NIKKEI: Southeast Asia becoming global hub for halal foods

Big Japanese and U.S. food processors such as Ajinomoto and Kellogg are turning Southeast Asia into a global production center for halal foods, as they build facilities in the region to meet the dietary needs of the world's Muslims.

The number of Muslims is forecast to rise from 1.6 billion now to 2.2 billion by 2030, accounting for nearly 30% of the world's population and making them an attractive market for food companies, reports Nikkei Asian Review (22 Feb 2014).

The article quotes figures from Malaysia's Halal Industry Development Corporation (HIDC). It says the global market for halal foods -- that is, those that comply with Islamic religious law -- was worth 64.2 trillion yen ($622 billion) in 2010. It is expected to top 70 trillion yen by 2015.

The Japanese and U.S. food giants see Southeast Asia as an attractive location to turn out halal products, both because the region is home to many Muslims and because many of the raw materials needed are readily available. The food processors plan to build halal-certified production and export bases in Southeast Asia to take advantage of this increasingly lucrative global market, it adds.

REST OF THE STORY:

'Non-halal' signboard

GCH Retail (Malaysia), a subsidiary of a Hong Kong-based conglomerate, operates the Giant supermarket chain in the Southeast Asian country.

The Giant outlet in Kuala Lumpur's entertainment district has a tiny section with a sign touting non-Halal foods. These include products made with pork or alcohol, which Muslims are forbidden from consuming. The vast majority of the supermarket's products comply with Islamic dietary strictures.

Malaysia is a majority-Muslim country of about 30 million people. About 40% of the population consists of ethnic Chinese and Indians, many of whom are not Muslims. Nevertheless, halal foods dominate store shelves. "It would be difficult to sell our products through distribution channels such as supermarkets and other retailers if they were not halal," said an official at a local food maker.

A similar phenomenon can be seen in Muslim areas in Singapore and Thailand, although Muslims make up only around 10% of these countries' total populations.

Many mouths to feed

Ajinomoto has exported its seasoning of the same name, Aji-no-moto, made in Malaysia, to Saudi Arabia and other Muslim countries since the 1990s. In late 2012, the Japanese company built a state-of-the-art plant in Indonesia and developed a high value-added product targeting consumers in Asia and the Middle East.

"We will make Southeast Asia a base to tap the global halal market," said Etsuhiro Takato, general manager of Ajinomoto's department overseeing the region. The condiment maker plans to set up a new, 900 million yen production line at the plant, which is in a suburb of Jakarta. The new line will go into production just a year and a half or so after the original facility was built.

Other Japanese food makers have also been expanding in Southeast Asia. Kewpie opened a halal-certified plant in Malaysia in 2010. It also plans to start production of mayonnaise products and sandwich fillings in Indonesia this autumn. Frozen food maker Nichirei received halal certification for its plant in Thailand in 2010.

Kellogg, an American company best known for its breakfast cereals, plans to spend about 13 billion yen on a snack plant in Malaysia, as it tries to grab a larger share of the growing halal market. The facility will be located in the southern Malaysian state of Negeri Sembilan and is scheduled to go online in 2015.

Major U.S. chocolate maker Hershey also plans to build a big new factory in thesouthern Malaysian state of Johor at a cost of about 25 billion yen. It will make halal-certified products for export to 25 countries and regions, mostly in Asia.

Southeast Asian charms

In addition to having a sizable indigenous Muslim population and strong connections to Muslim markets in the Middle East and elsewhere, Southeast Asia is favored as a stable location for foreign investment. Food processors can also easily procure raw materials such as palm oil, which is used in frozen foods and confectioneries. Malaysia and Indonesia together account for 80% of the world's palm oil production, and Indonesia is also one of the world's largest cocoa producers. 

[Nikkei Asian Review, 22 Feb 2014]