Reindeer and fish oil: Norway’s halal market opportunities

Photo: LAPLAND, FINLAND - FEB 14, 2011: A herd of reindeer / Heather Sunderland / CC BY 2.0 

Norway has few Muslims, and its only major food export is seafood. Halal certification in the country has improved over the past decade, but oversight of the sector still has some way to go. Norway’s greatest export potential is in niche products, such as halal-certified reindeer meat and fish derivatives. What opportunities are there for new market entrants in Norway’s halal food industry?

MARKET OVERVIEW

Norway has a small Muslim community of just 200,000, roughly 4 percent of its 5 million population, but domestic halal food sales are robust at an estimated 4 billion kroner ($493.8 million).

Until a decade ago, halal food was limited to locally slaughtered meat. “Most of the halal meat industry was based on trust, and as long as the suppliers marked their products as halal, consumers were happy and no questions were asked,” Mehtab Asfar, General Secretary of the Islamic Council of Norway (IRN), the country’s only private halal certifier told Salaam Gateway.

But over the past decade, as more halal food has become available, local certification under the IRN has increased. Since 2011, certification demand has grown by 20 percent year-on-year. Currently there are 32 Norwegian companies that have halal certification, and a further 20 are applying, according to the certifier.

“Muslim consumers have become more alert, and they have learned that consuming halal food in Norway is more challenging, so they are asking for halal-certified food. This is mainly due to second- and third-generation Muslim immigrants having higher education levels and better paid jobs than their parents, so their purchasing decisions are based on facts and not trust, and they usually ask for third-party halal certification,” said Asfar.

But although certification has increased, just 10 to 15 percent of all halal meat sold is locally certified. “There’s a gap of around 80 percent. If imported, it may be certified, but most halal food is not,” Asfar added. “Our plan is to get all halal products locally certified, but it’s all down to demand and the power of the suppliers. As it is right now, the suppliers are more powerful than consumers.”

In 2014, the lack of a government halal certifier and of oversight of the overall sector prompted Mattilsynet, Norway’s food safety authority, to require products to prove halal certification. Audits were carried out and documentation requested, but only 13 out of 60 companies had the relevant documentation.

“We think the situation has improved since then,” said Asfar. Certification is expected to improve further due to increasing demands from Organisation of Islamic Cooperation (OIC) countries for halal certification for imports. “Bigger companies are feeling the pressure to get certified,” added Asfar.

CHALLENGES

Locally certified meat is low in quantity because the country is a net importer to meet domestic consumption. As a result, not much is exported, and hence there is less incentive to get halal certification.

Nortura is one of the country’s leading meat producers, but just 1.3 percent of its sheep meat and 1.5 percent of its poultry sales (under the brand Alfathi) are halal—an indication of just how low the demand is.

Norway’s high production costs and salaries are also a hindrance to its competing internationally. “Very few Norwegian food producers have been exposed to the halal market nationally or internationally. This is basically because historically the main food product exported from Norway has been seafood,” said Asfar.

Indeed, fish and its derivatives are a major Norwegian export, estimated at $10 billion a year. Norwegian companies, especially those dealing in fish oil, have been getting halal certification to cater to growing demand around the world, especially in Eastern Asia. The global fish oil sector was estimated to be worth $2.22 billion in 2014 and is forecast to reach $2.93 billion by 2020, according to Zion Market Research. Currently, Norway’s main halal exports markets are the Middle East, Malaysia, Singapore, and Indonesia.

But while the halal sector is not expected to grow considerably in the immediate future, the domestic market will grow as the number of Norwegian Muslims is projected to triple to 520,000 by 2050, according to the Pew Research Center. Demand is also expected to grow in the near term due to more halal products being sold online. “The trend of online grocery shopping is on the rise and it will definitely boost the supply of halal food, as producers can have their own halal brands sold to a niche market on the net,” said Asfar.

Halal dairy certification is also expected to grow, catering to the local market, with some dairies, especially cheese producers, already certified. “There is good interest from the dairy sector. The problem is at our side, as we have limited resources to follow up,” he added.

Currently, Norwegian regulations are hampering halal product development. A case in point is Nasim’s Halal Baby Food, which was established by Nasim Rizvi in Norway in 2013. While its products have sold well outside Norway, certain ingredients were not permitted under Norwegian law, so the baby food is not available in the country. Instead, Rizvi has focused on the United Kingdom market, where around 80,000 Muslim babies are born a year. Over the next few years, Nasim’s retail value is forecast to reach $18 million, and the product is aiming for an 80 percent market share in the UK.

OPPORTUNITIES

Norway’s potential as a halal food producer lies in niche and premium products.

One product in which Norway could excel is reindeer meat. In 2013, specialist wildlife abattoir Vilteksperten was halal-certified to export to the Gulf markets. Another reindeer meat company is planning to get certification. “We are exploring the market as a company wants to export reindeer meat to Iran, which is exciting as the trade ban is over,” said Asfar.

Fish oil exports could also be expanded as research into fish derivatives and gelatin increased. Currently, 99 percent of gelatin worldwide is porcine- and bovine-derived, with fish making up the remainder.

“Fish gelatin could be a replacement to bovine and would not require the halal slaughtering of cows. This requires research and a lot of technology for extraction, but could be an interesting market for Norwegian companies to explore,” added Asfar.

© SalaamGateway.com 2016 All Rights Reserved