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Islamic Economy: Unified Halal Standard, the need of the hour

December 2016

The multi-billion dollar global Halal industry is a huge untapped market offering significant opportunities for investors. But what are the challenges that lie ahead?

The global Halal market has emerged as a new growth sector in the global economy and is creating a strong presence across. The industry, estimated at around USD 1.9 trillion (excluding Islamic finance, as on 2015 end) is growing at an estimated annual rate of 20%. What’s more promising is this industry has found a consumer beyond the 1.8 billion Muslims population and has gained acceptance across the non-Muslim consumers, associating the same with ethical consumerism.


The sector has expanded to include pharmaceuticals, cosmetics, health products, toiletries and medical devices as well as service sector components such as logistics, marketing, packaging and branding, amongst others. While industry outsiders are familiar with Islamic Finance and the Halal foods space, there remains a high degree of cloud around the understanding of some of the Halal segments. Here are a couple of segments which are surging ahead


Halal Nutraceuticals:  These are nutritional products with added health benefits and include dietary supplements, such as vitamins, and beverages fortified with additional nutrients, such as probiotics. Given the widespread use of what are considered non permissible ingredients, there has emerged a market for Halal nutraceuticals. Nestlé has emerged a key global player within this space and is being followed by companies with a newer lineage such as Noor Vitamins and HalalVital.


Halal Cosmetics: This segment has grown rapidly from catering to a niche market with a few players to an industry estimated to double by 2019 from its current size, representing 6% of the global cosmetics market, according to British market research firm TechNavio. Major brands like L’Oreal, Shiseido, Estée Lauder, amongst others have taken note and moved towards having some product lines Halal certified.



The Global Islamic Economy Indicator (GIEI), (State of the Global Islamic Economy Report 2016/17) highlights Malaysia and the GCC remain core to the Islamic Economy. All GCC economies as a whole have maintained their position in the top ten, illustrating their continued strong performance as Islamic Economy hubs, and driven  mainly by their strong performance in the Islamic Finance and Halal Food indicators. This is particularly promising for the region given the drop in oil and gas prices.


Some of the more recent trends witnessed in this space resulting in the Halal industry expanding to a holistic lifestyle choice include.

  • Participation widening: Top global brands across segments (food, finance, fashion, travel, pharmaceuticals and cosmetics) are striving for their pie within the Halal Economy. They are ringing in innovation.
  • Sentiment strengthening: The global sentiment around fair-trade and socially-conscious businesses is growing. The Islamic Economy sectors are seen as a natural fit given their underlying socially responsible motives.
  • Technological prowess: Technology is leading the way in bringing together the otherwise globally-distributed and fragmented market. The fact that GCC economies boasts amongst the deepest penetration of mobile phone reach besides social media users underlines this fact.


A Unified Halal Standard – the need of the hour

The criticality of a certification is immense within this space and it is a reflection of the trust of the consumer. However, the one issue which continues to overshadow the industry is the lack of a recognised global Halal compliance standard and certification process. As Shafiq Osmanzadah, Marketing Manager with the Islamic Council of Norway elaborates, ‘Historically, there are no doubts that the lack of standardisation in Islamic Finance has been a major barrier towards enhancing the reach and in turn development of Islamic financial products. The same problem is today witnessed within the Halal food industry as there is no unified Halal standard. The reasons given for the same are galore and generally centre around the interpretation of the related law – however, when one delves into the details ,it is evident that most of the Halal standards are almost the same and the differences are too minor to justify 100’s of different Halal standards. The direct fallout of the same is a time consuming process for producers to get their products Halal certified, in accordance to the Halal standard prevailing in the export country. Sometimes it requires them to have 5 different Halal certifications, to export to 5 different countries and most of the time this acts as a hindrance in exploring newer markets. Thus the pressing need for the Halal economy is that of a unified standard to ensure cross-border marketability that would result in higher competition, more innovation, increased investments, better efficiency and so on.’


Leading standardization bodies are taking steps to harmonize Halal standards within their regions. Standards Malaysia aims to harmonize Halal standards within the ASEAN region while others including SMIIC and the European Committee for Standardisation (CEN) are striving towards having unified standards for the OIC countries and Europe respectively. The UAE-led International Halal Accreditation Forum (IHAF) has most recently started work on forging the world’s first Halal accreditation network with the aim of driving a single global standard. Through its 10 founding members, amongst others which include non-Islamic majority nation bodies such as the American Association for Laboratory Accreditation, United Kingdom Accreditation Service, the Joint Accreditation System of Australia and New Zealand, the IHAF aims to become a global authority for the Islamic market.


All of these steps most definitely seem promising in the direction of a unified global standard.  For a stream or economy, which has emerged as a way of life and built on the principles of a Islam with a greater cause in mind, it is essential the standards governing it tend towards a universal appeal. The Halal industry, also referred to, as an ethical way of conducting business, has clearly established itself as a viable parallel economy. What now remains to be seen is how it stamps its identity over the coming 3-5 years with focus around this next step of uniformity.

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