Licence To Operate measurement critical for growing sales in Muslim markets in 2020!
The Middle East and Southeast Asia are amongst today’s fastest growing consumer markets for food, cosmetics and pharmaceuticals. All major brand owners want to serve these markets.
However, doing business in Muslim markets means next to food and product safety also meeting halal requirements. Halal requirements for food and other consumer goods often comes with a halal certification of the product and its manufacturing facility, which is audited and certified by a so-called halal authority or halal certification body. Over the past years new halal standards have been introduced as well as existing standards upgraded in Muslim markets in the Middle East and Southeast Asia. This means higher requirements for industries in terms of ingredients used, production methods allowed, as well as the actual organisation of its supply chain (network).
Why does your licence to operate matter?
The halal status is important for Muslims as the consumption of halal is mandatory. What several halal incidents and halal crises with big brand owners over the years have taught us, is that halal is highly sensitive in nature that can easily damage the reputation of a company. Therefore, next to obtaining a halal certificate a solid corporate halal reputation management is needed for building and maintaining a significant market share in Muslim markets.
When doing business in Muslim markets, corporate halal reputation is an important strategic asset. A good corporate halal reputation is crafted through a solid halal authenticity, trustworthy halal certification body, right messaging by both companies and supply chain partners, and positive messages by external stakeholders.
The complexity of serving multiple Muslim markets as a producer or brand owner is that the halal ecosystem of a country is dynamic and continuous changing, directly affecting your licence to operate in each country you are operating in. A declining licence to operate could be associated with either a negative perception of the company and/or deteriorating compliance with halal requirements in a particular country. In the worst case your company is (temporarily) stripped of its halal certificate, manufacturing permit, or import permit. Hence, licence to operate issues directly impact corporate sales and market share (which is not easy to repair).
How to protect your licence to operate?
Companies serving Muslim markets need to earn their licence to operate. The licence to operate is the ability to anticipate halal market requirements, based on the company’s halal authenticity, halal certification body used, messaging by both companies & supply chain partners, and messages by external stakeholders. In other words, an alignment of your corporate halal reputation with your market requirements.
In protecting your licence to operate internal and external alignment is essential. Internal alignment within an organisation and supply chain requires intelligence on gaps, information sharing in your supply chain, training of staff & supply chain partners, and tracking the progress of alignment. External alignment with external stakeholders requires amongst others market intelligence on the public opinion and a mix of strategies and tactics to achieve total stakeholder support.
It is therefore essential to measure and track your licence to operate in Muslim markets you are operating in. LBB International has developed a Licence to Operate (LTO) rating, providing a powerful tool for growing and protecting your sales in Muslim markets. After all, what gets measured gets accomplished.