You might not think of Russia as a key market for halal food yet between 15-20% of Russia’s 145 million population identifies as Muslim

That is a lot of mouths to feed. Indeed, demand for halal products has been growing around 30-40% since 2011, so look out halal food exporters: you may have just found your new market.

Halal food in Russia: a growing sector in a big market

Halal food in Russia is a multi-billion dollar market Approximately 20 million Muslims make Russia home. 2 million live in Moscow alone. With figures like that, you can expect the halal food sector, covering meat, dairy products, and other items consider fit for human consumption under the tenets of Islam, to be big. And it is. In 2014, the market was worth in excess of $35 billion.

Meat, similar to many other halal nations, is one of the market’s key drivers. Global Meat News suggests sales of halal meat will grow at an average rate of 15-20% per year until at least 2026. By this date, this sector should hold a valuation in the region of $1.1 billion. 1.3 million tons of halal meat is produced annually in Russia.

There are over 200 certified producers in the country, with certification awarded by the International Centre for Halal Standardisation and Certification of the Russian Mufti Council. Russian food producers who do not specialise in purely halal produce are tailoring their factories to cope with the ongoing increase in demand for halal food.

In majority Muslim regions, such as Chechnya, Ingushetia, and Dagestan, a lot of food production is already halal. One chicken plant, Chelny-Broiler, located in Tatarstan, gives over 13% of its annual output to halal products, for example.

Halal food: not just for Russian Muslims

According to Andrey Zhuralev of regional supermarket chain Bahelte, which has stores almost exclusively in Tatarstan, only 70% of customers who buy halal meat from his stores are Muslim. The remainder come from Russia’s other myriad religious followers and ethnicities. Products labelled as halal are seen as being of a slightly higher quality compared with non-halal alternatives.

Food labelling, is a top priority for Rosselkhoznadzor, Russia’s chief food safety organisation, so products that are halal-certified have extra heft behind them. An explanation behind this market trend is the fact that halal producers must follow strict guidelines regarding how animals are slaughtered, prepared, and packaged prior to consumption.

A product labelled “halal”, in theory, will have been rigorously produced in an expert environment — something which resonates with Russians nationwide.

However, this is not without its cost — literally — as halal food can increase production expenditures by up to 40% for manufacturers.

This in turn drives up retail prices. While this might bad news for your average Russian consumer, it is good news for exporters. By providing internationally-sourced halal products at a lower pricepoint, international businesses hold the potential to score some major wins in Russia.

Surprisingly, some of Russia’s biggest supermarket chains do not stock enough halal food products. Magnit, Auchan and Pyaterochka are experiencing halal shortages, causing consternation amongst consumers — particularly in the European side of the country. Even so, it appears Russia’s halal producers are looking overseas to sell their products.

Russia gears up halal sector for export

Despite domestic demand for reasonably priced, quality halal food and drink products, Russia is pivoting its manufacturing efforts away from domestic consumers. It appears the future of the Russian halal food industry lies with exports.

The devaluation of the rouble is partly responsible for this, allowing Russian exporters to grow market shares in the Middle East and North Africa. Southeast Asia, home to over 230 million Muslims, is also on Russia’s export radar. Russian supplies of halal poultry to the Arab-Muslim world are expected to reach 20,000 tons a year going forward.

For context, Russia exported 15,000 tons of poultry to these markets in 2015. More halal production sites in the pipeline A clutch of halal-specific factories and manufacturing sites are popping up around Russia. Not only that, but major existing producers are also seeking accreditation at their existing production bases to turn them into halal-certified premises.

For instance, a new halal turkey farm is set to be commissioned in Ingushetia. Investment at the site is set at around $61 million, and promises to have a production output capacity of 10,240 tons of meat annually.

Elsewhere, Chelny-Broiler opened a new meat processing plant in Tatarstan in November 2016 with a capacity of 49,500 tons a year. Investment in this facility totalled around $50 million. These massive levels of investment are symbolic of the growth of halal produce across Russia.

And, with exports quickly taking a leading role in the sector’s activity, it suggests factories, slaughterhouses, and other production sites, will have to upgraded with cutting edge equipment and machinery. As an avenue towards entering Russia’s halal food and beverage sector, this could potentially be very lucrative.

Foreign manufacturers of production equipment, especially those located in Muslim-majority nations with prior preparation experience, have the potential to enjoy significant market presence in Russia. Either way, desire for halal products is growing in Russia, and will continue to grow into the next decade.

Exporters, either of foodstuffs or production machinery, are well poised to expand their Russia-centric operations along with it. Of course, to really make an impact on the market, they need to find the right partners...