Halal Industry Growth and Competitive Advantage
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The document discusses opportunities in the global halal industry and strategies for competitive advantage. It notes that the current global halal market is estimated at $5-14 billion annually and growing over 35% per year. However, Muslim consumers represent diverse markets with varying incomes, tastes, and stages of development. The document advocates differentiation and value creation through branding, new technologies, and novel products as ways to gain competitive advantage. It also emphasizes the importance of integrating concepts of sustainability, ethics and community benefit with Islamic concepts of halal and toyib to develop integrated supply chain advantages.
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Halal Industry Growth and Competitive Advantage
- 1. The World is Undergoing Change “Competitive Collaboration in Halal Industry” Mohd. Murray Hunter University Malaysia Perlis
- 3. Global Cosmetic and personal care market Estimate (2012) > USD35 Trillion Current global size of Halal cosmetic & personal care market USD 5-14 Billion USD 7 Trillion Current market growth is > 35% per annum That Means if 2012 is USD 14 Billion: 2013 = 53 billion 2014 = 81 billion 2015 = 124 billion 2016 = 190 billion 2017 = 292 billion 2018 = 449 billion 2019 = 690 billion 2020 = 1.06 Trillion
- 4. Current Global Halal awareness is estimated to be 20% among the global Ummah. This is going rapidly However awareness about halal Cosmetics and personal care is even less but growing rapidly Matrade 2010
- 5. Although Muslims make up 20% of the World’s population many are in poverty Most countries are at different stages of development Consumer tastes and preferences actually differ widely Supply chains are typically “third world” in most countries Although ONE Ummah, different aspiration, desires, customs, incomes This is a niche market in many countries 20% of the World’s Muslims are NOT concerned about Halal certification on packaging
- 6. Background • 2-3 million population with different ethno-cultural background • Lagging along in national development • Lower education disposition • Predominantly rural population • Currently unable to benefit from growing tourism industry • Ageing farmer population • Limited knowledge of potential opportunities and matching skills What are our problems at home?
- 7. Farmers
- 8. “Mindset Barriers” (Small Holders) • market passive • copy cat approach • ‘quick-fix approach’ • poor exposure and perhaps resistance to new ideas, • practice isolation, • market isolation • perception of agriculture as only a fallback profession • fixation on a single success.
- 9. Lack of Ideas Lack of education and skills Narrow mindset Feeling of powerlessness – lack of access to markets Lack of resources Lack of will
- 15. The World has become a somewhat integrated market over the last few decades through the phenomena known as globalization Traditional economics would explain this phenomena in terms of specialization, comparati ve and relative advantage Sociologists would talk in terms of the ‘cosmopolitan man’
- 16. Success in the global market would depend upon…… Competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firm’s costs of creating it. Value is what buyers are willing to pay, and superior value stems from… providing unique benefits that more than offset a higher price. According to Professor Michael E. Porter
- 17. This presents three major issues: 1. Is ‘Globalization’ more ‘reality’, than ‘myth’? and if so and we understand it’s dynamics 2. What are the potential opportunities? and 3. How do we exploit these potential opportunities?
- 18. Product Opportunity Gap Social Social and cultural trends and drivers. Reviving historical trends. Influence of international trends. Changing demographics. Styles, fashions & fads. Economic Stage of economic development. State of the economy. Level of disposable income. Macroeconomic, general industry conditions, financial &geographical environment. Technology Current state of the art and emerging technology. Re-evaluating and utilizing existing technology in new areas. New knowledge. Invention. Government & Regulation Government needs & priorities. Restriction by Government. New laws & regulations and impact on product markets and supply chains. Trade liberalization. Our Inner Self Our upbringing, domicile outlook, experiences, interests, skills & abilities, assumptions, beliefs, attitudes, perception, cognitive processes, patterning and biases, our inner psych and emotions, imagination, energy, and passion, etc. The way we interact and stimulated by the environment and make connections Randomness & Unexpectedness A random or unexpected event that creates an opportunity Changes in any of the factors New Knowledge or Information Interrelated Factors Hunter (2012) Opportunity, Strategy & Entrepreneurship
