South African food/tastes does not have the same

brand recognition and its unlikely to achieve the same global status, except

potentially with significant promotion and brand leaders

The approach to promote all Thai food highlights challenges of such a broad

approach

o Unable to control who uses the brand and the quality they offer (e.g.

anyone can open a “Thai” restaurant anywhere in the world)

o Branding Western Cape as natural or healthy can similarly be harmed by

substandard products

Certificates and branding are only worthwhile if they are well known,

understood, and accepted by the market

o If a consumer doesn’t recognise the Thai Delicious mark, then it won’t

change purchasing decisions and will have cost the state and the firm

resources

Multiple support programmes causes overlaps, make it difficult to track success,

and can make individual programmes less effective

o The Thai programmes seem to have had some success, but the number of

initiatives which have been introduced suggest that not all have been

successful

o E.g. Thai Delicious certification, Thailand Halal Diamond certification, Thai

SELECT certification, and OTOP ratings are all attempts to address very similar

issues

o Programmes are run by different agencies and there seems to be large

overlaps which can arguably be streamlined to be more effective

o Industry take-up and recognition by the public is ultimately the measure of

success for promotion and certification (e.g. Thai SELECT seems to be used

globally, but Thai Delicious is not)

o Limited budget and resources for Western Cape means that departments

need to prioritise and collaborate – Project Khulisa is a good channel for this

A single certification entity is arguably easier to regulate and can have more

transparency, accountability and removes quality concerns across certifying

organisations. However, it also carries risks:

o Threat of monopoly pricing or inefficient service (certification in Thailand

currently takes a year)

o Key factor in single certification authority is its ability to gain acceptance by

international community (e.g. UAE standards)

Support technological solutions from private sector rather than developing and

running them in house

o Thailand Muslim Friendly app only has 1,000 – 5,000 downloads on Google

Play (compared to 10 million – 50 million downloads for Muslim Pro)

o Alternatively, approach existing apps to include a greater focus on Western

Cape options and alternatives and raise awareness for local business to

register on these websites/ apps


108

30 Singapore

Singapore is a small, island city-state off southern Malaysia. It only has 1.47% of land

turned over to agriculture and few natural resources. Despite these disadvantages

Singapore is a powerful and wealthy financial centre, regional and global trade hub

(it is the 14th largest exporter and the 15th largest importer in the world), and an

attractive tourist destination. It has a highly educated workforce; state of the art

infrastructure; excellent air and sea linkages; a low and transparent tax regime;

clean and efficient bureaucracy; a strong regulatory and legal framework; and a

neutral diplomatic policy which has ensured it is an ally of the US as well as China280.

These factors combine to ensure that Singapore is one of the most attractive places

to do business - ranking second on the World Economic Forum’s global

competitiveness rankings, and second in the World Bank’s Ease of Doing Business

ratings.

While there is little evidence of targeted support to Halal industries, producers and

logistics companies all benefit from the broader support offered (particularly

innovation) and the access to excellent infrastructure. The industry also benefits from

the hub status of Singapore, which offers access into the region and GCC countries

through preferential access agreements. These factors have led to a five-fold

increase in the number of Halal certified companies since 2000. Recently, the

Deputy Prime Minister also announced the establishment of a hub to

Singapore is a major tourist attraction. The country received 15 million tourists in 2015,

many from the region (2.7 million from Indonesia and 1.2 million from Malaysia).

Singapore was voted the most “friendly” non-Muslim destination for Muslim tourists in

2015, scoring high on safety, dining options, prayer space access, and airport

services281. However, Singapore’s score still ranks below many OIC destination scores

(ranked 9th overall).

The Halal tourism industry seems to be benefitting from the overall economic

environment, rather than direct government intervention. This is also the case for

medical tourism: Singapore attracts medical visitors based on its reputation for high

healthcare standards which also benefits Halal medical tourism. Patients Beyond

Borders estimated that Singapore receives 400,000 medical tourists a year from the

region (behind Malaysia – 640,000 – and Thailand – 550,000)282.

