Russia’s 20 million Muslims are driving growth, with the number of halal certified products rising by nearly a third since 2019.

ST. PETERSBURG: Russian halal food producers are looking to the future with optimism and setting ambitious goals. In addition to expanding production domestically, they are also laying the groundwork for exporting to the Middle East, especially Gulf Arab states. But to do so, they must first confront dishonest halal certifiers, who plague the sector within this country, according to the Moscow-based International Association of Islamic Business (IAIB).

Despite this problem, Russia’s domestic market for halal food products is showing stable growth. Islam is the second biggest religion in Russia, with state agencies estimating the number of Muslims living in the country at around 20 million. Many of them live in predominantly Muslim regions – notably Ingushetia, Chechnya, Dagestan, Kabardino-Balkaria, Karachaevo-Cherkessia, Bashkortostan and Tatarstan.

Fuelled especially by sales in these regions, the halal food market is growing. There were 426 stock keeping units (official product lines - SKUs) marked as halal in Russia in 2019, according to data provided to Salaam Gateway by London-based market researcher Euromonitor International. This number increased to 602 SKUs in 2020. The growth was especially noticeable in the packaged food category where the number of halal-marked products sold in Russia increased from 234 to 409 units.

Based on the experience of major Russian retailer Magnit, the halal products it sells are most in demand in Tatarstan, Bashkortostan, the Moscow region, Khanty-Mansi Autonomous Okrug-Yugra and the Udmurtiya republic, which have significant Muslim populations. That demand is increasing, said a Magnit spokesperson. For example, the sales of halal food in Magnit stores in Tatarstan, where the Muslim population exceeds 40% of the total, grew by 50% in the first half of 2021, year-on-year.

Tatarstan President Rustam Mannikhanov has called halal products the autonomous republic’s “priority area” and a “competitive advantage” for its economy, with his government proactively promoting the sector, including public investment into halal production and promoting halal tourism in Tatarstan spas.

The value of halal products produced in Tatarstan in 2020 reached Russian Roubles RUB10 billion ($137 million), or 3% of the republic’s gross agricultural output value, according to Tatarstan’s ministry of agriculture and food. Tatarstan exported to the rest of Russia and abroad some $300,000’s worth of halal products in 2019, with that number jumping to $2.5 million in 2020.

What is particularly noteworthy, however, is that the demand for halal products is not restricted to the Muslim population. Russians of other religious denominations are also buying halal products because they are regarded as being healthier and more eco-friendly than non-halal lines.

“Halal food is making its way into mainstream consumption, though from a very low basis, since people consider it healthier and better due to its seemingly more regulated way of production and its absence of some additives,” Christoph Spank, head of market research at the Moscow-based Schneider Group, told Salaam Gateway. “This notion opens the market to consumers that purchase the products for non-religious reasons and thereby transfers such products from a niche to mainstream.”

With consumer demand for halal products growing, so is the interest among companies to get their products certified. Murat Galeev, general manager of the international certification centre at the IAIB, has noticed a significant increase in the number of companies applying for certification. This goes beyond food products. Companies have approached IAIB with requests to certify cereal commodities or fertilizer - which usually meet halal requirements by default - to increase their appeal to consumers, Galeev told Salaam Gateway.

The certification serves as an important step for companies to start exporting their products abroad to countries where certification is mandatory rather than optional as in Russia. There is particular interest in exporting to countries in the Gulf, as can be seen by the increase in the number of Russian companies participating in regional halal-related business events, such as the Gulfood exhibition in Dubai.

As more products are certified, brand recognition is also increasing among consumers. Russians are becoming more aware of what a halal label means and are looking out for certified halal products, Galeev said.

Certification challenges

Making sure that halal certification is the real McCoy is a challenge. Dishonest certification practices are rampant in the country, and companies usually need to undertake lengthy research before choosing which certification company to approach.

“We are fighting against this,” said Galeev. “We will tackle this problem at a state level because you need political will to resolve it and identify, in legal terms, who is allowed to take part in the certification process. At this moment there are companies popping up that permit themselves to do this work without paying attention to important details, behaving dishonestly, and this situation must be fixed.”

Despite facing many challenges, Spank predicted that Russia’s halal market “is going to continue growing in the foreseeable future”. One reason is robust general economic growth in Muslim-majority areas such as Tatarstan, Bashkortostan, Dagestan and Chechnya, delivering “higher disposable incomes, growing purchasing power, growing population and therefore higher consumption of products.”

Mineral rich and Muslim-majority Bashkortostan is another autonomous federation republic whose government has identified the halal industry as a growth area. Its government has announced plans to increase the republic’s exports of halal food from RUB20 billion ($275 million) to RUB45 billion ($619 million) until 2024. It says that there are an increasing number of Bashkortostan companies already certified to export their halal products abroad. As of December 2020, there were more than 1,000 enterprises in Bashkortostan that had certification to export their halal products abroad, according to the RBC media group.

Galeev predicted this is the shape of the future. “Russian companies are interested in coming to the international market, in exporting their products. They are getting certified, they are trying to get a foothold in the countries of the Middle East, the Gulf, and to export products there. Everybody is aiming to get there,” he said. And in Russia: “Even people of other denominations see that these products are tastier, they are healthier, and they start to choose these certified products.”

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