Incredible Potential: Exploring Opportunities in the Halal Food Supply Chain in Saudi Arabia

At the World Halal Summit of 2024 held in Istanbul, Assistant Professor Doctor Aldin Dugonjic, also Chief Development Officer of The Bridge, was invited to share his expertise and unveil the incredible potential of Saudi Arabia's halal food supply chain. In his outstanding presentation, Dr. Aldin enlightened expert guests and business leaders from all over the world regarding the multitude of initiatives undertaken by the Kingdom which support local food production, drive an increase in luxury tourism and ultimately position Saudi Arabia as The Crossroads of the Muslim Gastronomic World.

Read on to find out what one of the most erudite halal experts in the world, Assist. Prof. Dr. Aldin Dugonjic, had to share with the business, governmental and academic leaders of this century at last year's summit!
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Initiatives Drive Growth and Opportunity

The Kingdom of Saudi Arabia, the 13th largest country globally by land area, is not only known for its vast desert landscapes and oil reserves but also for its rapidly evolving economy, strategic initiatives, and young population. Nevertheless, food imports are still large in the country, with about 80% of required food being imported, mainly from European states. In response to this dependency, the Kingdom has developed the National Strategy for Industry 2030, which has set the roadmap for achieving self-sufficiency in food production, localising 85% of the national food requirement, and simultaneously building capacity in halal food processing and manufacturing, by scaling up production across key food categories like dairy, poultry, produce and halal meat.

Through the upliftment of the industrial standard of the country, this project will be contributing to the broader and more revolutionary Vision 2030 that is aiming at the increase of non-oil export of the Kingdom from 16% to 50% of GDP, eventually making Saudi Arabia the reference point of halal food exports in the world. Through these unique developments, the Kingdom of Saudi Arabia offers compelling opportunities in the food industry, particularly in response to the rising local and global demand for halal-certified goods.

The Organisation Ensuring Gastronomic Excellence

The Saudi Food and Drug Authority (SFDA) is among the main organizations supervising the food supply chain, imposing high standards both from local producers and foreign exporters who want to be present in the Saudi market.

For foreign enterprises the regulation of the SFDA represents an access valve to the food market in Saudi Arabia. Companies need to register with the SFDA (usually via a local distributor) before they are allowed to import foodstuffs to the Kingdom. For companies working on categories that are considered sensitive such as meat and meat products, seafood, and honey, there is a series of specific requirements to be fulfilled. For products in these categories, importers are required to possess an SFDA-approved certification and the products must be compliant with the required strict standards of halal as defined in Islamic law. This comprehensive halal certification process is a cornerstone of the SFDA’s regulatory framework, assuring consumers that imported food products meet Saudi Arabia’s high standards.

The SFDA also requires food importing companies to check the background of their local suppliers, including verifying that they are validated and possess proper current licenses as recognized by the SFDA. This new layer of regulation offers governments increased control and responsibility in the food supply chain. Through reinforcing quality benchmarks and halal adherence, the SFDA effectively increases the entry cost for global manufacturers, and in turn, this leads to an increase in domestic production and assists the goals of Vision 2030 in localization.

The Made in Saudi Initiative

In order to encourage growth of local food production, the Saudi Export Development Authority (SEDA) set up Made in Saudi, a programme aimed at facilitating the development of the Kingdom's food manufacturing industry. Made in Saudi works towards achieving the economic diversification goal of Vision 2030 through both promotion of Saudi brands and export expansion. Through this program, local companies are encouraged to adopt high-quality production, branding, and marketing approaches that meet global criteria, making the contents of Saudi products competitive offerings on the global market.

In addition, the Saudi government pushed a series of fiscal incentives to promote local food production. Among those incentives are tax relief, subsidization, and support for public-private partnerships, which have been used to support the development of food production facilities in the Kingdom. The ultimate goal is to develop a scalable local food ecosystem that minimizes dependence on imports and, simultaneously, satisfies the increasing market demand for halal-labelled products. Through such a process, it is the Kingdom's objective to build a strong halal food production infrastructure which will not only cater to local demand, but also enable Saudi producers to market halal products across the globe.

A New Direction for Foreign Direct Investment (FDI)

Although these advances have been made, several gaps in local food production still exist. Saudi Arabia still depends on imports for some food items, such as red meat and seafood, due to insufficient domestic production capacity. These omissions point to important opportunities in the halal food market, particularly in augmenting the ability to manufacture in-demand products locally. With the Kingdom continuing to move forward on Vision 2030, there is a continuous effort to generate investments in food manufacturing infrastructure, collaboration, and technological advancements to close the self-sufficiency gap.

Saudi Arabia’s Vision 2030 blueprint seeks to diversify the nation’s economy and reduce its dependency on oil by making the Kingdom a global investment powerhouse. Foreign direct investment (FDI) is one of the essential foundations on which these are based and the involvement of large investor countries illustrates the trust held in the economic future of Saudi Arabia.