Standards, certification, accreditation and traceability

The Islamic Religious Council of Singapore (Muis), established in 1978, is the sole

custodian of Halal certification in Singapore. Its certification mark is widely

recognised including key Halal markets such as Brunei, Indonesia, Malaysia and

GCC countries through Mabims and GCC-Singapore Free Trade Agreements283.

Actions of Muis are governed by the Administration of Muslim Law Act (1968) that

seeks to protect the Halal industry284. Section 88A(1) of the Act gives authority to the

280 http://www.bbc.com/news/business-32028693 281 http://gmti.crescentrating.com/main/detail?spot=87&s=4 282 http://sea-globe.com/southeast-asians-drive-medical-tourism/ 283 http://www.muis.gov.sg/halal/ 284 https://www.spring.gov.sg/newsevents/itn/pages/booming-halal-sector-opens-global-path-for-

local-firms-20160118.aspx

http://www.bbc.com/news/business-32028693

http://gmti.crescentrating.com/main/detail?spot=87&s=4

http://sea-globe.com/southeast-asians-drive-medical-tourism/

http://www.muis.gov.sg/halal/

https://www.spring.gov.sg/newsevents/itn/pages/booming-halal-sector-opens-global-path-for-local-firms-20160118.aspx



109

Council to issue Halal certificates in respect of any product, service or activity and

make regulations for Halal certificate holders to ensure that conditions in Islamic law

are met.

Muis currently offers 7 Halal certifications285, however these are only targeted at

food. Currently Muis does not certify pharmaceuticals, cosmetics or any other non-

food product. The cost of certification varies across these 7 Halal certification

schemes. Normal applications cost S$147 (R1,431) and will be attended to within 14

days. Express applications costs $315 (R3,068), but processing will start within 7 days.

Certifying a catering / central kitchen facility is the most expensive, costing $1086

(R10,578), followed by certifying a storage facility ($963 or R9,379)286. If a consulting

firm is used (there are more than ten Halal consultants operating in Singapore) then

the costs can increase significantly. HCS Consultants, a Halal consultancy, charges

S$6,000 (R58,426) for a catering or manufacturing facility. The number of certified

companies has risen from 533 in 2000, to 2,941 in 2014287.

Muis has also created Warees Halal, a wholly-owned subsidiary, in 2006. Warees

Halal is an assurance provider with the primary role of supporting Muis’ Halal

certification functions. It does so by providing dedicated resources to perform Halal

audits and inspections in Singapore. It conducts more than 11,000 Halal audits and

inspections annually288. In 2014, TFK Corporation, a Japanese subsidiary of Singapore

Airport Terminal Services (SATS), became the first international company to be issued

Halal certification (for its central kitchen in Tokyo's Narita Airport) by Warees Halal289.


Singapore’s first dedicated Halal supermarket recently opened290. The 10,000-square

foot Global Halal Hub offers over 8,000 products from all over the world. It provides a

platform for domestic companies, and raises market awareness.

The 2016 budget announced the development of a one-stop trade information

management system, the National Trade Platform. The platform will enable

electronic data sharing among businesses and government. Firms benefit from a

reduced administrative load (they only have to provide trade information once and

it can be used for customs and regulatory approvals), access to support initiatives,

and have the ability to authorise its use by logistics providers as well as business

partners. This will be especially helpful for SMEs, to cut costs and streamline

processes. The aim is that the platform eventually extends beyond an IT system so

that it becomes an open innovation platform allowing service providers to develop

value-added services and apps in areas such as operations, visibility and trade

finance291. The platform is expected to cost more than S$100 million (R973 million) to

285 These are: Eating Establishment Scheme, Endorsement Scheme, Food Preparation Area Scheme,

Poultry Abattoir Scheme, Storage Facility Scheme, Whole Plant Scheme, and Halal

Food Certification for Social Functions 286 http://www.muis.gov.sg/halal/documents/Fees%20Revision%20-

%20Old%20and%20New_1%20Aug%202016.pdf 287http://www.academia.edu/10793093/Halal_Industry_in_Singapore_A_Case_Study_of_Nutraceutical_

