Note to Marketing Managers and Business Executives: three new words to learn:
The Halal Economy – while Economics is the study of supply and demand and its implications for the use of resources, production of goods and services, growth of output, and welfare over time, the Halal economy is the study of supply and consumption of products and services that is Sharia compliant or meets Islamic values and standards of hygienic purity and wholesomeness.
Halal Industry – a given industry that provides products and services that meet halal standards or is Sharia-compliant.
Halalonomics – a branch of knowledge concerned with producing, consuming, and transferring wealth while being Sharia-compliant or meeting Islamic standards regarding purity and wholesomeness.
Back on May 12, 2021, I posted the article Marketing to Muslims, Part 2 of 2 in which I stated, "To sell products to Muslims, vendors must ensure the products are either halal (permissible or lawful) or Sharia compliant. The very first step for a non-Muslim is to make their product meet these standards. You can have the best product globally, but Muslims will not buy it if it is not halal or sharia-compliant. On the other hand, if you have a lousy product and it is halal or sharia-compliant, Muslims still won't purchase it because they are discriminating consumers like the rest of us. Meeting the standards for halal or being sharia-compliant is just the first step in the process. The vendor still must have a good product that meets the customer's needs."
"Halal" is an Arabic term that means "lawful or permissible." Initially, halal pertained to food products, mainly meat. The Qur'an, sunna, and hadith provided directions on which livestock was acceptable for slaughter and how that process was to be handled. This process ensured some degree of hygienic purity or wholesomeness was achieved. Other products, such as financial assets, were to be dealt with with certain restrictions. For instance, The Qur'an, sunna, and hadith do not allow interest to be charged on financial products, and speculation such as derivatives are haram and unlawful. These products must be Sharia-compliant. The term "Halal Economy" has grown to include food products and everything a Muslim might consume. Whether the product is halal or Sharia-compliant, it is part of the Halal Economy.
How Big Is the Halal Economy?
Worldwide, the Halal Economy was measured in 2015 to be $5.3 trillion. Compared to the 2015 worldwide economy of $75 trillion, the halal economy represents a 7 percent market share. Five years later, in 2020, the global halal market was valued at USD 7.2 trillion versus the worldwide economy of $85 trillion. For those five years, the market share increased to eight percent, and the annual compound growth rate was 6.3 percent. Not shabby, considering that most of the growth was in the 57 OIC (Organization of Islamic Cooperation) countries. One market research company forecasts the global revenue for 2028 to be USD 11.2 trillion, with a compound annual growth rate of 5.7 percent.
Seven Main Industries
Halal Food. Halal food accounted for 42.5 percent of the global market share in 2020. Halal food refers to foods and beverages prepared according to the Islamic dietary law's rigorous guidelines. Alcohol, blood, pork, pig by-products, animals that are dead before slaughtering, and animals that are not slain in the name of Allah are all deemed haram or unfit for food. This industry would include suppliers providing packaging and clean utensils according to strict guidelines. Brazil and India are the dominant meat providers in this segment. Nestle opened halal food production facilities in Malaysia and Pakistan. Unilever has opened a halal-certified plant in the Philippines to cater to SE Asia.
Halal Travel. While Saudi Arabia experiences a bonanza in travel each year as pilgrims travel to Mecca, Muslims travel everywhere. On average, their families are more extensive; when they travel, they stay longer, travel further, and partake in the local culture. The EU has allowed UAE nationals to use the Schengen visa waiver plan, and Thailand's Tourism Authority has expanded its tourism marketing budget towards the Middle East. The governments of Singapore and Malaysia consistently seek out Muslim travelers.
Modest Fashion. Nearly a decade ago, it was hard for Muslim women to find modest clothing in department stores that were loose, non-transparent, and able to cover appropriately. Initially, modest fashion arose out of a need for inclusion. And while the styles typically range from higher necklines to longer hemlines, the modest fashion industry challenges us to rethink how we view clothes. In 2016, when Dolce & Gabbana launched their abaya and hijab collection, Forbes called it 'their most brilliant move in years. Nike has also jumped on the modest fashion bandwagon by releasing its modest sports and swimwear collection.
Halal Media & Recreation. This segment has developed three growth industries: video gaming, localized content, and Muslim-themed children's content. Turkey has emerged as the fastest-growing gaming market globally, attracting billions of dollars in new investment. New mobile phone apps catering to Muslim lifestyles continue to be launched. Muslim-themed media is poised for incremental growth as content producers target an audience of 1.8 billion Muslims. Pictured is a cover page from an article about "Halal Dating." Who would have thought Muslims had gone that far?
Halal Pharmaceuticals. Few people know that vaccines are prepared in a pork brine growth gel. Many Muslims refused the Covid 19 vaccine because of this contamination. Malaysia has since developed the world's first halal pharmaceutical standard that will allow vaccines to be prepared in a non-pork environment. This research and development product is indicative of the forthcoming healthcare changes. This halal certification product will enable Muslims to prepare all kinds of health products to improve their standard of living.
Halal Cosmetics. To be certified halal, every ingredient in cosmetic products must be traceable. Products must not contain ingredients derived from pigs, carrion, blood, human body parts, predatory animals, reptiles, and insects, among others. Animal-derived ingredients must come from permissible animals slaughtered according to Islamic law. This process also applies to application tools such as makeup brushes, where bristle fibers can contain animal by-products. In their preparation, processing, storage, and transport, products must be pure and hygienic, free from filth.
Islamic Finance. Islamic finance refers to businesses and individuals raising capital following Sharia or Islamic law. The Islamic financial system encompasses the Islamic banking system, the Islamic money market, Islamic insurance, the Islamic capital market, and specialized financial institutions that provide alternative financing sources. Islamic finance is based on the belief that money shouldn't have any value in itself. It's just a way to exchange products and services that do have value. Linked to this way of thinking about money is the idea that you shouldn't make money from money. This way of thinking means that getting involved in interest by either paying or receiving it should be avoided wherever possible. One area of Islamic finance is Halal real estate, and it is making large inroads into the global housing market. Here's an advertisement for halal condominiums.
Another important idea that underpins Islamic finance is that it shouldn't cause harm. Therefore, Islamic financial services should not invest in things like alcohol, tobacco, and gambling. Islamic finance also encourages partnership. This viewpoint means that, where possible, both profit and risks should be shared. This exchange can be between two individuals, an individual and a business, or a business and a business.
Room to Expand
These seven industries are made up primarily of personal consumption expenditures (PCE). Under normal circumstances, PCE ranges from 45 to 65 percent of a country's gross domestic product (GDP). Back-of-the-envelope calculations show that the Halal economy could easily double and maybe triple in size. Consider that there are 1.8 trillion Muslims on a planet of 8 trillion people, a 22 percent market share. If the current market share is 10 percent or less, then this statistic corroborates my theory there is room to expand.
My MBA students in Vietnam were correct in steering me to this opportunity. Not knowing anything about Muslims, my book, Muslim Mechanics, is written to give the reader a primary view of the people that make up the Halal economy. I would encourage anyone wanting to expand into this marketplace to read this book.
In summary, the halal industry has evolved from merely food products to a holistic halal concept that encompasses the entire value of commercial activities. Halal is fast becoming a global symbol of quality assurance and a lifestyle choice for Muslims and non-Muslims. Parts of the halal marketplace (food and finance) are in the growth stage of the product life cycle, while the other industries are approaching that launch. If you want to get in on the ground floor, now is the time to take action.