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Branding of Halal Products in the Poultry Market

Research by the Branding Company Labelmen
Poultry is one of the most capacious, promising and strategically important segments of the global food market. According to the International Independent Institute of Agricultural Policy (MNIAP), poultry is leading in the structure of global meat production with a share of around 37%. The long-term potential for growth of the poultry market is due to growing population and increasing disposable incomes.
According to the Russian Federal State Statistics Service (Rosstat), growth in cattle and poultry production for slaughter equalled 4.6% in the first 9 months of 2017, and the volume reached 9.6 million tons in live weight. Poultry farming remains the driver of Russias meat industry in terms of both the output volume and growth rates the increase in production volumes in physical terms in JanuarySeptember 2017 amounted to 6.9% against the similar period of 2016. For comparison, according to the Food and Agriculture Organization of the United Nations, global poultry production in 2017 amounted to around 118.2 million tons, which is 0.9% higher than the year before (117.2 million tons).
High rates of growth in domestic production have been maintained for several years in a row. Against the backdrop of declining disposable household incomes over the past 4 years, this led to primary saturation of the market even of the product as democratic and affordable as poultry. In 2017, a decline in prices for poultry was observed in Russia, which correlates with the situation in the global markets.
Poultry is a dynamically growing segment of the Russian food market. According to the expert-analytical centre of agribusiness AB-Centre, consumption of poultry in the country has increased two-fold during the past 10 years. Despite the unfavourable price dynamics in 2017, the capacity, long-term growth rates, marginality, and considerable long-term potential of the poultry market make it highly attractive for market players. According to marketing studies by Labelmen, the following changes have been taking place in the market in 19902017, overlapping each other:
* domestic frozen products instead of Bush legs (poultry leg quarters from the US);
* domestic chilled products instead of domestic frozen products;
* branded goods instead of non-branded goods;
* clearly focused brands and trademark portfolios instead of mass-marketing brands.
Whereas in the 1990s, consumers were satisfied with frozen Bush legs supplied from the unknown as long as they didnt smell of fish in addition to their low price, by the end of the 2000s such qualities as safety, naturalness, freshness, package neatness had become the mandatory, hygienic selection criteria. In the 2010s, branded goods have been getting increasingly widespread and popular. By late 2010s, most market players have developed product brands and market positions, and their popularity varies from region to region, which corresponds to the fragmentation of the market itself. Umbrella mass-marketing brands of standard products, such as Miratorg (Miratorg Agribusiness Holding), Prioskolye (TD (Trading House) Prioskolye CJSC, Belgorod region), Petelinka (Cherkizovo Group PJSC), Troekurovo (Prodo Group), Pervaya Svezhest (First Freshness) (Ptitsefabrika (Poultry Plant) Elinar-Broiler LLC, Moscow region), Belaya Ptitsa (White Bird) (Belaya Ptitsa Agricultural Holding), and Yasnye Zori (Clear Dawns) (BEZRK-Belgrankorm Agro-Industrial Holding) are already widespread in the market. This encourages players to differentiate their offers, as in terms of basic characteristics (quality, naturalness, price), positions are being evened out. The only natural solution for players in these conditions is to look for vacant and relatively capacious product sub-segments. Halal products are one of them.
Rapid development of the halal product segment is due to stricter requirements these goods have in terms of such basic product characteristics as naturalness, safety and quality, which matches the current stage of market development and the evolution of consumer preferences. Whereas Russians are still far from characteristics such as organic food or environmentally friendly, demand for real naturalness and safety has become an integral element of food product selection.
Halal poultry is produced in accordance with the canons of Islam and is primarily aimed at Muslim consumers. According to The World Factbook, the global Muslim population is almost 1.8 billion, which is about 23% of the worlds population. According to experts at the Tatarstan Investment Development Agency, the global market of halal foods is estimated at approximately $ 1.173 trillion.
Russia has no official statistics of religious adherence. According to sociological studies by Levada-Center and the Public Opinion Foundation (FOM), carried out in the period from 2012 to 2017, 78% of the Russian population profess Islam. The volume of the Russian halal food market is estimated at around 34 billion rubles by the Halal Standards Committee of Russias Spiritual Governance for Muslims.
In assessing features of halal product branding, it is important to take into account the fact that the poultry market on the whole, being in the initial stage of consolidation and branding, depends upon players overall branding strategies. For instance, players developing brand portfolios in the poultry category (Cherkizovo, Prioskolye, Resurs (Resource) Group, Prodo) have been mainly dedicating a separate trademark for the halal segment. Companies focusing on developing one umbrella brand (Miratorg, BEZRK-Belgrankorm, Belaya Ptitsa) produce halal goods as a product line within the key brand. Companies located in Muslim regions (Agrosila Holding, Ravis Agricultural Holding) have been developing halal products under umbrella brands that are already historically associated with this category by consumers.
At the moment, development of halal products as a product line of an umbrella brand remains the most widespread solution in the sample. This is largely due to historical reasons (the company being located in a Muslim region, the companys focus on the development of one product brand). It should be noted that in the medium term, the costs of creating and launching a new halal brand are low in comparison to resources required for its further development and promotion one-off costs of the former are 310 million rubles on average, whereas subsequent promotion and communication cost at least 10 million rubles annually. Therefore, an appropriate choice of the optimal branding model for halal products requires taking into account both medium-term and long-term outlooks. In this regard, 2 factors matter the most planned sales geography and planned market position (leader/challenger/niche player).
For regional producers having long-term goals for development in domestic Muslim regions, the economy strategy of promoting halal products under an umbrella brand is optimal. The strategy involving at least one specialised halal product brand is more relevant for companies that have higher ambitions.
There is no doubt that intense dynamics of the poultry market and the presence of strong and ambitious players in it promise a lot of bright and memorable branding events in the coming years, as opposed to the lethargic adjacent markets of chicken eggs and beef. The fashion for halal foods will reach its peak eventually, as it happened to the markets of convenience meats, juices, pet food and others earlier. Players who will be first to create strong halal product brands will enjoy long-term competitive advantages over other market participants.

Irina Vedenetskaya,
General Director
Branding Company Labelmen

Dmitry Golovnev,
Marketing Director