‘Now is the time’: China and Indonesia highlighted as major post-COVID-19 opportunity markets for halal growth
Indonesia is already known as a natural fit for halal brands looking to reach a large Muslim audience as it has the largest Muslim population globally at 231 million people – but beyond this, the country is also seeing a rise in middle income consumers with increasing purchasing power and consumer openness to international food trends in the country, both crucial factors for foreign brands to succeed according to experts.
“The internationalisation opportunity for foreign brands in Indonesia is really very prominent as the country is already seeing US$16.9bn of halal foods being imported, a number expected to grow 2.2% to hit US$19.2bn in 2024,” halal consultancy Amicale Chairman Riyanto Sofyan said when discussing halal opportunities in Indonesia during the recent Reimagine: Halal in Asia 2020 virtual conference.
“Importantly, there is a rapidly growing middle class Muslim population here with rising purchasing power - Most of these middle class income Muslims are millennials (25 to 35) who are tech-savvy and open to international trends so things like Korean foods, Japanese foods and so on are all likely to be successful in Indonesia.
“What these consumers seek is lifestyle trends which are also safe according to their faith, so for example halal-certified instant noodles from Korea have been a hit. This is not only limited to Asian trends - many locals like premium cheeses from Europe, but find it hard to find good brie, for example, that is halal certified, so there is also an opportunity there.”
Sofyan also pointed out that although the COVID-19 pandemic had affected local purchasing power ‘slightly’, this was still growing albeit at a slower pace, and economists have predicted recovery by next year so now is a good time for brands to think about making a move into Indonesia.
“Now is a good time to think about internationalisation here as everyone is looking to start fresh and grow [post-pandemic], so it is the right time for brands to prepare now so as to get a head start ahead of competitors,” he said.
“In addition to consumer numbers and trends supporting entry, the Indonesian government is also actively supporting and encouraging foreign investment in various areas, including F&B, so foreign brands who want to capitalise on opportunities in Indonesia will see good support from many fronts.”
The State of the Global Islamic Economy 2020 report found that halal food consumption in Indonesia hit US$186.5bn in 2019 and is expected to grow by a 2.7% CAGR to US$209.3bn in 2024.
Halal in China
Government support was also highlighted as one of the main reasons for halal F&B growth in China, where the local government has been focused on building cities with high Muslim communities since 2018, according to China F&B advisory firm Chainera Head Tng Jin Kit.
“It’s really a good time for halal food brands in China now – the government has spent a lot of money on building infrastructure like the High Speed Rail and bringing in technology and agricultural methodologies to cities like Xinjiang and Lanzhou which have many Muslim communities,” said Tng.
“What this means is that the Muslim communities in these cities have become richer over the last three years, so now have much higher spending power.
“We’re talking about a Muslim population of some 20 million becoming more prosperous and more connected, and also becoming willing to spend more on high quality food products as their standard of living increases, so the opportunity is huge.”
Tng also warned halal brands against taking the same approach to business in China as they would elsewhere, as the business environment is ‘very different’.
“Do not think to port over any successes you’ve had in other countries to China – The environment here is very different whether it comes to communication, understand what people want, and working with government officials [so there’s no way to copy paste previous experiences here],” he said.
However, although the Muslim market in China would appear attractive for halal F&B at a glance, doubts with regard to this apparent acceptance and support of Islam and halal food remain, particularly given ongoing international strife about the government’s treatment of the Muslim Uyghur people in Xinjiang.
Furthermore, in 2018 Xinjiang authorities launched an anti-halal campaign covering all halal products including halal food. This was launched by the capital city of Urumqi, with leaders calling for government cafeterias to be changed to regular ones so that government employees would be able to 'eat all sorts of food’ and not be limited by ‘dietary problems’.
China has repeatedly denied all accusations that Muslims are being targeted in Xinjiang, with the Chinese Embassy in the US recently tweeting that: “In Xinjiang, all citizens enjoy the same rights. It is a completely independent choice of each citizen to believe in, or not believe in, any religion. The efforts in counter-terrorism and deradicalization in Xinjiang have never targeted any specific religion or ethnic group, and devout religious believers are never equated with extremists.”
The local Ministry of Foreign Affairs has also issued a formal statement stressing that China practices a system of ‘ethnic regional autonomy’ and it ‘treats all ethnic groups equally and pursues prosperity and development for people of all ethnicities’.
In response to queries from FoodNavigator-Asia, Tng said that he 'has not experienced any anti halal sentiment in China' and halal food is 'very well accepted', citing the examples of halal foodservice outlets which are 'packed on most days, welcoming all nationality and race'.
