he halal market is growing rapidly all over the world. According to the recently published State of the Global Islamic Economy (SGIE) Report 2020/21, some 1.9 billion Muslims spent US$2.02 trillion in 2019 across the food, pharmaceutical, cosmetics, fashion, travel and media/recreation sectors, all of which are impacted by Islamic faith-inspired ethical consumption needs.
While this spending reflects 3.2 percent year-on-year growth, Muslim spending in 2020 is forecast to contract by 8 percent due to the impact of the pandemic. However, with the exception of travel, all other sectors of the halal market are predicted to rebound by end 2021, growing at a five-year cumulative annual growth rate (CAGR) of 3.1 percent to reach US$2.3 trillion by 2024. Islamic finance assets are estimated to have reached US$2.88 trillion in 2019 and are estimated to remain at the same level in 2020.
For the first time, Singapore made it into the top 15 in the Report’s Global Islamic Economy Indicator, which measures how leading national ecosystems are best able to support the development of Islamic economy business activities. This signifies the important role and the momentum of the Islamic economy for Singapore.
Singapore’s strong performances in Halal Food (2nd), Pharmaceutical & Cosmetics (3rd), Media & Recreation (3rd), and Muslim-friendly Travel (9th) are positive signs of Islamic economy’s role in economic revival post-pandemic. Singapore’s share in the over US$255 billion per year global halal trade, as highlighted in the Report, is a significant US$2.4 billion, which represents 1 percent of the global pie. This means there is tremendous potential and room for growth in the halal trade.
Halal Food Industry
In the halal food sector, Singapore ranks second according to the State of the Global Islamic Economy (SGIE) Report 2020/21. The report revealed that Muslim spend on food increased by 3.1 percent in 2019 to US$1.17 trillion from US$1.13 trillion in 2018. The COVID-19 crisis is not expected to result in a significant drop in Muslim spend for 2020, with a drop of 0.2 percent forecasted. A CAGR of 3.5 percent is expected between 2019 and 2024, with Muslim spend expected to reach US$1.38 trillion by 2024.
Singapore’s vibrant halal food scene has been flourishing, with more food and beverage outlets opening and more halal certifications issued. According to Mastercard-CrescentRating Halal Food Lifestyle – Singapore 2021, the halal dining market is estimated at S$1 billion in 2019, with S$700 million spent by local Muslims.
The rise of the halal food industry can be seen in the growth of halal certification. Statistics from the Islamic Religious Council of Singapore (Muis) show that in 2018, 53,060 F&B products were certified halal, an increase of 160 percent from 2013. The number of halal certified restaurants have had a CAGR of 9.4 percent since 2013, with 4,126 premises certified halal in 2019. Of these eateries, 16 percent are located in hawker centres.
Although COVID-19 disrupted the halal food growth in 2020, there is potential in the short to medium term for the domestic market post-COVID.
It was highlighted in the report by Mastercard-CrescentRating that local Muslim millennials are the key driving force behind the growth of the halal food sector. Local Muslim millennials aged between 25 to 40 years represented 24 percent of the local Singaporean Muslim population, with a per capita annual expenditure of S$1177. The next highest category, representing around 19 percent of the local Muslim population with annual per capita dining expenditure of S$1214 are the Gen Xers, aged 41 to 55 years. Muslim visitors’ spending accounted for S$300 million in 2019, or 30 percent of the total halal dining market.
Many efforts by government agencies, industry bodies and businesses have been put in play to tap on this growth and further develop the halal food industry locally and globally. An example is the Halal Hub, an integrated food cum logistic hub facility that aims to enable more local halal food producers to export to the flourishing international market. Dubbed as the most advanced of its kind in Southeast Asia, Halal Hub, when completed by third quarter of 2021, will house halal food processing units, central kitchens, cold-rooms and logistics operations, and will offer halal food and beverage businesses a helping hand in the procurement, production, compliance and distribution of their products. The hub will be at the forefront of innovation in the halal industry and will offer businesses a huge leg up in terms of procurement, production, distribution and international expansion.
Pharmaceutical & Cosmetics
Singapore found itself ranked third for Halal Pharmaceuticals and Cosmetics in the SGIE Report 2020/21.
According to market research firm Adroit, the global halal pharmaceutical market alone is projected to hit about US$174.6 billion by 2025. Asia-Pacific was the largest market for halal pharmaceuticals in 2018, bringing in a revenue of US$39.9 billion. Globally, total Muslim consumer spending on pharmaceuticals is expected to surpass US$131 billion over the next four years till 2025.
There is a growing demand for halal cosmetics in the Middle East, Southeast Asia and Europe. It was projected that the global cosmetics market could make US$76 billion in sales to Muslim consumers by 2024, as it is set to grow annually by 2.9 percent in a post-COVID recovery. With the size of the market already standing at US$4 billion in 2019 for Malaysia and Indonesia, it augurs well for Southeast Asia to capture a major slice of the global cosmetics pie.
Although sales of halal cosmetics and fragrances generally declined in 2020, the year saw a rise in the development of many innovative products. Sales of “above-the-mask” beauty products such as eyecare items and facial creams proliferated. A dedicated halal and vegan make-up line made from organic natural ingredients was launched by Japan’s Shojin Cosme, while Indonesian beauty brand Wardah launched facial creams to protect against the glare of computer screens for women who work on laptops at home.
Halal cosmetics brands have adapted to shifting consumer trends during the demand downturn of the COVID-19 pandemic. Strategies included marketing in local languages, especially in Southeast Asia, and releasing special Ramadan ranges.
Media & Recreation
In this sector, Singapore fared well, coming in third in the SGIE Report 2020/21.
The media and recreation sectors are gaining traction and adapting to the needs of Muslim millennials. The industry is grabbing the market share by releasing new films and documentaries with Islamic content (Muslim culture, history, and life), new Islamic channels going on air, and streaming of many Islamic programmes. The Muslim spend is projected to reach US$281 billion by 2022.
The Muslim travel sector is one of the fastest growing sectors in the travel industry. Muslim spend on travel increased by 2.7 percent in 2019 to US$194 billion from US$189 billion in 2018. With the impact of the COVID-19 crisis, Muslim spend on travel is expected to fall to US$58 billion in 2020 and make a recovery to 2019 levels by 2023. Muslim consumer spending on travel is expected to grow at a five-year CAGR of 1.4 percent from 2019 to 2024.
Singapore is one of the most successful destinations which has been able to cater to the needs of both Muslim and non-Muslim travellers. Singapore has been ranked as the top Muslim-friendly destination among non- Organisation of Islamic Cooperation (OIC) countries for five consecutive years, according to the Mastercard-CrescentRating Global Muslim Travel Index.
Part of its success in the Muslim-friendly travel market is due to its proximity to Indonesia, Malaysia and Brunei as well as having a large local Muslim community. The local Muslim population constitutes around 15 percent of the total population. This has also meant that a sizable population of Singaporeans do have a better understanding of some of the faith-based practice and needs of the Muslims.
Singapore scored the strongest for its safe travel environment, ease of access to prayer spaces and halal dining options and halal-friendly environment, which is sustainable in supporting Muslim travellers. Although the pandemic has brought the tourism industry, including Muslim-friendly travel, to a grinding halt, the prospect of some recovery is expected by end of 2021 when travel restrictions ease up.