Overview—Halal food opportunities in Iran’s $61 billion F&B market

Muslims in Iran spent an estimated $61 billion on food and beverages in 2015. With the lifting of sanctions against the country, substantial growth in demand is expected. What are the opportunities for new players to thrive in Iran’s halal food market?

Iran’s economy struggled while subject to international sanctions, with GDP per capita declining by 12 percent in cumulative annual growth between 2011 and 2014. It is no surprise, then, that the recent lifting of sanctions has opened up a whole range of possibilities for Iran’s economy and the halal food market in particular.   

As of 2015, Iran’s Muslims accounted for 99.6 percent of a total population of 80 million, and they are estimated to have spent $61 billion on food and beverages in that year, up 3.7 percent from $58.8 billion in 2014.

MEAT INDUSTRY

Iran’s domestic meat industry was estimated at $6.7 billion in 2015, having grown by 1.5 percent cumulative annual growth rate (CAGR) between 2013 and 2015, with the uptick in demand driven primarily by a modest population growth.

The country is a net importer of meat and live animals, with a net balance of $383 million – importing $580 million and exporting $197 million in 2014, according to UN Comtrade.

This is a result of meat imports being reduced by 12 percent CAGR between 2010 and 2014, while exports grew by 51 percent CAGR during the same period, according to UN Comtrade data.

NET IMPORTER OF BEEF

Meat of bovine animals accounted for a substantial 90.5 percent of 2014 imports to reach an estimated $525 million, primarily from Brazil, India and Pakistan. Beef imports from Brazil alone was an estimated $274 million, according to the Association of Brazilian Beef Exporters.

Consumption of beef and veal was 0.4 million tonnes, 0.25 million tonnes of which were produced in the country,  according to the Italian Trade Agency.

Iran has historically faced challenges with meat production, with the Italian Trade Agency noting that livestock companies typically operate at 20–30 percent of production capacity, and that animals delivered to slaughterhouses are often underweight and fail to meet international standards. Production challenges have been exacerbated by sanctions, which have resulted in inflated feed prices.

NET EXPORTER OF POULTRY

However, Iran is a net exporter of poultry, including meat and live animals.

Poultry exports reached 120,000 tonnes in 2014. These exports increased by 28 percent CAGR to reach $109 million between 2010 and 2014, resulting in net exports of $75 million in 2014.

HALAL MARKET

The growth in meat exports, of poultry in particular, has been facilitated by the establishment in 2007 of the Iran Chamber of Commerce’s affiliate Halal World Institute, which is approved as a halal food certifying body by Malaysia’s JAKIM (Department of Islamic Advancement of Malaysia). It is the only recognized international halal certification authority in Iran. 

However, Iran remains a small player in the global halal food market. Alimohammad Goudarzi, a senior trade official, told Iranian Press TV in 2015 that the Islamic Republic has a “minor share” of the global $700 billion halal food market, with little being doing to promote local brands in halal foods.

HALAL MARKET DEVELOPMENTS AND POTENTIAL                                                   

There is significant growth potential for halal food companies as domestic consumption and international demand for Iran’s halal meat products continue to rise.

There is robust growth in demand driven by economic recovery

As sanctions are lifted, Iran’s economy is expected to recover, with GDP growth expected to surge to 6 percent by 2016, boosted by a reduced cost of trade and increased income from the export of oil. This growth is highly likely to impact household income and expenditures, and coupled with population growth, this will drive higher domestic demand for halal food.

The government is seeking to boost domestic production

To address increased domestic demand, the agricultural sector is poised to benefit from the Sixth Five-Year Development Plan between 2016 and 2021, which adopts frameworks to enhance agricultural productivity, achieve self-sufficiency, and encourage private sector participation in production. The plan includes subsidy programs and reforms that provide benefits for producers and consumers.

Further, Iran has allocated $10 billion to infrastructure development of the agriculture sector with the objective of increasing production and lowering the cost of food, according to Deputy Agricultural Jihad Minister Abdolmehdi Bakhsahnde in an interview with the Islamic Republic News Agency. A further $735 million is allocated to improving beef production and providing animal facilities with the necessary level of profitability and liquidity.

Numerous trade agreements have been signed

Developments in Iran as well as meetings between international government officials discussing trade augur potential growth opportunities for meat exports. For instance, The New Zealand Herald reported that Mohammad Javad Zarif, Iran’s Foreign Minister, paid a visit to John Key, Prime Minister of New Zealand, who expressed interest in re-establishing old trade relationships and importing meat from Iran in 2016.

Iranian companies may also be granted the opportunity to export meat to the Eurasian Economic Union of Armenia, Belarus, Kazakhstan, Krygyzstan, and Russia, according to GlobalMeatNews.com. Iran has signed a meat deal with Russia to encourage transactions and supply other international markets with beef and poultry.

Iran is offering halal poultry to a number of countries and plans to triple the amount of poultry it currently supplies to Oman in 2016—an estimated increase of 15,000 tonnes. Iran also continues to export poultry to Saudi Arabia and Iraq and is targeting exports of 1 million tonnes of poultry in the near future.

© SalaamGateway.com 2016