With 2017 drawing its curtain, we review the year by looking at the milestones and key events surrounding different sectors in the Halal industry. The past year was witness to several important developments along with increasing recognition of the halal industry across the board. From the beauty sector to finance, as well as sustainability being an integral part in all conversations, how does the industry fare and what could we look forward to in 2018?
The global Islamic finance industry has seen some key developments over 2016 and 2017. Its value grew by 10% between 2015 and 2016, to USD2.2 trillion at the end of December 2016. Increasingly, non-OIC countries are embracing Islamic finance, with Yielders being the first Islamic FinTech firm to get UK regulatory approval, and the Reserve Bank of India including Islamic Finance to improve financial inclusion in India, while more OIC countries are realising the potential of Islamic finance. Saudi Arabia issued the first global sukuk worth USD9 billion, rated A+ with a stable outlook by Fitch, and the sukuk industry continues to mature with sizeable, billion-dollar issuances. Meanwhile, the existing standards for Islamic finance have broadened, while global regulations are being expanded to address Islamic finance.
Global retail e-commerce sales is estimated to reach USD2.3 trillion by the end of 2017, up from USD1.9 trillion in 2016, and experts forecast that it will reach USD4.5 trillion by 2021. Asia as a whole commands 50% of the global e-commerce consumer market, dominated by China with USD672 worth of annual online sales which represents 15.9% of its total retail sales, while North America’s market share in the market has been slowly dropping and is expected to continue on this trend. Meanwhile, as self-service goes on the rise, B2B e-commerce sales dwarfs that of B2C, estimated to reach USD7.7 trillion by the end of 2017. The best examples of companies embracing the B2B e-commerce environment are marketplace behemoths Amazon and AliBaba, the latter of which generates 80% of sales in China and connects Western businesses with Chinese manufacturers.
Sustainability in Halal Industry
The world is witnessing a gradual shift towards Halal goods and services in several sectors including food, travel, finance and cosmetics, among others. The past year has seen an increasing demand for ethical, sustainable, environmentally and socially responsible goods and services driving the growth of the Halal market, not among Muslims but also showing growing acceptance by non-Muslim consumers. Involvement of governments and private sectors contribute to the sustainability of the Halal ecosystem through certification by religious authorities as well as implementation of policies which help boost the industry. Religious authorities of several countries are also working together towards establishing a global Halal standard which would ensure an even more sustainable industry going forward.
Halal Fashion & Beauty
According to a Thomson Reuters report, Muslims worldwide have spent about USD243 billion in the halal market, out of which USD44 billion was earmarked for modest fashion. Nike announced earlier in the year that they will venture into the sports hijab line in Spring 2018, however, launch was brought forward to early December, showing a global interest in modest fashion. 2017 saw a huge leap in modest sportswear, where not only highly acclaimed global brands like Nike jumped onto the bandwagon, but also Turkish label Mayovera innovating Muslimah’s swimwear. The increasing normalisation of Muslimah sportswear is supported by Cindy van den Bremen, designer at Capsters with “ The image of a woman wearing hijab while working out will be normal and more women worldwide will be aware of the existence of sports hijab”. Meanwhile, in Malaysia, the Prime Minister has urged more entrepreneurs in the cosmetics industry to venture into halal beauty and health products citing a growth of up to 20% of the total market share for such products.
Womenpreneurs in Halal Market
2017 witnessed milestones in female empowerment with the largest feminist rally and the #MeToo movement. With the topic being widely discussed and championed, the year has seen more women joining the entrepreneurship bandwagon and is supported by the governments as well as the financial institutions. Banks and non-bank institutions are providing micro-loans to women in Bangladesh and Pakistan under the Islamic Banking options. A study done by J Walter Thompson in September stated that young Muslim women are becoming influential figures especially in tourism and fashion and this is supported due to their technological savvy and entrepreneurial know-how. With Muslim business women such as Vivy Yusof starring in her own reality TV show and celebrities turned entrepreneurs Noor Neelofa and Yuna inspiring not just their local community but Muslimahs worldwide, the rise of womenpreneurs is set to blaze through in 2018.
Halal tourism grows on firmer footing in 2017. Key market players have conceded that more countries are catering to Halal requirements such as having prayer areas in tourist locations and airports, more Halal options for food & beverages and itineraries catered to the Muslim Market. Faeez Fadhlillah of TripFez stated that revenue for the company has superseded the original 300% projected growth and the company has indexed 55,000 accommodation establishments across 50 countries. The growth has been attributed to the digital boom and increasing discretionary income of young Muslims. One of the findings from the Crescent Rating report shows that 46% of Muslim millennials travel two to five times a year for the length of four to six days per trip. Japan, South Korea, Taiwan, Spain and South Africa are some of the countries that are trying to be attractive to the Muslim segment as it is projected that 156 million Muslim travellers will be in the market by 2020.
Other Growing Industries
By category, food & beverage holds the biggest share in the halal industry. In the Global Islamic Economic Report 2017-2018, the halal F&B consumption is valued at USD1.24 trillion. The Halal pharmaceuticals and cosmetics sector is said to be growing with the innovation of Halal nail polish and makeup. Muslims spend on pharmaceuticals is forecast to reach USD132 billion by 2022. Pharmaniaga, a Malaysian pharmaceutical company is set to invest RM100 million to develop halal and cost-effective vaccines for the public.
The Halal industry is steadily growing, and is gaining traction among industry players worldwide. The inclusiveness of the industry which can be integrated into all sectors makes it an attractive niche for companies to invest in as the opportunities are endless. Moving forward, the Halal industry is expected to continue on this path as it garners more attention and exposure.