Products 288 http://wareeshalal.sg/homepage/about-us/about-warees-halal-limited.html 289 https://www.spring.gov.sg/newsevents/itn/pages/booming-halal-sector-opens-global-path-for-

local-firms-20160118.aspx 290 http://thesmartlocal.com/read/global-halal-hub 291 http://www.singaporebudget.gov.sg/budget_2016/pb.aspx

http://www.academia.edu/10793093/Halal_Industry_in_Singapore_A_Case_Study_of_Nutraceutical_Products

http://www.academia.edu/10793093/Halal_Industry_in_Singapore_A_Case_Study_of_Nutraceutical_Products

http://wareeshalal.sg/homepage/about-us/about-warees-halal-limited.html



http://thesmartlocal.com/read/global-halal-hub

http://www.singaporebudget.gov.sg/budget_2016/pb.aspx


110

develop. While this is a major project, it is estimated that it could generate over

S$600 million (R5.8 billion) worth of man-hour savings each year for Singapore firms292

Trade associations also play a valuable information sharing role. They have intimate

knowledge of the needs and potential of their specific sectors. The Local Enterprise

and Association Development (LEAD) programme aims to support associations to

strengthen their outreach, thus providing wider funding support for associations to

attract talent, develop their capabilities, and strengthen their processes and

services. It is unclear to what extent Halal certified companies will benefit from this

programme. Because Halal certification is cross-cutting business sectors, no

dedicated Halal association exists. This means that all lobbying and information

sharing occurs through Muis. Since Muis only focusses on certification this may mean

that Halal industries are underrepresented.

The government has set aside S$30 million (R292 million) over the next five years to

support associations in developing their capabilities, with additional funding for

industry-wide transformation projects.

Product and service tailoring and innovation

Innovation and R&D make up a core part of Singapore’s economic policy. Its

importance is highlighted by the fact that the overarching council – the Research,

Innovation and Enterprise Council – is chaired by the Prime Minister and includes

several other Ministers (e.g. Minister of Finance; Coordinating Minster of Infrastructure

and Minster for Transport; and Minister of Education). Under the last five-year

Research, Innovation and Enterprise (RIE) 2015 Plan, the Singapore government

committed $16 billion (R155 billion) over 2011 to 2015 to establish Singapore as a

global R&D hub. The government will be sustaining its commitment to research,

innovation and enterprise, and will invest $19 billion (R185 billion) for the RIE2020 Plan

over 2016 to 2020.

Some achievements of the previous RIE include293:

The number of PhDs being trained locally continued to increase from 7,522 in

2011 to 7,850 in 2015

The support of more than 20 research institutes under the Agency for Science,

Technology and Research (A*STAR) that straddle the spectrum from

fundamental to applied research, producing breakthrough science in various

fields

In 2015, the annual World University Rankings placed the National University of

Singapore (NUS) and the Nanyang Technological University (NTU) in the 12th

and 13th positions respectively

A*STAR’s approach to open innovation has seeded a new Food and Nutrition

and Consumer Care innovation cluster in Singapore that has attracted

investment from several multinational companies and has led to the creation

of over 1,000 R&D jobs. Companies include Nestlé, Danone and P&G;

specialty chemicals and ingredient companies like DuPont, DSM, Kerry and

Ingredion; as well as major flavour and fragrance companies

The focus of RIE2020 will be on four strategic areas294:

292 http://www.singaporebudget.gov.sg/budget_2016/pb.aspx 293 http://www.nrf.gov.sg/rie2020

http://www.singaporebudget.gov.sg/budget_2016/pb.aspx

http://www.nrf.gov.sg/rie2020


111

1. Closer integration of research: Encourage stronger multi-disciplinary, multi-

stakeholder collaboration

2. Stronger focus on the best teams and ideas: Continued shift towards more

competitive funding (from 20% of public funding for research in RIE2015 to

40% in RIE2020) to support the best teams and ideas, and more White Space

funding (from $1.6 billion in RIE2015 to $2.5 billion in RIE2020) to allow greater

flexibility in reprioritising funding towards areas of new economic opportunities

and national needs as they arise over the next five years.

