Germany's Booming "Halal" Niche Market Forges a New Link in the Supply Chain

"Halal logistics" caters to the growing demand for Halal products among Germany's Muslim population.

Germany's growing Muslim population - the country has the largest Muslim population in Europe - has created a niche market for Halal food, and with it the need for a well-functioning Halal logistics network.

Players in the logistics industry have realized that this is a growing niche market in Germany and other countries eager to penetrate the European Halal market, with inherently strong demand for Halal products.

Studies have been commissioned to assess the market potential of Halal products in many European countries. One such study was conducted by Professor Yvonne Ziegler, who specializes in air transport management at the Frankfurt University of Applied Sciences (Frankfurt UAS).

Halal Logistics

The "Halal Logistics - Air Freight" study investigated the level of demand for Halal products among Germany's more than 5 million Muslims and established a Halal supply chain. According to Islamic principles, the Arabic word "Halal" means "permissible." The production and supply chain of such products - in addition to food, the term also applies to cosmetics and pharmaceuticals - must also comply with Halal guidelines. The study was conducted in cooperation with the Halal certification organization Halal Control and Lufthansa Cargo.

The study investigated the willingness of the Muslim population to pay higher prices for Halal food, surveying 772 Muslims in Germany. It found that almost all of them said Halal food was important to them (88%) or moderately important (9%). About 94% of respondents said they preferred food with Halal certification, while more than half (59%) said they were willing to pay more for food prepared according to Halal guidelines.

An interesting finding was that they were willing to pay higher prices regardless of their income level. About 80% were willing to pay 5% to 20% more for Halal products. In fact, the remaining 20% were willing to pay 50% above the price of non-Halal products for Halal ones.

The study also analyzed various aspects of Halal logistics in the air freight sector, particularly at Frankfurt Airport. It examined Frankfurt Airport's potential as a hub for Halal products in Europe and the conditions that would need to be met to create such a hub.

Germany Exports Meat to Islamic Countries

Germany has also become a major meat exporter to Islamic countries. Germany exports more than EUR 3 billion worth of air-freighted meat annually to the world's top ten Muslim countries. The study also interviewed 20 export companies and found that, in order to make the supply chain compliant with Halal standards, all equipment and tools used in transport should be dedicated exclusively to Halal products.

Meanwhile, various ports in Europe have already been certified, but Mahmoud Tatari, managing director of project partner Halal Control, sees good potential in air trade. He believes that perishable and high-value foods should continue to be transported by air, a mode that will offer business opportunities to airports and airlines and enable them to further strengthen their expertise in Halal logistics.

Halal products and Halal services are an important part of Germany's foreign trade. "German logistics companies are increasingly focusing on the Halal niche market... There is a huge consumer base of about 2 billion Muslims worldwide, not counting Germany's own 5 million Muslim population. They (German logistics and trade companies) are focusing not only on Halal imports into Germany, but also on Halal product exports outside Germany. In fact, suppliers of Halal products are competing with each other to increase their market share. For example, many German exporters of Turkish origin are actively exporting products not only to the Mediterranean region but also to the Middle East," Mathias Schmidt, who works at a freight company outside Frankfurt, told an American transport magazine.

Turkish Airlines and other Middle Eastern airlines unload large amounts of Halal cargo at European airports - German Halal exporters are keen to break into new markets, and traditional Halal product exporting countries such as Turkey, Malaysia, Saudi Arabia and the UAE are eager to build a customer base in Europe, particularly in Germany. Malaysia, for example, has even organized a special Halal trade show called MIHAS; this year it will be held in Kuala Lumpur from September 7 to 10.

Halal as a Business Value Proposition

MATRADE, Malaysia's official trade promotion agency, recently ran a strong promotion for MIHAS 2022 through a webinar held in Frankfurt, attended by 45 business representatives. The webinar, titled "Halal as a Catalyst for Manufacturers' Innovation and Sustainability," was co-hosted with the Hannover Chamber of Commerce; Hannover itself is the venue for a trade show called "Halal Hannover" dedicated to the Halal industry.

Webinar speakers included Frankfurt MATRADE trade commissioner Zuhaila Sedek; Professor Dr. Yus Aniza Yusof, deputy director of the Halal Products Research Institute at Universiti Putra Malaysia; Professor Dr. Katharina Riehn of the German Agricultural Society; and Romzi Sulaimen, senior manager of international cooperation at the Halal Development Corporation. In his opening remarks, Malaysia's Consul-General in Frankfurt, Farzamie Sarkawi, described Halal food as "a business value proposition with universal appeal, because it aims to ensure the highest level of care in product manufacturing - not only avoiding the use of prohibited ingredients, but also caring about the environment, social well-being and good governance."

Zuhaila Sedek said the Halal industry is a multi-billion-dollar industry with consumers who have strong purchasing power. "As shown in the State of the Global Islamic Economy Report 2022, the global Muslim population's spending was worth USD 2 trillion in 2021 and is expected to grow to USD 2.8 trillion by 2024. In Germany, Halal food is seen as a value proposition with much in common with organic and vegan products, able to meet the needs of the 5.3 to 5.6 million Muslims living in the country," she insisted, urging German businesses to cooperate with Malaysia on innovative and sustainable supply-chain management.