Rising Muslim population and influx of GCC tourists spurring growth of Bosnia’s halal food sector

Photo: MOSTAR, BOSNIA AND HERZEGOVINA - JULY 16, 2015: Old bridge in Mostar / Adnan Vejzovic / Shutterstock.com

Bosnia and Herzegovina’s halal sector has been growing faster than its overall food and beverages market, driven by a rapid rise in the Muslim population, which now accounts for over 50 percent of the country, and an influx of visitors from the Middle East. With positive demand drivers and over 50 companies halal-certified domestically, what opportunities are there for new players to enter Bosnia’s halal food industry?

VOLATILE FOOD AND BEVERAGE SECTOR

Bosnia and Herzegovina’s infrastructure was severely damaged in the war between 1992 and 1995 and the country’s recovering economy faces a high unemployment rate of 44.6 percent and a poverty rate of 17.9 percent.

The Balkan state has taken important steps to establish a robust economy including establishing a central bank, boosting the development of a private sector and implementing broader economic reforms as part of accession plans to the European Union.

Bosnia’s consumer food retail market was estimated at $3 billion in 2015, but has largely been in decline since 2012, according to the United States Department of Agriculture and national estimates. Further, the country has a low consumer purchasing power, estimated at 17 percent of the European average.

The country’s agriculture sector accounted for 6 percent of GDP in 2015, equivalent to over $1 billion, and accounts for 19 percent of overall employment. Crops and vegetables account for the majority of output, with livestock production representing less than a third of total production.  

Bosnia’s meat industry does not sufficiently meet domestic demand. The country has over 30 primarily small-scale meat processing companies, but the 11 largest are only 50 percent utilized. Bosnia imports 80 percent of its frozen meat, boned meat, pork, and poultry primarily from Austria, Germany, Hungary, and Poland.

POSITIVE DEMAND AND PRODUCTION DYNAMICS FOR HALAL INDUSTRY

Despite macroeconomic difficulties, Bosnia’s halal meat market is rapidly growing in tandem with its domestic Muslim population. There are 1.7 million Muslims in Bosnia who make up over 50 percent of the population, according to the most recent census poll carried out in 2013, up from 45 percent of the population in 2010.

The halal food industry has seen tremendous growth in the Balkan state since certification began in 2006 by the Agency for Halal Quality Certification (AHQC). There are now over 78 halal-certified manufacturing companies, including over 50 based in the country across the food and personal care products.

The AHQC certifies to Bosnia’s Halal Certification standard, developed in 2007 in accordance with the International Standards Organization.

The industry’s development was further boosted by the Association of Halal Industry, founded in 2015, and supported by the country’s prominent role in halal food trade events, most notably in organizing the annual Sarajevo Halal Fair & Forum.

“In the last few years we have seen an average growth in the number of companies certified and the number of products at 70 percent plus,” AHQC director, Amir Sakic, told Salaam Gateway.

“During the war the food industry was totally destroyed—now we have new companies and greenfield investments which are established and they are still growing,” he added.

Photo: SARAJEVO, BOSNIA AND HERZEGOVINA - August 24, 2015: Tourists and local residents walks at main square of Bascarsija area in Sarajevo / Fotokon / Shutterstock.com

Tourism is also boosting demand for halal food, with over 70,000 tourists from the GCC annually as well as over 40,000 tourists from Turkey, boosting the local economy and driving investment. In what could be the biggest foreign investment of its kind in the Balkan country, Dubai-based property developer Buroj announced in October last year plans to invest up to $4.8 billion to build a luxury tourist resort in Sarajevo.

“Three years ago charter flights started from Kuwait, bringing around 40,000 visitors a year to Bosnia. Then in 2015 FlyDubai launched the first direct carrier flights from the GCC and we saw at least 25,000 Emiratis visiting Bosnia that year,” said Kamran Siddique, CEO of UAE-based Holiday Bosnia.  

“Bosnia has great potential for business and we are actively inviting investors to come here. Bosnian people are hardworking and the country has great natural resources. Pre-war Bosnia specialized in the manufacturing industry and the quality of its products are getting wider recognition internationally,” he added.

Photo: SARAJEVO, BOSNIA AND HERZEGOVINA - AUGUST 13, 2012: Woman in front of a street stand selling souvenirs / Paul Prescott / Shutterstock.com

SUBSTANTIAL EXPORT GROWTH

Bosnia is a net exporter of meat and live animals to OIC member countries; its exports to the 57-member bloc  were valued at $49.2 million in 2015, an exponential increase from $5 million exported in 2015, according to ITC Trademap data. Turkey is its largest export market.

 AHQC’s Sakic sees substantial growth opportunity for exports, with the organization actively encouraging access to international markets.

“[AHQC] policy - when one of our clients wants to export – is to provide all necessary documents and guarantees at no additional costs. Most importantly, we are working closely with all significant international organizations - we don’t want or support any type of additional halal certification and since 2010 we have been aligned with the OIC’s Standards and Metrology Institute for the Islamic Countries (SMIIC) standard to help avoid the need for multiple certifications.”

With the prospect of joining the EU, Bosnia and Herzegovina’s halal food companies are poised to benefit from accessing a larger Muslim consumer market, as well as potential cross-border mergers and acquisitions activity bringing European halal food companies to the country.

© SalaamGateway.com 2016