The World is Undergoing Change

“Competitive Collaboration in Halal Industry”

Mohd. Murray Hunter University Malaysia Perlis

Global Cosmetic and personal care market Estimate (2012)

> USD35 Trillion

Current global size of Halal cosmetic & personal care market

USD 5-14 Billion

What should it be?

USD 7 Trillion

Current market growth is > 35% per

annum

That Means if 2012 is USD 14 Billion:

2013 = 53 billion2014 = 81 billion

2015 = 124 billion2016 = 190 billion2017 = 292 billion2018 = 449 billion2019 = 690 billion

2020 = 1.06 Trillion

Current Global Halal awareness is estimated to be

20% among the global Ummah.

This is going rapidly

However awareness about halal Cosmetics and personal care is even less but growing

rapidly Matrade 2010

Although Muslims make up 20% of the World’s population many are in poverty

Most countries are at different stages of development

Consumer tastes and preferences actually differ widely

Supply chains are typically “third world” in most countries

Although ONE Ummah, different aspiration, desires, customs, incomes

This is a niche market in many countries

20% of the World’s Muslims are NOT concerned about Halal certification on packaging

Background

• 2-3 million population with different ethno-cultural

background

• Lagging along in national development• Lower education

disposition• Predominantly rural

population

• Currently unable to benefit from growing

tourism industry

• Ageing farmer population

• Limited knowledge of potential opportunities

and matching skills

What are our problems at

home?

Farmers

“Mindset Barriers”(Small Holders)

• market passive • copy cat approach • ‘quick-fix approach’ • poor exposure and perhaps resistance to new

ideas,• practice isolation, • market isolation • perception of agriculture as only a fallback

profession • fixation on a single success.

Lack of Ideas

Lack of education and skills

Narrow mindset

Feeling of powerlessness – lack of access to markets

Lack of resources

Lack of will

The wall between farming and business

The biggest barrier

The World has become a somewhat integrated market over the last few decades through the phenomena

known as globalization

Traditional economics would explain this

phenomena in terms of specialization,

comparative and relative advantage

Sociologists would talk in terms of the ‘cosmopolitan

man’

Success in the global market would depend upon……

Competitive advantage grows fundamentally out of value a firm is able to create for its buyers that exceeds the firm’s costs of creating it. Value is what buyers are willing to pay, and superior value stems from… providing unique benefits that more than offset a higher price. According to Professor Michael E. Porter

This presents three major issues:

1. Is ‘Globalization’ more ‘reality’, than ‘myth’?

and if so and we understand it’s dynamics

2. What are the potential opportunities?

and

3. How do we exploit these potential opportunities?

Product Opportunity

Gap

Social Social and cultural trends

and drivers. Reviving historical trends. Influence of international

trends. Changing demographics. Styles, fashions & fads.

Economic Stage of economic

development. State of the economy.

Level of disposable income. Macroeconomic, general

industry conditions, financial &geographical environment.

Technology Current state of the art and

emerging technology. Re-evaluating and utilizing existing technology in new

areas. New knowledge.

Invention.

Government & Regulation

Government needs & priorities.

Restriction by Government. New laws & regulations and impact on product markets

and supply chains. Trade liberalization.

Our Inner Self Our upbringing, domicile outlook, experiences, interests, skills & abilities, assumptions, beliefs,

attitudes, perception, cognitive processes, patterning and biases, our inner psych and emotions, imagination,

energy, and passion, etc. The way we interact and stimulated by the

environment and make connections

Randomness & Unexpectedness A random or unexpected

event that creates an opportunity

Changes in any of the factors

New Knowledge or Information

Interrelated Factors

Hunter (2012) Opportunity, Strategy &

Entrepreneurship

Restoring Competitive advantage

Must move from this:

To this:Branding

Promotion

New & efficient technologies

Novel new products

Toyyibat & Halal

• This day are (all) things good and pure made lawful unto you. The food of the people of the Book is lawful unto you and yours is lawful unto them. … If anyone rejects Faith, fruitless is his work, and in the Hereafter he will be in the ranks of those who have lost (all spiritual good).

Al-Ma’idah5:5

• O you people! Eat of what is on earth, lawful and good; and do not follow the footsteps of the evil one, for he is to you an avowed enemy.

Al-Baqarah 2:168

• From the land that is clean and good, by the Will of its Cherisher, springs up produce, (rich) after its kind; but from the land that is bad, springs up nothing but that which is niggardly: thus do we explain the Signs by various (symbols) to those who are grateful.

Al-A’raf 7:58

• O ye who believe! Eat of the good things that We have provided for you, and be grateful to God, if it is Him ye worship.

Al-Baqarah 2:172

Heavy use of chemicals. Leading to declining yields. Cause of high input costs. Loss of cover protection. Leading to residuals in crops.