- 19. Restoring Competitive advantage Must move from this: To this: Branding Promotion New & efficient technologies Novel new products
- 21. Toyyibat & Halal • This day are (all) things good and pure made lawful unto you. The food of the people of the Book is lawful unto you and yours is lawful unto them. … If anyone rejects Faith, fruitless is his work, and in the Hereafter he will be in the ranks of those who have lost (all spiritual good). Al-Ma’idah5:5
- 22. • O you people! Eat of what is on earth, lawful and good; and do not follow the footsteps of the evil one, for he is to you an avowed enemy. Al-Baqarah 2:168
- 23. • From the land that is clean and good, by the Will of its Cherisher, springs up produce, (rich) after its kind; but from the land that is bad, springs up nothing but that which is niggardly: thus do we explain the Signs by various (symbols) to those who are grateful. Al-A’raf 7:58
- 24. • O ye who believe! Eat of the good things that We have provided for you, and be grateful to God, if it is Him ye worship. Al-Baqarah 2:172
- 25. Heavy use of chemicals. Leading to declining yields. Cause of high input costs. Loss of cover protection. Leading to residuals in crops. Loss of humus Loss of trace elements Compact (inhibit root growth) Erosion Accumulation of chemicals Carrier of disease (the unrecognized problem) Contaminated water Poor drainage - floods Carry away top soils Generally afterthought – poor maintenance This has implications upon what we do and how we do it
- 26. “He hath subjected to you all that there is in the heavens and all that there is in the earth: All is from Him. Verily, herein are signs for those who reflect.” Al-Jathiyah 45:12
- 27. The Muslim living as a minority in a non-Islamic society will have a number of problems identifying what items are halal and haram (forbidden in Islam), without product certification. For example, gelatine, lard and tallow can be either in a halal or non-halal, depending upon their source and method of processing. Cross contamination is a major problem in stores and particularly restaurants, where pork is also served.
- 32. Halal, but is it Toyyibaan?
- 33. Its all about value (both industrial and consumer products)
- 34. USA Asian Influence Sesame, wasabi, ginger, noodle and Asian cabbage Indian Influence Fruit, spice and toasted nuts, chutney, quince pear, roasted coriander, pistaschio,almond & walnut Blue and goat cheese Mexico Tarmarind, squash flowers, huitlacoche (corn mushroom), portobello mushroom, duck meat North America Cuisines with most potential for growth Mediterranean influence Indian influence Middle East influence Slow Food Europe Fusion style Thai, Indonesian, Vietna mese influences Contemporary cuisine Mediterranean influence Exotic combinations South America Fusion style Thai/Chinese Western/Chinese Indonesian/Thai American/Mediterranean Italian French Asia/Pacific
- 37. Heaven Strategy (Dan Hill 2010) Emotional Response Response Rate Negative Positive Low High More negative/high response More positive/lower response More negative/lower response More positive/highe r response
- 40. Tawhid Al-Iman Syar’iah Ad-Din Fard’ain Fard’ Kifayah Al-Ilm Al-Amal Shu’ra Adab Halal Toyyibaan Musharakah Ibadah Al-Ta’awun Al-Fasad Amanah Al-Fatah Ummah Islam is ready to compete
- 45. Microwave Oven Pressure Cooker Chemicals & Spoons, etc. Glassware
- 50. Tissue Culture
- 51. • Minimise Production scale to account for initial low sales/production quantities and lower capital investment • Mobile GMP Facility • Simplified Technology
- 71. Southern Thailand Malaysia Brunei Indonesia Competitive Advantage Through Differentiation Maximises Benefit from Location as a marketing advantage Relatively low competitive market segment Maximises benefits of large local biodiversity Local culture is utilised as branding
- 73. Haram (Those things prohibited by Allah in the Al Qu’ran) HACCP GMP Sustainable environment, community & business Community Benefit Toyyibaan Clean Healthy Non-exploitive Traceable Supply Chain Ethical The Halal/Toyyib supply chain is another example of integrated competitive advantage: Non-Muslim concepts of ethics, sustainability, and goodness are merging with Islamic concepts
- 74. Halal & Toyyibaan Look at non traditional markets Clean Healthy Non Exploitive No Najis/Haram Sustainable Community Benefit Toyyibaan See Halal as only part of a whole system of production Halal does not necessarily mean Foods Look at product other than foods
