The ‘halal’ market goes beyond of food it includes sectors like finance, tourism, fashion, drugs, hobbies and cosmetics. The increase in population, development economical and appearance of the average classification in Muslim majority country are the motors of the sector It is necessary to create a regulatory framework common which facilitates the new certification business and growth
of a European halal market.
Halal defines the set of practices, goods and services allowed to Muslims. This term appears in the Koran and refers to everything that is not not prohibited by Islamic law or by sharia and so it means lawful, ethical, healthy and not abusive. Its antonym is haram, this term also appears in the Qoran and translates everything which is prohibited and therefore harmful, unlawful, unethical or abusive. All what is not expressly prohibited, qualified as haram, is allowed, that is to say halal. In accordance to Islamic rules are haram: the flesh of a dead beast, the blood of any animal, pork and wild boar, that of animals not sacrificed according to the Islamic ritual, that carnivorous and scavenger animals, that of greenhouse birds, that of creeping or buried animals, alcohol, substances harmful or poisonous, ingredients from haram animals, such as additives, preservatives, colors, flavors, etc., interest, usury, excessive speculation, betting and games of chance and pornography. This set of prohibitions determines the daily life of Muslims, because they have relates to essential issues in
practice, as are food, hygiene or economic and commercial relations. This is why halal market segments have arisen in areas like food or that of finance and that this term and its implications is equated with a mode of life which, as we will see, is more and more attractive to not Muslim.
Currently, the term halal has gone beyond religious and even for many, including non-Muslims, it is synonymous with quality, health and sustainability. The discovery of horse meat in some fourth and fifth range that are marketed in the European Union (EU), the massive use of unfair terms on the part of banking and financial institutions in developed economies or the search for organic food and / or healthy, have brought a lot of non-Muslim consumers at in recent years asking for and consuming products or halal services. A study by the Halal Institute on a large commercial area in Madrid has showed that 60% of consumers of halal products consulted were not Muslims. They indicated that the search for an extra quality guarantee was the main reason why they bought these products. For the non-Muslim consumers, halal has become a guarantee of quality and just like for muslims it encompasses all that is good and beneficial for human beings.
The ‘drivers’ on the ‘halal’ market
All halal practices have allowed the emergence of business opportunities that go more far from the food sector. The demand and consumption of halal non-food products and services has favored the development of rest of the sectors that make up the market today: finance, tourism, medicines, leisure and cosmetics. They’re all driving stratospheric growth rates. But what are the engines growth in these sectors in particular and in the halal market in general?
The boom in the halal market is due to the combination of three factors that set up a feedback mechanism: a large sector of the growing population, the economic development of countries Muslim majority and the appearance of the middle class in these.
In 2010, there were 1.6 billion Muslims, or 23.4% of the population world. According to the latest estimates, they will represent 2.2 billion people, or 26.4% of the total population. Their growth rate is estimated at 37.5% for the next 20 years (The Halal Economy and the Islamic Capital Market, KFH
Research Ltd, 2014).
This growth demographic will not be limited exclusively to the regions where a greater number of Muslims, like Southeast Asia and the MENA region designating the Middle East and Africa of the North) and which concentrated approximately one billion and 320 million people respectively in 2010 but it will also very significant in other regions like sub-Saharan Africa, Europe and America, where it is planned from 243million, 44million and fivemillion registered in 2010 to almost 386 million, 58 million and 11 million in 2030, respectively. This large and growing fraction of the population, including the aging is 25 years old (Thomson Reuters, 2015), is concentrated in the most dynamic regions of the world, in the so-called emerging economies. For the period 2015-2019, the latest projections indicate that the PIB of 57 member countries of the Organization of Islamic Cooperation (OIC) is expected to increase by 5.4% on average against 3.6% of the world average (Islamic Growth Markets Investment Report, Thomson Reuters and DinarStandard, 2015). Recently, the IMF revised its forecast, indicating the ranking of the 10 economies that will grow the most in 2016.