Loss of humus Loss of trace elements Compact (inhibit root growth) Erosion Accumulation of chemicals

Carrier of disease (the unrecognized problem)

Contaminated water Poor drainage - floods Carry away top soils Generally afterthought – poor maintenance

This has implications upon what we do and how we do it

“He hath subjected to you all that there is in the heavens and all that there is in the earth: All is from Him. Verily, herein are signs for those who reflect.” Al-Jathiyah 45:12

The Muslim living as a minority in a non-Islamic society will have a

number of problems identifying what items are halal and haram

(forbidden in Islam), without product certification. For example,

gelatine, lard and tallow can be either in a halal or non-halal,

depending upon their source and method of processing. Cross

contamination is a major problem in stores and particularly

restaurants, where pork is also served.

Halal, but is it Toyyibaan?

Its all about value (both industrial and consumer products)

USAAsian Influence

Sesame, wasabi, ginger, noodle and Asian

cabbage

Indian Influence

Fruit, spice and toasted nuts, chutney, quince

pear, roasted coriander, pistaschio,almond &

walnut

Blue and goat cheese

MexicoTarmarind, squash

flowers, huitlacoche (corn mushroom),

portobello mushroom, duck meat

North AmericaCuisines with most potential for growth

Mediterranean influence

Indian influence

Middle East influence

Slow Food

Europe

Fusion style

Thai, Indonesian, Vietnamese influences

Contemporary cuisine

Mediterranean influence

Exotic combinations

South America

Fusion style

Thai/ChineseWestern/ChineseIndonesian/Thai

American/Mediterranean

Italian

French

Asia/Pacific

And in the end why do people buy

a particular product?

Heaven Strategy (Dan Hill 2010)

Emotional Response

Response Rate

Negative Positive

Low

High

More negative/high

response

More positive/lower

response

More negative/lower

response

More positive/highe

r response

The New marketing

Tawhid

Al-Iman Syar’iah Ad-Din

Fard’ain

Fard’ Kifayah

Al-Ilm

Al-Amal

Shu’ra

Adab

Halal Toyyibaan

Musharakah Ibadah Al-Ta’awun

Al-Fasad Amanah Al-Fatah Ummah

Islam is ready to compete

Seek Innovation

through novel

means

This needs a multi-dimensional approach

Microwave Oven Pressure Cooker

Chemicals & Spoons, etc. Glassware

Tissue Culture

• Minimise Production scale to account for initial low sales/production quantities and lower capital investment

• Mobile GMP Facility

• Simplified Technology

Innovation is almost free

Locked into old paradigms of business

The Burger Syndrome

We need to move from here…

To Here …

Needed: Integrated

Competitive Advantage

Its about community empowerment

Southern Thailand

Malaysia

Brunei

Indonesia

Competitive Advantage Through Differentiation

Maximises Benefit from Location as a marketing advantage

Relatively low competitive market segment

Maximises benefits of large local biodiversity

Local culture is utilised as branding

Source of Opportunity

Vision &

Objectives

Networks

Key Stakeholders

Key Activities

Key Resources

Key Capabilities

Technology

Themes

Customer engagement

Channels

Cost Structure

Value Propositions

Revenue Streams

Strategies

Business DNA

Haram (Those things prohibited by

Allah in the Al Qu’ran)

HACCP

GMP

Sustainable environment, community

& business

Community Benefit

Toyyibaan

Clean Healthy

Non-exploitive

Traceable

Supply Chain

Ethical

The Halal/Toyyib supply chain is another example of integrated competitive advantage:

Non-Muslim concepts of ethics, sustainability, and goodness are merging with Islamic concepts

Halal & ToyyibaanLook at non traditional markets

Clean

Healthy

Non Exploitive

No Najis/Haram

Sustainable

Community Benefit

Toyyibaan

See Halal as only part of a whole system of production

Halal does not necessarily mean

Foods

Look at product other than foods

GDP % share of GDPrank country country pop % GDP World Islam

1 Indonesia 866 88.0 761.7 1.3 13.92 Turkey 572 99.8 570.9 0.9 10.43 Iran 562 98.0 550.4 0.9 10.14 India 3,611 13.4 483.9 0.8 8.95 Pakistan 393 97.0 381.6 0.6 7.06 Saudi Arabia 338 100.0 338.0 0.6 6.27 Egypt 304 90.0 273.2 0.4 5.08 Bangladesh 304 83.0 252.6 0.4 4.69 Algeria 233 99.0 230.9 0.4 4.2

