Photo: Fish oil capsules spilling out of a bottle. The growth of halal fish oil is contingent on changing consumer behavior toward fish oils and fortified foods, and burgeoning demand for nutraceuticals.
Demand for fish oil is rising throughout the world, particularly in the Middle East and Asia Pacific. More and more producers are getting certified, but sourcing halal gelatin now and in the future can be an issue. Given the rapid growth in the global Muslim population, how robust is the demand for halal fish oil?
|YOUR PAIN POINTS ADDRESSED
|Scenario: You manufacture fish oil and seek to better address the needs of the rapidly growing global Muslim population
How robust is the demand for halal fish oil?
|What are the size and growth trajectory of the global fish oil industry?
|What are the major developments in the halal fish oil industry?
|What are the challenges and opportunities facing the industry?
Demand for fish oil is growing around the world on the back of its publicized health benefits and increasingly diverse uses, from fortified and functional foods, to vitamins and health supplements. Retail sales of fish oil reached $3.48 billion in 2015, and are forecast to grow to $4.5 billion by 2020, based on a compound annual growth rate (CAGR) of 5.2 percent, according to Euromonitor International.
There are no figures on halal fish oils, but with Muslims accounting for an estimated 17 percent of global food and beverage spend, the halal fish oil market could potentially be worth $591.6 million.
Currently the major consumer markets for fish oil are non-Muslim-majority countries or non-Muslim communities in Organisation of Islamic Cooperation (OIC) member states. This is due in part to culinary differences, with fish and its oils more prevalent in some diets than others. For instance in Malaysia, which is 61 percent Muslim, 60 percent of market demand for fish oil is from Chinese Malaysians, who account for 21.4 percent of the 31 million population, and who are predominantly non-Muslims.
“Right now, consumers of fish oil are largely Chinese Malaysians so there’s not been a jump in sales (of halal fish oils) as expected, but it is growing and there are more Muslim customers,” Dr Rajen Manicka, CEO of Holista Colltech, the first halal-certified fish oil supplements company in Malaysia, told Salaam Gateway.
The second factor is that fish oil demand has come from the vitamins and nutraceuticals segment, which is more developed in North America and Europe. Indeed, global demand is skewed towards these two markets despite lower demographics than other regions, with North America a $1.37 billion retail market and Western Europe $584 million, according to Euromonitor.
The Asia Pacific region is the second largest in the world, at $955.3 million in 2015, and slated to grow the fastest, by 34.2 percent to 2020, according to Euromonitor. But again, such demand is from non-Muslim-majority countries, led by China’s $345 million retail market (roughly a third of Asia Pacific sales), then Japan at $256 million, and South Korea at $116 million.
On the other hand, Indonesia is a $31.6 million market, Malaysia, $25 million, and India $18.9 million, according to Euromonitor. The three countries have a combined Muslim population of around 400 million.
The fish oil industry started out in the North Atlantic, focused on cod liver oil. The region, especially Norway, is still a major producer of fish oils, while the larger processing facilities are in Europe and North America. However, sourcing has shifted as demand has risen and fish oil sources diversified.
“The main suppliers are South American, particularly Peru and Chile. China is also increasingly entering the market with raw materials but South America would be, by a considerable distance, the main supplier for the supplements sector,” Peter Clough, Founder and Director of UK-based Cobden Research, a specialized consultancy on the fish oil sector, told Salaam Gateway.
Halal companies needing fish oil would source from the same exact suppliers as all fish are considered permissible to eat (halal).
So why the need for halal-certified fish oil? Fish oil in supplements and vitamins is typically consumed as a gelatin capsule, while an estimated 45 percent of the global gelatin market is derived from porcine.
“The issue is that most fish oil companies use porcine or bovine gelatin. We had to get fish gelatin from Europe, from a producer that only does halal gelatin,” said Manicka.
Bovine gelatin is more affordable and has better properties and consistency than fish. “The issue with fish gelatin is more the cost and technical properties not being as good, although I’d say they are adequate,” said Clough.
Manicka said fish gelatin is improving. “We’ve been battling with fish oil consistency for a while but we’re figuring it out. There’s been no issues lately with capsules leaking or breaking, and shelf life is not an issue anymore (compared to porcine or bovine gelatin),” he said.
“The challenges are breaking into new markets, certification and the constant availability of fish gelatin. Also making sure fish is of a high quality due to marine contamination,” said Manicka.
Sustainability is a concern for the immediate and long-term growth of the sector. “There are a lot of concerns in that respect, some are justified, such as specialty fish oils from tuna species [that are in decline]. The problem is any over-fishing is not driven by fish oil requirements – no species is fished for its oil; it is a byproduct in all cases,” said Clough.
To mitigate the decline in healthy fish stocks, work is underway on non-fish oil sources, such as algae.
“It is established but expensive, and there are significant markets for it, especially in baby food. A lot of work has also been done over the past decade on genetically modified crops for high fatty acids,” he added.
While there is potential market demand for algae derived oils, genetically modified organisms (GMOs) are controversial and not accepted in all markets, with for instance Europe more opposed to GMOs than the USA.
There are also concerns about how halal fish oil can truly be, as many oils are derived from synthetic sources, as well as being harvested from factory-farmed fish that are given antibiotics. “Most fish oil is not very good for you, as most is synthetic, and there is mercury toxicity and also antibiotics (in the fish). These are ethical questions the halal industry needs to discuss,” Shoeeb Riaz, Managing Director of Halal Consultancy Services in the UK told Salaam Gateway.
The growth of halal fish oil is contingent on changing consumer behavior toward fish oils and fortified foods, and burgeoning demand for nutraceuticals. This is happening, albeit from a low base.
“The Middle East and particularly the Far East are showing larger growth than many parts of the world,” said Clough.
Projections confirm this. The Malaysian and Indonesian markets are forecast to grow by over 50 percent by 2020, and the Middle East and Africa market is slated to grow by 55.7 percent, from $53.4 million to $83.9 million. Fish oil sales in Saudi Arabia, currently valued at $5.8 million, are forecast to grow by 67.5 percent, and in the United Arab Emirates by 93 percent, from $2.7 million to $5.3 million, according to Euromonitor.
“Halal fish oil will become more and more popular,” said Manicka.
|Get certified: Halal as a first critical step – seek out the certifiers that have global recognition among leading halal certification bodies, or that have accreditation
|Identify high-growth markets : Determine which markets are growing faster among Organisation of Islamic Cooperation (OIC) countries, and establish important distribution capabilities in those countries
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