UAE: HARVARD STUDY ANALYSES AL ISLAMI FOODS

Dubai, 24 Jumadil Awwal 1436/15 March 2015 (MINA) –  Harvard Business School recently published a new case study about Al Islami Foods, the leading Halal food company in the Middle East, analyzing company’s journey towards a model Halal organisation under the light of Dubai’s ambitious Islamic economy initiative.

From Harvard Business School, Professors Lynda Applegate, David Bell and researcher Michael Norris prepared the case study, halalfocus.net  quoted by Mi’raj Islamic  News Agency (MINA) as reporting.

The Harvard team was briefed by Al Islami about Halal food production and the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Prime Minister and Vice-President of the UAE and Ruler of Dubai, to establish UAE as the capital of the world Halal economy.

Saleh Abdullah Lootah, Managing Director, Al Islami Foods, commented, “We are delighted that reputed business institutes, such as Harvard Business School, are attracted by Dubai’s aim to make Dubai the global hub of Islamic economy. It has been tradition of Al Islami to welcome universities and academics to examine the growth of Al Islami, the halal procedures applied across the organisation and how Dubai is positioning itself as the centre of global halal market”.

He added, “Not only a method of slaughtering, Halal encompasses everything that goes into a business. It is a set of embedded values that influences our decisions. This case study is another testament to Al Islami’s successful model of Halal. And we cannot mislead and mistreat suppliers and employees. If we do, our products will not be Halal.”

Case study analysts predicted the global value of the halal food market to hit $10 trillion by 2030. Malaysia, whose population was more than 60 per cent Muslim, exported nearly $10 billion worth of halal food products in 2013, making it the largest halal exporter in the world. Global halal trade was much lower than global trade in, for example, kosher products. For each halal product available in an American grocery store in 2013, there were 86 different kosher products. Al Islami reported that U.S. Muslims spent about $16 billion on kosher products annually because similar halal products were not available.

Saleh Lootah attributes the growth of Al Islami to its founder Hajj Saeed Ahmed Lootah, and to the leadership of Dubaias saying, “Under the directions of its founder Hajj Saeed Ahmed Lootah, Al Islami is a business that treats its employees like members of a family. We work together to promote Islamic principles in the modern world. Under the visionary leadership, Dubai is establishing itself as a hub of Islamic Economy that encourages us to think globally about Halal manufacturing.”

Global Poultry Market: Major Sources & Market Share

The study shows figures from 2014. It indicated that more than half of the world’s poultry production came from Brazil, the United States and China. Those three and the European Union countries accounted for almost 60% of global chicken consumption. Worldwide, more than 58 billion chickens were slaughtered for human consumption annually.

Further processing could be as simple as plucking, cleaning, and packaging for sale as a whole chicken, or as complicated as producing breaded chicken nuggets. Only a small percentage of poultry products were exported worldwide. Of the 6%-10% of global poultry production that was exported annually, the major portion was taken by ‘freshly chilled’ products rather than the ‘frozen’ products that made up most of Al Islami’s sales.

Latest poultry production trends in the market had increased the demand in Western nations for free-range and/or organic products because consumers believed that improved poultry living conditions, feed-stocks and reduced use of antibiotics led to a higher quality chicken. Whilst, Al Islami reports that these trends had not yet come to the UAE and believed that the consumers would be open to trying Halal products for the same reasons.

The company was in the midst of refocusing its product line on Halal chicken products. Trimming the product line other than chicken allowed the company to build stronger relationships with its biggest chicken suppliers around the world.

The company had transitioned away from the Danish chicken suppliers they used in the 1990s as the global poultry slaughterhouse business consolidated in Brazil.

Saleh Lootah says “ slaughtering without stunning is a minor part of the business for all of our Brazilian suppliers. We have done a good job of educating our suppliers about our ‘Real Halal’ process, but implementing this process at supplier end naturally costs us more. We cannot sacrifice quality for lower costs. Our customers will not allow that. So we have to sell at a premium price point while working hard to keep costs down in all other aspects of the business.”

At Brazilian slaughterhouses, Al Islami’s poultry is slaughtered by hand. Workers are positioned on an assembly line and use sharp knives to cut chicken’s throats as the chickens are moving along, hung upside-down by their feet on a conveyor belt. Chickens are not stunned before their throats were cut; they have brisk movements after the cut, which speed up the process of draining their blood out. Draining the blood out is a required part of Halal slaughtering. All of the slaughtering is overseen by an Al Islami inspector who stands a few feet behind the assembly line.

Al Islami’s chicken products were shipped frozen on container ships. Middle Eastern consumers preferred to buy frozen meat products; more than 80% of chicken products sold in the UAE in 2014 were frozen. In addition, UAE consumers prefer to buy whole chicken rather than parts or processed products. Whole chicken line made up about 65% of UAE chicken sales in 2014, chicken parts making up 25% and processed products make up about 10% of sales.

On Warehousing and logistics front, Al Islami had to undertake a significant project to integrate the warehouse management system utilized by a global logistics operator into its own SAP enterprise platform.

“We are committed to our customers that we have our whole supply chain under control to ensure everything is halal and we have to make good on that promise. Our inspectors, at chicken sources, are highly trained in Al Islami’s Halal process and dedicated to their job.” Saleh Lootah concluded. (T/P010/R04)

Mi’raj Islamic News Agency (MINA)