3. Sharper focus on value creation: Strengthen flow-through from research to its

eventual impact in society and economy

4. Better Optimised RIE manpower: Sustain a strong research and innovation

workforce in the private and public sectors

The Budget 2016 also announced further support to the start-up ecosystem (which

already benefits from venture funding and support for accelerators and incubators).

The government will set up a new entity called “SG-Innovate” which will match

budding entrepreneurs with mentors, introduce them to venture capital firms, help

them to access talent in research institutes, and open up new markets.

Removing market access barriers

Singapore signed its first free trade agreement (FTA) with the GCC in November

2006. Qatar, Kuwait and the United Arab Emirates have agreed to recognise the

Islamic Religious Council of Singapore Halal Certification and Halal Mark. This

recognition positions Singapore as a vital trading hub and helps to boost halal trade

between Singapore and the GCC countries.

Addressing halal-specific skills and talent attraction requirements

The Singapore government places a great emphasis on education and training, as is

evident from the 7,850 PhD graduates in 2015. The newest programme, SkillsFuture

was launched in November 2014. It aims for continuous skills upgrade, regardless of

stage of life – schooling years, early career, mid-career or silver years295. It consists of

various sub-programmes, but is guided by four elements:

1. Help individuals make well-informed choices in education, training and careers

2. Develop an integrated high-quality system of education and training that

responds to constantly evolving needs

3. Promote employer recognition and career development based on skills and

mastery

4. Foster a culture that supports and celebrates lifelong learning

The SkillsFuture programme is managed by The Council for Skills, Innovation and

Productivity which oversees the national effort to develop skills for the future.

Part of the programme is a S$500 (R4,868) credit Singaporeans aged 25 and above

get to pay for courses which can be high skilled, or technology focussed, but can

also be used for waxing, baking, art, or music lessons296. As of November 2015, there

294 http://www.nrf.gov.sg/rie2020 295 http://www.skillsfuture.sg/what-is-skillsfuture.html 296 http://www.tnp.sg/news/singapore-news/five-fun-courses-you-can-use-your-skillsfuture-

credit#sthash.StFIQC8Y.dpuf

http://www.nrf.gov.sg/rie2020

http://www.tnp.sg/news/singapore-news/five-fun-courses-you-can-use-your-skillsfuture-credit#sthash.StFIQC8Y.dpuf

http://www.tnp.sg/news/singapore-news/five-fun-courses-you-can-use-your-skillsfuture-credit#sthash.StFIQC8Y.dpuf


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are about 10,000 courses that span across 57 functional areas, including basic

computing, digital animation, finance, and advertising. This included four courses

with the keyword “Halal”.

The government approach to Halal skills therefore seems to be consistent with its

approach in tourism, innovation, and product development. Support is granted with

a wider focus than the Halal market, but the quality of the programmes, the extent

of the support, and the ability of the managing institutions means that Halal

producers still benefit from this support, and it still forms part of their competitive

advantage.

Halal specific training is offered by Warees Halal – the official training provider for the

Halal Foundation Programme, which is one of the mandatory requirements for Halal

certification by Muis. On average more than 1,000 industry professionals are trained

annually. The focus of training is to meet compliance of the necessary skills and

knowledge to perform their specific roles required by the Muis Halal Quality

Management System (HalMQ). Interestingly, it also offers an International Halal

Masterclass for foreign Halal-certifying bodies wishing to learn about the operating

models and best practices of the Singapore Muis Halal certification system297.


