Globalization of the Halal Market


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This was a presentation by Dr. Angelo Camillo at Woodbury's weekly colloquium.

Published in: Business, Technology

Globalization of the Halal Market

  1. 1. Creating global competitiveness through culture and religion: an insight into the global strategic evolution and marketing of the Halal food industry An exploratory study by: Angelo Camillo, PhD Svetlana Holt, PhD Joan Marques, PhD Jenny Hu, PhD 11/11/2013 Woodbury University School of Business-Burbank-Los Angeles – USA 1
  2. 2. Introduction • Halal food is of fundamental significance to Muslims around the world • It assures safety and security in their dietary requirements and consumption • Must be Syariah compliant • In Muslim countries the Halal industry contributes to societal development and economic growth 11/11/2013 2
  3. 3. Introduction, cont. • Marketers have strategically positioned the Halal industry, especially the food industry, in major geographical clusters with large Muslims population • It is a US $2.3 trillion industry • Halal food accounts for about US $700 billion • A highly fragmented industry • Malaysia appears to be developing as the major player, followed by Indonesia and Pakistan 11/11/2013 3
  4. 4. Muslim Population 2013 estimate Source:
  5. 5. Purpose of study • The Halal industry, within the global context, is an under researched field of study in scientific literature, in business, and in social science. • This paper investigates the strategies used by marketers in the supply chain to globalize the Halal food industry with the aim to gain and sustain international competitive advantage. 11/11/2013 5
  6. 6. Background • Muslims living around the world generate demand for Halal products • In response there has been a rapid global expansion of the Halal industry over the last decade • Malaysia is the dynamic International Halal Food Hub • Malaysian authorities currently recognizes fifty-seven certification bodies in thirty-one countries • There is intense competition between Malaysia, Indonesia, Pakistan, Singapore, New Zealand and Australia 11/11/2013 6
  7. 7. Malaysia: the Dynamic International Halal Food Hub 11/11/2013 Source: PIHH Development Abdul Malik Kassim State Minister for Religious Affairs, Domestic Trade And Consumer Affairs, Penang, Malaysia 7
  8. 8. Islamic marketing/business ideals • Only lawful activities are permitted (Halal) 2:168 O MANKIND! Partake of what is lawful and good on earth, and follow not Satan's footsteps: for, verily, he is your open foe. • All transactions involving usury/interest are prohibited (Haram) 2:275 THOSE who gorge themselves on usury behave but as he might behave whom Satan has confounded with his touch; for they say, "Buying and selling is but a kind of usury" - God has made buying and selling lawful and usury unlawful. Hence, whoever becomes aware of his Sustainer's admonition, and thereupon desists [from usury], may keep his past gains, and it will be for God to judge him; but as for those who return to it -they are destined for the fire, therein to abide! 11/11/2013 8
  9. 9. Islamic marketing/business ideals, cont. • Use of Images is discouraged • Dealing in intoxicants, gambling and games of chance is prohibited • Promise must be kept and truth must be told • Undercutting another in business is prohibited • Brokering is prohibited 11/11/2013 9
  10. 10. The Halal Product Mix (Partial listing) • • • • • • • • • Agricultural products (plants, animals, and derivatives) Chemical Healthcare Cosmetics Personal care Pharmaceutical/ medical devices Financial activities and business transactions Other subcategories: Medical Tourism - Syariah compliant medical 11/11/2013 centers 10
  11. 11. Muslim Consumption Patterns: Products must be healthy, wholesome & hygienic (safe). • Consumption must include only Halal food and food products. • The food and food products must be obtained through Halal means. • The material in contact with the food or food products must not be harmful to health. – – – – Halal- lawful Haram- unlawful Makrooh- discouraged Mashbooh- suspect 11/11/2013 11
  12. 12. Sample Haram (unlawful) products 1. Pork and all swine by-products, 2. Animals that are not slaughtered according to Halal requirements, 3. Animals that have been killed prior to slaughter, 4. Animals slaughtered in the name of anyone other than God, 5. Carnivorous animals or birds of prey, 6. Blood and blood by-products, 7. Alcohol and intoxicants, 8. Halal foods that have been contaminated by any of these Haram products. 11/11/2013 12
