The ROI and Costs of Halal Certification

There is a unique dynamic in halal certification. Quality and regulatory staff are tasked with obtaining quotes, applying for halal certification, and maintaining compliance. The sales and marketing team reap the benefits of increased sales. There is often a lack of complete analysis of what AHF halal certification returned for the company.

This AHF insight will delve into the cost-benefit analysis with some real-life examples.

How does halal certification make cents?

There is both a macro and micro economics approach to this question. As the macro benefits are often touted, we will focus more on the tangible micro benefits.

Supply Chain Network Effect

You might not know this, but most prominent global companies have some form of halal certification in place. When a company becomes certified to increase the integrity of its supply chain, they look for halal-certified companies to work with. For example, AHF-certified companies are encouraged to work with suppliers that are already halal certified to increase the halal quality of their supply chain. Thus the network of halal-certified suppliers becomes more valuable.

By foregoing halal certification, you may miss opportunities to work with companies that have obtained halal certification.

Increased Recurring Revenue

Today, most retail shelves do not carry a plethora of halal-certified and labeled finished goods, which creates an asymmetry in supply and demand. Unequivocally, halal compliance is the most significant influence on a halal consumer’s purchase of a consumable. With 2 billion halal consumers globally, this is a massive opportunity for brands to build affinity with halal consumers. Once customer loyalty is built, the consumer will likely continue to purchase that product as it saves them the time to determine if a non-certified brand is halal.

Global Markets

Halal certification is a federal mandate for many countries such as Indonesia, Malaysia, UAE, and other countries. The scopes of the certification mandates are now expanding beyond meat and poultry to cover many different types of consumables.

Agnostic of the federal requirements, for the last four decades, companies with operations in Muslim majority countries often require their suppliers to have halal certification as it is integral to the importer’s halal program. For example, if you are a food manufacturer in Malaysia and you have halal certification from JAKIM, you will likely require your suppliers to obtain certification. It is often more efficient for these companies to work with already certified suppliers.

The Macro Outlook

The macro developments of the halal market are significant. With one in every four consumers globally adhering to halal, it is the largest untapped market in the world. Worth nearly $2 trillion, the halal food and beverage segment is growing between 4-6% annually. Less than 20% of all manufacturers worldwide are halal-certified. With the halal economy being a key strategic point for GPD growth for several countries, AHF sees tremendous opportunities for companies to enter global markets.

How much does halal certification cost?

There a few factors that go into the cost of halal certification such as:

1. Halal risk factors
2. Number of manufacturing plants
3. Complexity of products (from a halal standpoint)
4. Number of products
5. Manufacturing location
6. Type of certification (private label, manufacturer, distributor, etc.)

To learn how much halal certification will cost your company, please obtain a quote here.

The ROI

The average AHF client receives 11x on their investment in halal certification.

This calculation does not include the increased value from brand awareness and the resulting equity value, though it is of substantial value.

How does this break down? Here are a few real examples from companies that invested in halal certification and their ROI.

International Exporter

A global trading company used AHF halal certification to begin exporting products to Singapore. The export product was a regulated commodity and required US halal certification from a foreign accredited halal certification body (FHCB) accredited by MUIS, the authority in charge of administering religious affairs. AHF worked with over 10 production facilities across the United States for halal certification and eventually put together a cohesive halal compliance program across the facilities. The company invested less than $300,000 in halal certification and generated over $65,000,000 in new halal sales.

Natural Ingredient Supplier

An ingredient supplier invested less than $5000 in halal certification in 2018, registering their facility and certifying four products. After a thorough analysis of their supply chain, facility, protocols, programs, and products, AHF issued a Halal Production Facility Registration and a Halal Product Certificate for four products creating a complete halal program. With their halal certification program, they could market their halal program to obtain more clients globally, and soon, AHF began receiving requests for product additions. Within a few years, they had more than 40 halal-certified products and generated over $2,675,000 in sales of halal products. The company continues to add halal products and has experienced tremendous growth overall.

Commercial Caterer

A small commercial caterer invested less than $3000 in AHF halal certification. Once they completed the certification process by successfully passing the audit, they began marketing using Halal Production Facility Registration to market their facility as halal. They began bidding on city contracts for halal meals, and over a year through halal certification, they generated over $1,000,000 in halal contracts.

Over a year through halal certification, they generated over $1,000,000 in halal contracts.

How to Obtain AHF Halal Certification?

You can obtain halal certification by applying here or contacting a certification specialist through the contact form below.