Singapore has a significant budget available to fund innovation, R&D, skills training

and other areas to support the competitiveness of firms. Although Western Cape/

South Africa cannot match the budget of Singapore, there are still several lessons

Getting the basics right matter

o The strength of Singapore’s Halal industry and tourism is not directly

linked to Halal support programmes

o Instead these industries gain a competitive advantage from the

overall economic environment, institutions and infrastructure

Funding for innovation is flexible and evolving

o Shifting focus to competitive funding (e.g. based on competitive bids

or current results)

o “White space” allocation allows for flexibility in fund developing areas,

changing environments, or new economic opportunities

Islamic certifying organisations need to adapt to changing markets

o Ensure market access by adapting to new standards (e.g. UAE, but

also general food standards)

o Create new markets by offering wider areas of certification than just

food (e.g. cosmetics, pharmaceuticals). Currently Muis focusses only

on food which can cause producers to miss out on new markets

Halal producers are widely dispersed across sectors and are only represented

by the certifying agent

o Interest of certifying agent and producers may not align

o Potential for an industry association for Halal producers?

297 http://www.wareeshalal.sg/homepage/services/halal-training.html


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31 Additional lessons from Malaysia, Dubai and the USA

31.1 Malaysia

Malaysia was the first country to look at the Halal food sector as a potential engine

of growth, and to develop strategies to use the Halal sector to strengthen the

agricultural sector, SME growth, human resource development, exports and direct

foreign investment. In reviewing Malaysia’s role in the Halal marketplace, there are

various lessons to be learned, and implications to be considered from the

perspective of a Western Cape Halal market strategy.

Political support. The aim to make Malaysia a global Halal hub started in 2003

as a somewhat vague aspiration that only became more defined over a

period of several years. There was a clear starting point, namely JAKIM’s

reputation as a certification body, but there was not a well-articulated

strategy until 2006-7. The formation of the Halal Industry Development

Corporation HDC in 2006, and a Halal industry master plan in 2007 were

unique innovations that reinforced Malaysia’s leadership role in this emerging

global market arena.

o Lessons: while political support is essential, experience has shown that it

can also lead to political in-fighting. Halal sector development tends to

impact so many different ministries and government institutions, and

unless there is a clearly agreed-upon political hierarchy for policy and

decision making, it can lead to confusion and competitive in-fighting

that severely hampers the roll-out of ideas and strategies.

Public – Private collaboration. Political green lights and incentives are only

effective if the private sector – large and small – buys into the overall idea,

and then develops products and services suited to their own expertise and

available resources. A sense of ownership from the private sector is critical to

success, and is likely to be particularly important in the case of the Western

Cape.

o Lessons: the balance of public-private collaboration can be a delicate

one. In Malaysia’s case, the Chinese community control a large part of

the food manufacturing and distribution, and maintaining a good

balance between the ruling Malays and Chinese business communities

has been an on-going element in Malaysia’s efforts to increase the

volume of Halal certified exports.

o Malaysia’s first-mover advantage was certainly hindered in its initial

stages by the various agencies jostling for control, as well as political

resistance to the formation of HDC. Including all relevant stakeholders

in the creation of a new Halal-specific body would have been a

positive move, and would have provided HDC with broader political

support, rather than opposition from within government circles.

National branding and positioning. Malaysia effectively cemented their

position as Halal market leaders without any significant increase in their food

production, exports or inward investment. It was initially not much more than

a statement of intent. But by leveraging on existing strengths such as JAKIM

certification, Nestlé Malaysia with their Halal Committee monitoring Nestlé

Halal certified factories worldwide, the Department of Standards Malaysia’s

Halal Standard MS1500:2004, and articulating their aims and policies in the

media, Malaysia took on the mantle of ‘global Halal hub’ without fulfilling that

role from a quantifiable market perspective.


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o Lessons: National branding can be a useful exercise, but the time gap

between vision and implementation must be kept as small as possible.

It can be argued that Malaysia were too slow to move to the

implementation phase, and spent more energy in promoting their

global positioning than in developing the human resources and

manufacturing capacity necessary to have a real market impact. In

contrast, Thailand said much less and implemented a policy of getting

their SME’s up to export levels, and have consequently established a

strong market share of the Halal export markets to the OIC countries.

