| KUALA LUMPUR, June 16
KUALA LUMPUR, June 16 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
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.
But industry executives say the lack of global or regional
benchmarks is stunting the industry's potential at a time when
countries such as Japan and Australia are jumping on the halal
bandwagon to cater to a rising number of Muslim travellers.
"We welcome efforts to ensure consistency in halal
certification and would support a global standard, or perhaps
wider regional standards, to help simplify the landscape," a
spokesman for Cadbury's parent firm Mondelez said.
Halal standards are emotive topics in Muslim countries, as
Cadbury's recent problems in Malaysia showed.
Several Muslim consumer groups called for a boycott of all
Cadbury and Mondelez products after the health ministry said it
had detected traces of pig DNA in Dairy Milk chocolates.
The news generated an online furore and prompted several
rounds of testing by authorities from neighbouring Indonesia,
home to the world's biggest Muslim population, to Saudi Arabia,
the birthplace of Islam.
Further testing by Malaysia's Islamic affairs agency, the
country's sole official halal certifier, however, showed that
the initial tests had not been definitive and the chocolate was
But the incident has sparked a heated debate among Islamic
scholars in Malaysia over whether substances derived from pork
such as gelatin can be considered halal.
"We expect there wouldn't be a repeat of such an incident as
this could ruin the halal industry, in Malaysia especially,"
said Othman Yusoff, chairman of the halal committee of the
Federation of Malaysian Manufacturers.
Domestic politics and vested interests have also proved to
be a stumbling block so far.
The 57-member Organisation of Islamic Cooperation (OIC),
which calls itself the collective voice of the Muslim world, is
trying to draft global halal guidelines with the backing of
Dubai, Turkey and Saudi Arabia.
But that movement, the Standards and Metrology Institute for
the Islamic Countries (SMIIC), does not include Malaysia and
Indonesia - home to large halal-certification centres.
"What is critical is that there is interoperability among
standards, and transparency," said Rafi-uddin Shikoh, chief
executive of New York-based consultants DinarStandard.
"An exporter intending to export food from Sudan should know
and deliver easily the halal certification requirements from
almost any market they feel they can grow in."
Defining what exactly constitutes halal is an issue of hot
debate among Islamic scholars, which makes agreeing on a global
For example, more conservative interpretations hold that
each animal must be slaughtered by a hand-held knife. Britain
has two main halal certification boards with conflicting stances
on whether animals can be stunned before slaughter.
The kingdom of Brunei, which has a strict interpretation of
Islamic rules, sends auditors to neighbouring Malaysian
factories to check imports for halal-worthiness.
Another factor complicating the search for a single standard
is the intense rivalry between countries for a slice of the
industry. U.S. cereal maker Kellogg Co. and chocolate
maker Hershey Co., for example, are building
halal-compliant plants in Malaysia, with investments of $130
million and $250 million respectively.
Dubai is setting up testing and certification centres to
profit from the halal business. Malaysia has been pushing its
own standards, as has Turkey.
"It's silos," said Darhim Hashim, the director of the
International Halal Integrity Alliance, which is working with
the OIC to create common standards. He said one way forward
would be for the Gulf countries, Malaysia and Indonesia to agree
"I think naturally the rest would follow - those are the key
markets, the most regulated import markets."
(Additional reporting by Lisa Baertlein in LOS ANGELES and
Martinne Geller in LONDON; Editing by Miral Fahmy)