Overview-Canada’s halal food market, a high-growth $1 billion opportunity

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Canada’s halal food sector was estimated at $1 billion in 2014, representing just under half of the $2.6 billion Muslims spent on food and beverage, as estimated by Nourish Food Marketing and the State of the Global Islamic Economy 2015/16 report prepared by Thomson Reuters in collaboration with DinarStandard. With the halal food market poised for significant growth, what opportunities exist for new players to enter this market, and what are some key considerations?

Canada’s Muslims spent an estimated $2.6 billion on food and beverage in 2014, representing 3 percent of total F&B expenditure in the country. This Muslim spend is expected to increase by a Cumulative Annual Growth Rate (CAGR) of 4 percent through 2020.

Expenditure on halal food was estimated at $1 billion in 2014 and the market is poised for growth driven by increasing demand for halal food among Canadian Muslims and an expanding Muslim population, which is projected to reach 2.7 million by 2030 (6.6 percent of population) from just over a million currently (2.8 percent of population).

Canada is also a modest exporter of halal meat and poultry products to the OIC countries, with export revenues of $47 million in 2014, according to Trade Map data. This is up from just $8 million ten years ago, so there is a growth story in progress, and given the quality of Canadian produce, there is certainly an export opportunity for their halal sector.

Halal meat and poultry export revenues make up a small portion of overall agri-food exports to OIC countries, which the Canadian government estimates at over $3 billion for 2010 to 21 key OIC markets.

HALAL MARKET DEVELOPMENTS

A recent survey by the International Food Marketing Alliance found that of the 800 respondents, only 39 percent felt that the Canadian retailers were doing a good job serving the Muslim community, leaving plenty of room for improvement.

“Food processors, manufacturers and retailers need to adapt or they will miss out,” said Jo-Ann McArthur, the founder of IFMA, speaking to Nourish Food Marketing in 2015. “An investment in halal value-add products not only instils consumer confidence, but also presents unique crossover opportunities for mainstream consumers,” she said.

The government has recognised that the halal sector is a viable one and in 2014 passed a bill that made it mandatory for all products that claim to be halal to carry the name of the certification body. This is an effective way to bring some degree of accountability to the halal sector without having to develop a national standard or accreditation process. This new law will come into effect in April 2016.

CANADA - Muslim food and beverage spend vs. halal food spend, 2014, in USD billions

Source: Nourish Food Market; State of the Global Islamic Economy 2015/16 report

KEY INDUSTRY PLAYERS

There are a number of domestic food brands serving the halal market, many of them headquartered in the Greater Toronto Area, which is home to almost half the Canadian Muslim population, and the natural epicentre of the halal scene.

Maple Lodge Farms is Canada’s largest independent, family-owned chicken processor, and in addition to mainstream production, they have run a large scale halal operation since 1990. Branded Zabiha Halal, there is a full product offering that is certified by IFANCA’s Canadian arm and distributed nation-wide. Their website gives an above average description of their halal operation, including a full defence of their mechanical slaughter process.

The Mina brand by Maple Leaf, in contrast, is branded ‘Zabiha by Hand’ on the logo. It is certified by the Halal Monitoring Authority (HMA) and clearly caters to those who prefer or insist on hand slaughter.

Mortimers Fine Foods is a good example of a mainstream producer that went halal with a newly-certified range branded as Mortimer’s Halal Kitchen and Pies-On-the-Go.

Crescent Premium Foods is a family-owned firm that has been selling authentic halal meals and packaged foods across Canada for over three decades. In order to keep up with food trends they have recently added organic, cage-free chickens to their selection, guaranteeing they are fed non-GMO organic feed free from antibiotics and hormones.

Blossom Pure in Ontario provides organic meat and poultry, dairy and produce sourced from certified organic, Amish and Mennonite farms for the Muslim community.

Paramount Fine Foods has 19 restaurants and reported revenues of $32 million in 2014 with expansion plans to grow to 32 outlets over the next phase extending into the USA and the Middle East. Their performance attracted the attention of Prime Minister Trudeau, who told ME News Wire, “Such enterprises also attract younger generations and immigrants wishing to preserve their identity by investing in feasible projects that not only represent an added value, but also promote multiculturalism, which is a source of pride to Canada.”

The Halal Guys, already a growing success story in the U.S. where they are ranked in the Top 10 Most Yelped Businesses, are opening five new franchised outlets in the Greater Toronto Area.

Toronto’s popular Halal Food Fest is an established forum to bring key players together and can promote the emergence of truly international halal brands. The fest attracted over 27,000 visitors in its first year will return for its third year in May 2016.

“Almost a fifth of last year’s visitors were tourists from all across North America, which reflects the increase in demand for halal products, and shows that the event has really become a destination for people looking to sample and learn about halal food options,” said Salima Jivraj, Founder, Halal Food Fest, on the company’s website.

With the notable lack of truly global halal brands despite the scale of the market, DinarStandard considers platforms such as this to have the potential to promote M&A activity and help create larger, more cost efficient global halal food companies.

KEY OPPORTUNITIES AND CONSIDERATIONS

The Canadian halal market should not just be judged on size or research data. The Muslim community there, and especially in the Greater Toronto Area, is one of the most vibrant in North America, and there is a strong Muslim identity with a well-developed cultural, entertainment and restaurant scene. Toronto’s annual Reviving The Islamic Spirit convention has a massive following across the continent, and has developed a global reputation that in turn boosts Canada’s Islamic credentials.

The annual F&B expenditure for an average Ontario household is $7,843 (2013 figures from Statistics Canada); meat expenditure is $1,072 and eating out accounts for $2,272. Given that Muslims tend to spend significantly more on food (and on meat in particular) than average, the domestic halal market offers some viable opportunities.

There are some clear retail gaps, with consumers wanting more from the retail chains. Market leaders Loblaw have their own halal range, Sufra, but their website only lists three or four products in addition to part of the Zabiha Halal range.

Given the young demographic of Canadian Muslims – the median age is 28.9, against a national median of 37 – and their expressed dissatisfaction with current retail offerings, there is certainly room for a more diverse product offering at the retail level.

There is considerable scope to expand Canadian halal meat exports to the OIC. Given the USA’s exports of meat and poultry to the OIC of $15.8 billion in 2014, there are certainly opportunities for Canadian exporters to meet some of this continually rising demand, especially from the GCC region. With a cleaner environment and extensive agricultural land, exporters could find lucrative niche markets for Canadian produce.

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