Thought leadership. As the first country to articulate a wide-ranging Halal

market strategy, and by bringing in thought leaders from various sectors and

different parts of the world to present their ideas on a Malaysian platform,

Malaysia reinforced its claim to being a Halal hub. Kuala Lumpur became the

place that put out the most highly developed Halal sector ideas, even if they

were not actually being put into practice. The publication of the bi-monthly

Halal Journal magazine in 2004-2010, despite its limited global distribution,

further reinforced the notion that Malaysia possessed the deepest

understanding of the potential of the Halal market, and arguably shaped the

language that was used within the Halal market arena in the years to come.

o Lessons: if you do not put your publicly announced ideas and

strategies into practice, your competitors are likely to do so.

Events. The combination of the Malaysia International Halal Showcase (MIHAS)

now in its 14th year, and the World Halal Forum (2006-2013), particularly when

held back-to-back at the same venue with the Prime Minister attending,

created a very powerful reason to visit Malaysia and experience both the

trade opportunities and the leading ideas and issues in the Halal market.

Reinforced by the creative use of specialist and mainstream media as well as

an effective business-matching programme, this week-long event was, for

many years, the most highly regarded Halal sector gathering. It was regularly

attended by high-level executives and decision makers as well as SME’s and

start-ups, and had a genuine global impact on the Halal industry, especially

in its early years.

o Lessons: events need to evolve in line with the times and the overall

market development and growth. While the Halal food market grew,

so did the scope of the various sectors that came under the overall

umbrella of Halal (personal care, cosmetics, pharma, fashion, travel,

etc.). MIHAS has struggled to encompass all of these new

developments to stay relevant.

o Specialist Halal sector events are now commonplace, and are

naturally limited in their scope. Combining Halal sector interest into

mainstream events may well be a more successful strategy for the

future, and is certainly a strategy for the Western Cape to consider for

the food, travel and even the fashion, lifestyle and cultural events.

o Events can be a very effective way to establish a strong market

position and to ‘buy some time’ to implement the strategies that will

have an impact on jobs, exports and SME development.


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31.2 Dubai

The entire GCC region was conspicuously silent on Halal market matters until 2013,

when Sheikh Muhammad bin Rashid Al Maktoum, the ruler of Dubai, announced

that Dubai was to become the ‘Capital of the Islamic Economy’. This effectively

created a second wave of Halal market interest that redefined the Halal food sector

as a sub-set of the broader Islamic economy. By incorporating finance, food,

pharmaceuticals, cosmetics, personal care, travel, fashion, media and recreation,

art and culture and the digital economy under the umbrella of the Islamic

economy, Dubai effectively shifted the centre of gravity from South East Asia to the

Middle East. Bold vision and large budgets have enabled Dubai to take advantage

of its history as a trading nation and its geographical position at the centre of the

Muslim consumer markets of the Middle East.

While there are not obvious parallels between Dubai and the Western Cape, there

are certain aspects of Dubai’s strategy that contain some useful lessons.

Branding & positioning: Dubai has always shown considerable skill at branding

and self-promotion, and their Islamic Economy project certainly follows this

trend. They had the added advantage of seeing the trends and

developments in South East Asia, and could review both the successes and

failures. They were able to refine their own strategy to consider how the

market was evolving, such as the need for harmonised standards, the

accreditation of certification bodies as well as the trend towards integration

with mainstream markets.

o Lessons: Dubai anticipated the needs of an evolving and somewhat

unregulated market. They developed their strategies accordingly,

thereby future-proofing their initiatives, such as the creation of Halal

certification standards, and a new accreditation programme

implemented by the International Halal Accreditation Forum (IHAF),

that will effectively play a prominent role in global Halal food export

and import to the Gulf region.

Making use of the expertise of others

o Data: By engaging Thompson Reuters and DinarStandard, Dubai

created the first publications to provide accurate and verifiable

market data across all sectors of the Islamic economy. The annual

State of the Global Islamic Economy Report (SGIE) is now the most

widely quoted source for data, trends and reports on all Islamic

economy sectors. Although there was minimal input from any UAE

nationals, the existence of the report, as part of the Capital of the

Islamic Economy initiative, successfully placed Dubai firmly at the

centre of this new market paradigm, and gave them a clear edge

over any of their competitors.

o Website: Salaamgateway.com has rapidly established its place as a

useful resource that covers news, strategy and monthly reports on all

market sectors, and provides an effective shop window for Dubai’s

initiatives. As with the SGIE Reports, this work is outsourced to industry

specialists, but confirms Dubai as the source of relevant market

information.