Among them are countries with a Muslim majority such as Iraq (7.2%), Bangladesh (6.6%) or Senegal (6.6%) and countries like India (7.5%) who, without being predominantly Muslim, is the second in the world who has the largest number of Muslims (140 million according to the Pew Research Center, 2015).
The growth rates recorded in Muslim majority countries, including most are double digits, are to generate class appearance average with more purchasing power and consumption patterns which dizzyingly approach those Westerners.
In 2030 66% of the total middle class focus in the region Asia-Pacific (Hitting the sweet spot: The growth of the middle class in emerging markets yPersonas coningresosdiarios between $ 10 and $ 100, E&Y, 2013), where Muslims almost represented 25% in 2014 and they should exceed 1.3 billion people in 2030.
These three factors, combined with increased demand for products and services halal from the non-Muslim consumer market, are making a decisive contribution to the growth of the various sectors that make up the halal market.
For decades and as a result of the underdevelopment of the rest of the production sectors, the halal market has been linked to or associated with food. And it is true that even today, with permission of Islamic finance, it is the main segment of the halal market, even if it is no longer the only one.
In recent years, other sectors such as tourism and pharmaceuticals have made their mark on this market, by widening the range of halal products and services available and favoring the creation of new opportunities that are overlooked for large multinationals and for investment funds.
The value of the different sectors making up the halal market, including financial and Islamic banking assets, exceeded 4.9 billion dollars in 2014 and everything seems to indicate that it will reach $ 8.4 trillion in 2020 (State of the Global Islamic Economy Report 2015/16, Thomson Reuters, 2015). this set of sectors that some experts are called Islamic economics global and beyond Islamic finance forecasts, banking assets Islamic and halal food – which go from 1.8 billion dollars, 1.3 trillion dollars and $ 1.1 trillion respectively in 2014, at 3.2 trillion dollars, 2.6 billion dollars and $ 1.5 trillion in 2020 – which attracts attention is growth and level of development that are going know tourism, la mode halal or modest fashion, cosmetics or halal drugs.
According to the latest estimates, these emerging sectors, stimulated in a the extent of halal food dynamics (essential for halal tourism development) and islamic finance (funding source alternative) reached 142 billion dollars, $ 230 billion, $ 75 billion and $ 54 billion respectively in 2014, just like in the case of halal food, finance and Islamic banking assets, the rate of compound annual growth (CAGR) in all cases amounts to 5.5% for the period 2014-2020 and for this last year, the value of these sectors is around $ 233 billion, $ 327 billion, $ 106 billion and $ 80 billion respectively.
The ‘halal’ market in Europe.
Over the past few years, we witnessed an arrival in mass of European businesses in the market. The vast majority, attracted by the growing demand for halal products and services, to export their goods and services to Muslim majority countries where the list opportunity is long. But they are becoming more and more interested in the national compound market, in the case of Europe, almost 50 million potential customers (number approximate of Muslims living here, including 14 million Muslims Russia. Pew Research Center, 2015).
In the halal food sector, whose value fluctuates in Europe between 40 and 100 million euros (Doing business in the Halal Market-Products, Trends and Growth Opportunities, Euromonitor, 2015), heavy dependence from outside the Maghreb countries and from the Middle East who import from 50% to 60% of the food they eat, the increase in the population Muslim in Europe which will lie around 60 million in 2030, and the progression of tourist arrivals Muslims in the Old Continent, has brought producers like Nestlé, Unilever or Danone, and distributors, like Tesco or Carrefour, to bet on this market, both in Europe and outside. France and the United Kingdom dominate this sector, including the national halal food markets recorded respectively in 2014 values of six billion dollars and 4.5 billion dollars, and they lie among the main exporters of halal meat and live animals OIC member countries whose exports were represented in 2014, for this which is from France, 700million dollars (Salaam Gateway, 2016) .It should also be emphasized the role of companies like Nestlé, which has 159 factories and 300 certified halal products, etTesco which has shelves with a wide range halal food and drink sales areas in the United Kingdom, Turkey, Malaysia and India.