  13. 13. Syariah Compliant Holistic Halal Supply Chain • • • • • • • • • • 11/11/2013 R&D Finance Human Capital Marketing Support services Hospitality and tourism Life sciences (Bio-tech/ Medical/ Wellness) Logistics Agro-based industries Manufacturing industries (Food additives, enhancers…) 13
  14. 14. Summary of findings • • • • Halal is a US $ 2.3 trillion industry (Aggregate) North American market largely untapped European market has matured, France and Italy lead the way Religion moderates social interactions: Halal is not only about following the law; it is a way of life. • The importance of cleanliness is vital in the spiritual sense; food and drink products must be approved before consumption • Industry largely fragmented • Difficult challenges ahead: Halal compliance by suppliers, packaging and labeling, and distrust about fraudulent suppliers. 11/11/201 14
  15. 15. The driving factors: social and economic • Primary factors for this rapid expansion are health related: Halal products produced and consumed locally may have a higher quality nutritional value • Secondary factors are cultural and religious in nature. Certification authorities, however, point to the Muslim religion as the main driver of the global expansion Muslims obey the religious guidelines and demand Halal products; Islamic population is estimated to grow to 2.19 billion by the year 2030 • Tertiary factors are sustainability related Halal products produced on location by applying the “zero mile distance” concept leave insignificant carbon footprints 11/11/2013 15
  16. 16. Halal marketers’ strategic objectives • Promote the best foods in the world: the Halal food products • Formulate and implement strategies for the most creative marketing campaign using contemporary technologies and communication channels • Gain global competitive advantage with the best Islamic financial service or product • Sustain market growth and achieve global market dominance by providing certified Halal products • Contribute to the environmental development through sustainability efforts • Promote travel, tourism and hospitality by encouraging operators to use exclusively Halal products • Become best halal-related service provider • Promote and reward the best innovation in Halal industry • Promote and reward the individual - outstanding personal achievement in the Halal 16 industry 11/11/2013
  17. 17. Strategic Factors Halal Marketers are the following: 1. Ensure quality of the raw food materials to instill manufacturers’ confidence. 2. Acquire halal certification from Halal certifying institutions in the home country to cater to the Muslim consumer market overseas. 3. Emphasize competitive advantages of the exporter’s products to the food manufacturers. 4. Market and promote to increase awareness among food manufacturers. 5. Establish an efficient distribution network to maximize market penetration. 6. Conduct promotional activities to create awareness among importers and the food service establishments. 7. Appoint local importers specialized in the food service industry to import and market the exporter’s food products to the food service establishments. 8. Target the mid- to high-end food service establishments. 9. Adhere to a product positioning strategy for the food products. 11/11/2013 17
  18. 18. Limitations • • • • • Lack of published scholarly literature Non-consolidation of certifying authorities Halal compliance may be different in each country Absence of a global data repository The validity and reliability of the data cannot be tested 11/11/2013 18
  19. 19. Implications • Attitude and subjective norms are important antecedents of Muslims’ intention to choose Halal products • Marketing campaigns to focus on creating awareness regarding the compliance with Halal products • Halal in non-Muslim countries is not very well understood • Failure of the current Halal certification system 11/11/2013 19
  20. 20. Future research – Topics of interest • Case studies about the equilibrium of supply and demand; • Investigation of the impact of different product categories, social classes, gender, and Halal certification on consumer attitudes toward Halal products; • Case studies about supply chain management, business model development, organizational structure and management; • Measuring perceptions of Muslim consumers in the supply chain; • Product-brand awareness and consumer behavior • Application of ISO standards and HACCP to Halal products; • The effect of Halal on environmental sustainability • Halal banking and investments • Creation of a consolidated world institution dedicated to Halal 11/11/201 20
  21. 21. Thank you for attending our presentation 11/11/2013 21