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o Events: the annual Global Islamic Economy Summit brings global

market leaders to Dubai, and effective use of the media has made this

event arguably more significant than any other. Much of the cutting-

edge thinking is articulated by representatives from all corners of the

world, and much of it is from the Muslim minorities of the West, but by

being on a stage in Dubai, this all adds to Dubai’s leadership claims.

Other major trade events, such as Gulfood also held in Dubai, have

steadily added to their Halal sector content without making it an overt

issue, and this has helped to bring Halal into mainstream awareness

with people wanting to export to the GCC region.

o Innovation: innovative change has been conspicuously absent from

the Halal marketplace for decades, but Dubai have changed this by

focussing on incubation, crowd-funding, start-ups, angel investing and

other strategies for innovation that are increasingly popular in

mainstream western markets. These initiatives are pushing the Halal

sectors forward, and facilitating their transition into mainstream

integration.

31.3 USA

Despite its complex and often troubled relationships with the Muslim world, and its

own Muslim community, there have been some significant contributions to the Halal

sector by both large and small stakeholders in the USA. Their successes offer useful

lessons in understanding how Halal market values can translate into attributes that

can succeed in the mainstream marketplace.

The appeal of integrity and quality. In a marketplace where Halal is often

justifiably viewed as being second rate and low quality, several

companies, most noticeably Crescent Foods of Chicago, have built an

enviable reputation and market share by being meticulous about their

Halal integrity. From interest-free financing, free-range Amish raised

chickens, vegetarian feed, well-trained slaughtermen, innovative product

lines, modern packaging and marketing, Crescent are effectively a case

study for success. By upgrading to SAP systems, they have been able to

cope with the surge in demand, and have gone from supplying local

neighbourhood stores to supplying mainstream outlets like Walmart on a

nationwide basis. The combination of attention to fundamental details

plus cutting-edge infrastructure and design have created a winning

formula that any SME would be well-advised to emulate.

Product positioning. Saffron Road is another American success story that

provides useful lessons. Their strategy from day one has been to create a

high-quality product that will be appealing to the mainstream markets.

While maintaining high levels of Halal integrity, from a marketing

perspective Halal is almost a secondary consideration for them. By a

combination of products that are certified humane, non-GMO, hormone-

free, all natural, etc., their frozen entrée range has become one of the

fastest growing in the country – across all sectors. This is an excellent

example of a well thought out strategy that was intelligently implemented

by a successful Muslim American entrepreneur.

Be prepared for backlash. Saffron Road, in conjunction with top-end retailer

Wholefoods, had a strategy in place that anticipated any Islamophobic

backlash. When it came, they could respond in a rapid and unemotional


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manner and the backlash had no effect on their reputation or market

share.

Use of social media. While many mainstream companies have made good

use of social media to market their products, Halal sector companies in

Asia and the Middle east have been much slower to realise the potential

power of social media. Not so in the USA, where innovative SME’s have

built entire campaigns around social media, particularly effective in

gathering support and custom from Generation M customers.

Innovation. The absence of government support has forced American

Muslim entrepreneurs to take a pro-active approach to growing their

businesses via a range of innovative practices gleaned from the

mainstream. Start-up incubation initiatives, Muslim-friendly crowd funding

programmes, app development and the use of social media has placed

many American Muslims at the forefront of cutting edge innovation that

has brought them worldwide recognition. Indeed, they are often seen on

international stages, lending credence to events in Asia and the Middle

East, where their work is more valued than it is at home.

To summarise, many of the developments and initiatives that have taken place over

the past fifteen years, both in S E Asia and the Middle East, provide useful insights for

Western Cape policy makers. When applied to the Western Cape’s perceived

strengths and assets, they can provide some valuable lessons when it comes to

determining the most effective strategies for greater penetration into the Halal

markets worldwide.