10 Russia 1,589 12.5 198.6 0.3 3.611 Malaysia 290 55.0 159.6 0.3 2.912 Morocco 138 98.7 136.5 0.2 2.513 France 1,816 7.5 136.2 0.2 2.514 China 8,859 1.5 132.9 0.2 2.415 US 12,360 1.0 123.6 0.2 2.316 UAE 111 96.0 106.8 0.2 2.0

Muslim

The top Islamic economies

rank Country GDP pop GDP1 US 12,360 1.0 123.62 China 8,859 1.5 132.93 Japan 4,018 0.0 1.64 India 3,611 13.4 483.95 Germany 2,504 3.7 92.66 UK 1,830 2.7 49.47 France 1,816 7.5 136.28 Italy 1,698 1.5 25.59 Russia 1,589 12.5 198.6

10 Brazil 1,556 0.1 1.611 Canada 1,114 1.9 21.212 Mexico 1,067 0.1 1.113 Spain 1,029 1.5 15.414 Korea, South 965 0.2 1.915 Indonesia 866 88.0 761.716 Australia 640 1.5 9.6

Muslim %

Muslim share of population and GDP in major economies

Recent reports indicate that

halal sales in the US are increasing around 80%

per year, where a number of

new retail outlets specializing

in halal products are opening

up. A&P, Loblaws, Food Basics

and Wal Mart are allocating

space for halal products in

their stores

EU is approximately 30% of the World Market for foodIt has great regulatory influence on the rest of the World

Risk Assessment

Hazard Identification Hazard Characterization Exposure Assessment Risk Characteristics

Risk Management

Risk Evaluation Option Assessment Option Implementation Monitoring and Review

Risk Communication Improve quality of consumer information To facilitate healthier food choice

Declaration of GMO Materials Nutritional Information Eliminate Misinformation Scientifically Substantiate

Claims

General Provisions

Personnel & Facilities

Seeds & Propagation Materials

Cultivation, Soil & Fertilisation, Irrigation

Harvest

Primary Processing

Packaging

Storage & Transport

Equipment

Documentation

Self Inspection

Quality Assurance

EurepGAP

Although widely respected internationally

The present Halal Certification is only related to ingredients and processing environment

New infrastructure is not enough to Move the region to a new paradigm in

Agribusiness

Infrastructure is easily replicated

A new competitive paradigm is not

Healthy foodArguably the fastest growing sector of the food market.

Ethnic Foods

Ethical & Environmental

Safety Issues

Mad Cow Disease and Avian Flu

Halal food Assurance

auditing to verify halal compliance from the farm to the plate

Islam is a way of life based on modesty, justice and religious practices, whichCreates a unique set ofProduct and service needs

The concept of HalalGAP willProvide this

Integrated competitive Advantage

to the region’s Agribusiness

We have already been

highly innovative

Essential Oil

Production

Trading

Flavour & Fragrance

Compounding

End Product

Manufacture

Wholesaler

Retailer

Consumer

1.0 1.6 2-3.0 (6-9) 2-2.5 (18-24)

Relative and (Absolute) Value Added Through Chain

1.1-1.2 (19.8-28.8)

1.2-1.4 (23.76-40.32)

The Essential Oil Value Chain (Flavour & Fragrance Industry)

$ Cost

$ Return

Deg

ree o

f P

rocessin

g

Final Product Form

Selection of Crop

Trials

Propagation

Land Preparation

Planting, Maintenance &

Irrigation

Harvesting & Extraction

Product Development

Final Product

Crop & Project Failure

No Return

Co

mp

os

t & M

ulc

h

Bio

fuel

An

ima

l Fe

ed

Cru

de

Es

se

ntia

l Oil

Org

an

ic A

gro

-

pro

du

ct

Co

sm

etic

&

Aro

ma

the

rap

y

Nu

trice

utic

al

Ph

arm

ac

eu

tical

Conceptual Value Added Processing Options with Revenue and Cost

Implications

Finding New Business Models

Co-innovation

Systems Agriculture Agricultural professional stance that emphasizes

farming as a social practice that uses technology

Participatory Action

Research Emphasis on co-learning

through farmer and community participatory

research and empowerment programs

Traditional Academic Based Research

Based on developing technology and principals,

models and possible practices

Farming Systems Research

On-farm technical problem diagnosis and adaptive

research

Shift from theoretical and

technical to community

collaboration and problem specific

research

General Local

Technical

Social

Domain Focus

Dis

cipl

ine

Ori

enta

tion

Opportunities are a product of our mind and these visions can become the design of our

future with skilful and creative utilisation of scattered existing and forgotten resources to

create great unimagined synergies. This is the true power of creativity that God has

given humankind.

Overseas Halal Food Product

Overseas Halal Food Product

Still many philosophical issues to resolve

Blue Ocean StrategyHow Quickly can a

Turn into a red ocean strategy?

Thank You