Competing halal standards leave food industry with indigestion

Sun Jun 15, 2014 5:10pm EDT
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By Stuart Grudgings and Trinna Leong

KUALA LUMPUR (Reuters) - The storm of bad publicity that hit confectioner Cadbury in Malaysia after its chocolates tested positive for traces of pork highlights the costly, religious minefield food companies must navigate as they rush to tap the surging $1 trillion global halal market.

One of the biggest headaches for corporations like Mondelez International, Nestle and Unilever PLC is the lack of a unified standard for what exactly is halal, or permissible under Islamic law, despite years of efforts by Muslim authorities to come up with a global benchmark.

As a result, global food firms face higher production costs as they must comply with a mix of national processing standards that can vary widely even within the same country.

Failing to navigate these differences leaves companies exposed to the risk of using ingredients permissible under one standard but not another.

"Obviously it's not good to have so many standards. It's confusing," said Jamil Bidin, the chief executive of Halal Industry Development Corporation, an agency linked to Malaysia's government. Muslim-majority Malaysia is regarded by many Muslim countries as a global leader in halal food processing due to its established certification experience and developed industry.

Islam requires practicing Muslims to consume halal products, and, at its most basic, that means foods and drinks that do not contain any alcohol or pork. To be deemed halal, livestock must be slaughtered as the name of Allah is invoked.

Big food firms have been ramping up their investment and expertise in halal, eyeing a fast-growing Muslim population that is forecast to add a billion people by 2050 with rising education and income levels.

The market to process, produce and distribute halal food and drinks will grow into a $1.6 trillion industry by 2018 from about $1 trillion in 2012, according to DinarStandard, a research firm specialising in Muslim markets.   Continued...

Cadbury chocolate products are is seen inside a shop in Shah Alam outside Kuala Lumpur June 11, 2014. REUTERS/Samsul Said