According to the Saudi General Authority for Statistics, the United Arab Emirates leads with 40.5 billion USD in FDI, followed by Luxembourg at 27.2 billion USD, and France at 17.3 billion USD. Other major investors include the Netherlands (17.1 billion USD), the United Kingdom (16.8 billion USD), and the United States (15.5 billion USD). This significant FDI inflow points towards Saudi Arabia's economic attractiveness and provides a springboard for the Vision 2030 goals of diversifying the economy, creating new sectors, and improving the dependency ratio.

The Essential and Growing Saudi Sectors

Certain food categories in Saudi Arabia are projected to see substantial growth in the coming years, offering lucrative investment opportunities for both domestic and foreign businesses. The top growth products in the Kingdom include dairy products, poultry, processed meats, seafood, vegetables, dates, honey, nuts, packaged meals, and beverages. All of these products have the potential to make a real impact in the halal food industry, both in domestic and export markets in search of halal-labelled products.

Dairy and poultry products in particular are already well established in Saudi households and can readily utilise high levels of self-sufficiency. Growth in processed halal-certified meat, prepared meals and drinks presents new avenues for catering to a wide range of consumer requirements, in particular as the Kingdom’s younger population requests convenience, alongside traditional fare. Furthermore, with an expanding focus on packaged and processed foods, there is a potential for Saudi companies to cater to emerging trends in convenience foods while maintaining halal standards.

Since the halal food market's growth is not limited to Saudi Arabia, it enables local producers to immediately expand internationally into the global halal market which is worth more than 1 trillion USD today. Utilizing its geographic and cultural strengths, the Kingdom of Saudi Arabia is set to become one of the major halal-certified exporters, targeting Muslim-majority countries in the Middle East, Asia and Africa, as well as the expanding Muslim markets in Europe and North America.

The Made in Saudi initiative also enhances this potential by advocating for locally produced goods from Saudi brands to conform to the requirements of international quality and the highest halal standards. This branding campaign is designed to improve the international standing of Saudi products, creating a competitive advantage for local businesses in the world halal market. Together with the commitment of the government to infrastructural development such as ports, logistics network, and export functional industries which simplify the logistics chain, export products from the Kingdom of Saudi Arabia can now easily and effectively reach international markets.

Gastronomy at the Heart of Tourism

Through the conception and rise of Saudi Arabia's ambitious giga-projects, including NEOM, Qiddiya, the Red Sea Project, and Amaala, Vision 2023 aims to transform the Kingdom into a major tourist destination and global business hub. According to the large-scale plans of these projects, the Kingdom of Saudi Arabia is expecting to experience an enormous increase in demand for food products including halal-certified food for both the local and international visitors and residents.

All giga-projects currently underway taken together constitute an estimated multi-billion-dollar investment in infrastructure, starting a chain reaction through many sectors of the economy which will significantly affect the food industry. For local halal manufacturers, these advances create a larger market and provide countless opportunities for collaboration with the big names in the international hotel industry, major food service companies, and global distributors to satiate the growing demand for halal food at tourist-attractive locations.

The Promise of the Future

The forecasted increase in halal food demand from the tourism industry provides various chances to local entrepreneurs and foreign investors. Saudi halal food producers are now able to form long-term supply agreements with local hotels, resorts and entertainment centres, providing both stability and growth in their businesses. In addition, food innovation investments, production technologies, and internationally directed marketing will drastically increase the Kingdom's competitiveness in the global halal tourism industry.

As a key part of the current halal food supply chain, we at The Bridge strive to source the best gourmet products locally first before looking out towards the rest of the world. Following the clearly defined road map of Vision 2030, we hope to assist in transforming this industry to fulfil local needs and also establish Saudi Arabia as a global halal food homeland.

All that said, the halal food supply chain of the Kingdom is a dynamic and rapidly expanding system, which holds a huge potential for global economic impact. The viability of the country's halal food policy is inextricably linked to ongoing investment in infrastructure, regulatory measures, and public-private partnerships, all of which will allow the Kingdom of Saudi Arabia to optimize its potential as a market leader for halal food products and to realize its vision for economic diversification.
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About Assist. Prof. Dr. Aldin Dugonjic

Dr. Aldin Dugonjic, Chief Development Officer and Halal Advisor at The Bridge, Saudi Arabia, is a distinguished expert in halal standards and certification with extensive experience in quality management systems. With a Ph.D. on the "Halal industry's contribution to strengthening the economy, with a special focus on the food industry and tourism," he has held key roles, including CEO of the Center for Halal Quality Certification in Croatia along with memberships in various international standardization bodies. Recognized as a leader in the Islamic economy, Dr. Dugonjic has authored numerous publications and led initiatives like World Halal Day Croatia, advancing the understanding and implementation of halal practices globally. His contributions have earned him widespread acclaim, including inclusion in the ISLAMICA 500 and membership in the International Academy of Science and Arts in Bosnia and Herzegovina.