- 75. GDP % share of GDP rank country country pop % GDP World Islam 1 Indonesia 866 88.0 761.7 1.3 13.9 2 Turkey 572 99.8 570.9 0.9 10.4 3 Iran 562 98.0 550.4 0.9 10.1 4 India 3,611 13.4 483.9 0.8 8.9 5 Pakistan 393 97.0 381.6 0.6 7.0 6 Saudi Arabia 338 100.0 338.0 0.6 6.2 7 Egypt 304 90.0 273.2 0.4 5.0 8 Bangladesh 304 83.0 252.6 0.4 4.6 9 Algeria 233 99.0 230.9 0.4 4.2 10 Russia 1,589 12.5 198.6 0.3 3.6 11 Malaysia 290 55.0 159.6 0.3 2.9 12 Morocco 138 98.7 136.5 0.2 2.5 13 France 1,816 7.5 136.2 0.2 2.5 14 China 8,859 1.5 132.9 0.2 2.4 15 US 12,360 1.0 123.6 0.2 2.3 16 UAE 111 96.0 106.8 0.2 2.0 Muslim The top Islamic economies
- 76. rank Country GDP pop GDP 1 US 12,360 1.0 123.6 2 China 8,859 1.5 132.9 3 Japan 4,018 0.0 1.6 4 India 3,611 13.4 483.9 5 Germany 2,504 3.7 92.6 6 UK 1,830 2.7 49.4 7 France 1,816 7.5 136.2 8 Italy 1,698 1.5 25.5 9 Russia 1,589 12.5 198.6 10 Brazil 1,556 0.1 1.6 11 Canada 1,114 1.9 21.2 12 Mexico 1,067 0.1 1.1 13 Spain 1,029 1.5 15.4 14 Korea, South 965 0.2 1.9 15 Indonesia 866 88.0 761.7 16 Australia 640 1.5 9.6 Muslim % Muslim share of population and GDP in major economies
- 77. Recent reports indicate that halal sales in the US are increasing around 80% per year, where a number of new retail outlets specializing in halal products are opening up. A&P, Loblaws, Food Basics and Wal Mart are allocating space for halal products in their stores
- 78. EU is approximately 30% of the World Market for food It has great regulatory influence on the rest of the World Risk Assessment Hazard Identification Hazard Characterization Exposure Assessment Risk Characteristics Risk Management Risk Evaluation Option Assessment Option Implementation Monitoring and Review Risk Communication Improve quality of consumer information To facilitate healthier food choice Declaration of GMO Materials Nutritional Information Eliminate Misinformation Scientifically Substantiate Claims
- 79. General Provisions Personnel & Facilities Seeds & Propagation Materials Cultivation, Soil & Fertilisation, Irrigation Harvest Primary Processing Packaging Storage & Transport Equipment Documentation Self Inspection Quality Assurance EurepGAP
- 80. Although widely respected internationally The present Halal Certification is only related to ingredients and processing environment
- 81. New infrastructure is not enough to Move the region to a new paradigm in Agribusiness Infrastructure is easily replicated
- 83. Healthy food Arguably the fastest growing sector of the food market. Ethnic Foods Ethical & Environmental Safety Issues Mad Cow Disease and Avian Flu Halal food Assurance auditing to verify halal compliance from the farm to the plate Islam is a way of life based on modesty, justice and religious practices, which Creates a unique set of Product and service needs
- 86. Essential Oil Production Trading Flavour& Fragrance Compoundi ng End Product Manufactur e Wholesal er Retailer Consumer 1.0 1.6 2-3.0 (6-9) 2-2.5 (18-24) Relativeand (Absolute) ValueAdded ThroughChain 1.1-1.2 (19.8- 28.8) 1.2-1.4 (23.76- 40.32) TheEssential Oil ValueChain (Flavour& FragranceIndustry)
- 87. $ Cost $ Return DegreeofProcessing Final Product Form Selection of Crop Trials Propagation Land Preparation Planting, Maintenance & Irrigation Harvesting & Extraction Product Development Final Product Crop & Project Failure No Return Compost&Mulch Biofuel AnimalFeed CrudeEssentialOil OrganicAgro- product Cosmetic& Aromatherapy Nutriceutical Pharmaceutical Conceptual Value Added Processing Options with Revenue and Cost Implications
- 88. Finding New Business Models
- 90. Systems Agriculture Agricultural professional stance that emphasizes farming as a social practice that uses technology Participatory Action Research Emphasis on co-learning through farmer and community participatory research and empowerment programs Traditional Academic Based Research Based on developing technology and principals, models and possible practices Farming Systems Research On-farm technical problem diagnosis and adaptive research Shift from theoretical and technical to community collaboration and problem specific research General Local Technical Social Domain Focus DisciplineOrientation
- 91. Opportunities are a product of our mind and these visions can become the design of our future with skilful and creative utilisation of scattered existing and forgotten resources to create great unimagined synergies. This is the true power of creativity that God has given humankind.
- 93. Overseas Halal Food Product
- 94. Overseas Halal Food Product
- 100. How Quickly can a Turn into a red ocean strategy?
- 101. Thank You