The rest of the halal sectors are not at an embryonic stage and there is practically no data or estimates on their development in Europe.However, some sectors such as finance and banking Islamic trade who arrived to function naturally in countries like the UK or the Luxembourg, after their governments have made the changes necessary to their legal systems (in 2014, the British Treasury issued Islamic or sukuk bonds to finance his current expenses of an amount of 200 million pounds).
We should also point out halal tourism, with the creation of Shaza Hotels, a 100% halal hotel network, by the German chain Kempinski or the take-off of this sector in Spain, LaCroatieouleUnited Kingdom, where certification of restaurants and hotels has led to a significant increase in the arrival of Muslim tourists over the years. In 2014, by example, Muslim tourists have spent $ 3.3 billion on
United Kingdom (CrescentRating, 2015). Likewise, when it comes to fashion or halal cosmetics we find European companies – like D&G, which launched a collection of luxury hijab, or L’Oréal, which traded cosmetics halal in countries where Muslims are a majority -, who seek to find a place in this market.
Europe thus has a possibility of capitalize on the growth of this market but, to get there, which has been done until present is not enough and even insufficient. In order to meet the strong demand for halal goods and services, outside the food sector, more will be needed of certified companies and a range broader halal products and services, as well as a regulatory framework which facilitates the certification of new businesses and the development of a European halal market.
An opportunity for Spain
In Spain, seventh exporter world of agrifood products and third receiver foreign tourists (Marca España 2016), the take-off of this market is not not gone unnoticed. The rise in purchasing power of 1.6 billion Muslims worldwide and the existence an unmet demand (the lack of a wide range of halal foods in western countries has pushed many Muslims to consume kosher), have aroused the interest of Spanish companies for this market.
Currently, the Halal Institute has nearly 300 companies certified in Spain. They are 95% owned by food and beverage sector. It is therefore hardly surprising that between 2012 and 2014, more than 90% of the sale of approximately 380,000 tonnes of halal food and drink, carried out by certified Spanish companies, worn on four meat-based products: chicken, beef, turkey and mutton. At
during this period exports. Halal foods and beverages have also grown significantly, more than 82%, from 11,200 tonnes in 2012 to 20,500 in 2014. Algeria was the main destination for halal products exported in 2014 (52% of the total amount exported), while Morocco (10%) positioned itself as the second business partner.
Among the European markets there is to cite two: France, which represents 8.5% of Spanish exports halal and the United Kingdom with 4%. The possibilities are endless and go beyond the food industry. tourism, 65 million tourists who visited our country in 2014, about two million were Muslim, an increase of 18% compared to 2013 (Turespaña, 2015). It should be noted the increase in tourists from Indonesia (+ 118%), Jordan (+ 90%), Turkey (+ 88%) and Kazakhstan (+ 87%), as well as that of number of tourist establishments certified by the Halal Institute, which are already more than a dozen today.
Because Spain and its Andalusian heritage The attraction of Muslim tourists is that, although this industry only at an embryonic stage, Spain passed in a year of twentieth to ninth position of the Global Muslim Travel Index, developed by MasterCardetCrescentRating, placing it as one of the destinations more attractive (non-member countries OIC) for Muslims.
Beyond the figures which undoubtedly indicate a promising horizon for certified companies, the most important aspect of Spain is that it has all the necessary assets for define a halal food and tourism hub around the triangle formed by Cordoba, Malaga and Granada: a fabric dynamic agro-food and tourism, products and services quality, excellent infrastructure to sell goods and receive tourists, a famous brand and easy to recognize by consumers (Al-Andalus), the competent institution to issue certifications halal (Halal Institute) and three cities that strong cultural and economic ties to the Islamic world.
Thanks to the Halal Institute and the Town Hall de Cordoue, a large industrial center and companies focused on the halal industry has started to develop in Cordoba which could be the first step in a global hub. This is, without doubt, an extraordinary opportunity for Spain and its companies.
Tomás Guerrero Blanco (translated from French)