Halal-certified cheese gaining market share in an $80.5 billion global industry

Photo: CORK CITY, IRELAND - March 3, 2016: A man choosing cheese at The English Market / Gabriel12 / Shutterstock.com

The halal-certified cheese market in the Asia Pacific alone is a growing $284.6 million sector. With changing tastes in Muslim-majority regions, particularly the Middle East, what opportunities are there for new entrants in the halal-certified cheese industry?

Halal cheese sales globally can be gauged by the Asia Pacific market, where halal-labeled cheese is estimated to be worth $284.6 million, or 6.6 percent of the region's $4.3 billion in cheese sales, according to market researcher Euromonitor. The research firm estimates growth in the region at 13.5 percent, to rise by $147 million by 2020.

Dietary changes and an increase in exports to Muslim countries, especially in the Middle East and Southeast Asia, are leading to a rise in demand for cheese, with the Asia Pacific region holding the strongest growth forecast, at 7.9 percent per year until 2019.

In the Asia Pacific, halal-labeled cheese accounted for 81 percent in Indonesia, 79 percent in the Philippines, 52 percent in Singapore, 32 percent in Australia (largely for export), 19 percent in Taiwan, and 6 percent in Hong Kong, according to Euromonitor.

Outside the region, 2 percent of all cheese in Brazil is halal-labeled. The country is a major exporter of halal meat and poultry.

THE NEED FOR HALAL-CERTIFIED CHEESE

Cheese is made from milk and it is the enzymes – rennet and pepsin - added in the manufacturing process that determines whether a cheese is halal or not.

Rennet derived from porcine is haram, while bovine rennet has to come from calves that are slaughtered according to Islamic requirements (halal calve obamasum rennet).

Alcohol-based chemicals should also not be used for cleaning machinery used to make halal cheese.

Traditionally, most rennet was from the stomach of a calf, but since the 1970s, bacterial enzymes have increasingly been used due to the rise in cheese production and the supply of calf rennet not keeping up with demand, according to Dr Tom Beresford, Head of Food Bio Sciences Department at the Teagasc Food Research Center in Ireland.

“The rennet used in Ireland, and throughout most of the large-scale cheese industries in the U.S., Australia and New Zealand, is from bacterial origin. That is why they say it is suitable for vegetarians. The indication I have is that all bacterial fermentation would conform to halal guidelines,” said Beresford.

Yet despite dairies using such ingredients, many do not seem to be seeking out halal certification.

Photo: KIMANIS, SABAH, MALAYSIA - Dec 25, 2015: Unidentified food vendor making famous Malaysian snack called Goreng Pisang Cheese or fried banana with cheese / Lano Lan / Shutterstock.com

Beresford noted that of two major dairies he contacted in Ireland, one had halal status, while the other had not certified its cheese as halal despite using halal ingredients and halal whey (a by-product of cheese used in infant milk formulas and sports nutrition products).  

In Muslim-majority Middle East, one of Lebanon's largest dairies also uses halal ingredients but is not certified.

“I'm not sure if it makes sense as we are not dealing with meat and the market is not asking for halal-certified cheese,” said Mazen Khoury, Production Manager at Dairy Khoury. Any queries were related to whether the rennet was halal-certified, which is imported from Europe, he added.

In Saudi Arabia, all cheese that enters the country must be halal, yet the labeling has not followed suit. “People in Saudi Arabia have faith in their government, that if the cheese is in the country, it is halal. Most products not labeled as halal in fact would be,” said Michael Sweeney, Senior Researcher at Farrelly & Mitchell, an Irish food consultancy with offices in Riyadh.

The $1.26 billion Saudi cheese market has grown by 8 percent a year between 2008 and 2014. The kingdom is the largest market for cheese in the Middle East and North Africa, accounting for around a fifth of the market, according to Sweeney. “There's been five or six years of positive publicity on the region, so you have a lot of manufacturers in Europe now exporting products,” he added.

Photo: Halloumi cheese with black olives, a dish served across the Middle East

CHALLENGES

Islamophobia

According to Saqib Mohammed, Chief Executive of UK certifier the Halal Food Authority, dairies are not getting halal certification because they do not want any negative publicity due to Islamophobia. 

“Around 30 to 40 percent of cheeses are halal-certified in the UK, the European Union and the U.S., and many more are halal but do not state it, because they don't want to publicize it,” he said.

Dairies that get halal certification primarily do so for export purposes. “We have had cases where a customer submits five or 10 lines for certification even though the whole supply segment is halal-certified, and they could get halal certification for all lines, but they only do so for particular lines for export,” added Mohammed.

Global glut driving down prices

A further factor in cheese manufacturers not seeking out halal certification may be attributed to a global glut in production, especially in the U.S.

Prices have dropped from $2 a pound in 2014 to a six-year low of $1.27 in May 2016, according to the Wall Street Journal.

European exporters, having lost the Russian market due to sanctions, are also flooding the U.S. with low-cost cheese, roughly 20 percent cheaper than in 2014.

As a result, excess production has led to lower returns and heightened competition among producers.

In such a cost-sensitive environment, producers may not be willing to pay for halal certification. This may change if consumer awareness, and resultantly demand, for halal cheese rises in the near future.

“Halal certification is market driven, so if companies need it, they will get it,” said Mohammed.

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