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Saudi Arabia is witnessing a surge in the demand for halal products, indicating a broader global market growth for the sector. The economic boom fueled by the growth of halal medicines, cosmetics, and sportswear is extending far beyond the Middle East and Saudi Arabia.
Between 2018 and 2020, global product launches with halal claims increased by 19 percent, rising from over 16,000 to more than 20,000 products. The majority of these products, approximately 63 percent, originated from Asia, followed by Africa and the Middle East.
The significant growth in the halal sector reveals a substantial untapped potential that goes beyond conventional notions of halal being limited to Islamic dietary rules. Halal, which means “permissible” or “lawful” in Arabic, encompasses goods and services acceptable to Muslims based on Islamic law and the Holy Quran.
Halal products are typically free from pork and adhere to specific methods of slaughter performed by a Muslim, as well as being alcohol-free. Certificates issued by governing bodies attest to businesses producing goods according to halal procedures. The halal industry was valued at $1.27 trillion in 2021 and is projected to reach $1.67 trillion in 2025, with the food sector being the largest contributor.
According to Frost and Sullivan, a leading American marketing research company, the global halal economy is one of the fastest-growing sectors worldwide and has the potential to reach $4.96 trillion by 2030. This demonstrates a substantial increase from its value of $2.30 trillion in 2020.
With approximately 2.2 billion Muslims worldwide, accounting for about 26 percent of the global population, Muslim consumers represent a rapidly growing segment. Saudi Arabia, being the birthplace of Islam, is currently undergoing significant social and economic transformation and experiencing a surge in the halal economy.
The expansion of the halal economy is not limited to food items but extends to cosmetics, cleaning products, household items, and more. The market potential for the halal economy is immense, attracting major players such as Procter and Gamble, Unilever, Nestle, and other renowned food, cosmetics, and clothing producers who aim to become certified halal producers.
Saudi Arabia plays a pivotal role in driving the growth of the halal industry by redefining the definition of halal products and establishing global standards for halal certification, inspection, and qualification. As the center of the Islamic world, it is a natural step for the Kingdom to lead the expanding halal economy.
In October 2022, Saudi Arabia’s Public Investment Fund launched the Halal Products Development Co., aiming to localize halal production and enhance the efficiency of the ecosystem within Saudi Arabia, while also targeting global markets. Collaboration with key local and international players will empower small and medium-sized enterprises to expand their presence in global halal markets.
Muslim countries and other nations, including Malaysia, the UAE, Qatar, Turkey, Thailand, Japan, South Korea, Australia, and Brazil, are actively developing their halal economies to capture the potential of this market. Even non-Muslim countries recognize the importance of positioning themselves as key players in the halal market.
Qatar, in particular, has experienced substantial growth in the halal economy across various sectors such as financial markets, Islamic insurance, tourism, healthcare, and fintech. The country has been instrumental in developing the global and national halal accreditation ecosystem.
Despite the rapid growth of the halal market, challenges remain, including the need to clarify the definition of halal and address financing for the industry, as well as effectively managing the halal supply chain. However, the future of the halal economy appears promising, with an increasing variety of halal products being produced to meet the growing demand globally.
