Islamic economy: values for money

The potential of a global, ethically centred Islamic economy, for lifestyle companies in every sector, is vast, and can appeal to Muslim and non-Muslim consumers alike

When the British government announced recently it would issue its first Islamic bond, the first non-Muslim country to sell sharia-compliant sovereign debt, the world sat up and took notice.

The move went far beyond the international debt market and was a signal of the importance placed on the Islamic economy by London. It spoke to the growing global demand for healthy and organic halal food, for alcohol-free, family-friendly hotels, for animal-friendly skincare and ethical finance.

Global expenditure of Muslim consumers on food and lifestyle sectors is expected to reach US$2.47tn by 2018

Complying with religious principles is becoming big business in the Muslim world. According to research by Ogilvy Noor, a bespoke Islamic branding practice, more than 90 per cent of Muslim consumers say their faith affects their consumption, so global brands looking to make an impact in the market could do worse than take note. Global expenditure of Muslim consumers on food and lifestyle sectors is expected to reach US$2.47tn by 2018, so the potential rewards are obvious.

London is not alone in seeing the potential. Last year, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai, announced his determination to establish the emirate as the global capital of the Islamic economy.

Global values

Both countries recognise that the Islamic economy isn’t just about the needs and preferences of Muslims, as Islamic values are gradually transcending the religion’s boundaries.

Abdul Rahman Saif Al Ghurair, Chairman of Dubai Chamber of Commerce and Industry and Board Member of the new Dubai Islamic Economy Development Centre, says: “There is huge untapped potential in the global Islamic economy... Dubai is the ideal place to be the capital of this economy because it already has significant advantages and opportunities for growth in all the potential areas. “Dubai can open up the Islamic economy and make it more international.”

The value-based needs that drive the halal economy sectors include the need for pure and ethical food, modest clothing, ethical financing and family-friendly travel, factors that resonate across the world, irrespective of religious beliefs. According to Abdalhamid Evans, the Founder and Senior Analyst of Imarat Consultants, a UK-based consultancy specialising in halal market intelligence and expertise, food will continue to provide the main thrust for growth in the halal market place “as it crosses cultural, geographic and even religious boundaries relatively easily”.

“The convergence with mainstream will continue to be a major driver as halal products continue to appear with greater frequency in mainstream retail outlets globally, based on retailers’ increasing awareness of the opportunity this represents,” he says. “The overlap of generally recognised healthy and eco-ethical values with the values inherent in halal will become more pronounced, especially as the halal sector players become more aware of the marketing edge that these provide.”

Islamic economy: values for money
The market for food that is ethically and sustainably produced crosses religious boundaries

Many of these values have taken on a new relevance since the global financial crisis, which was attributed in large part to the excesses of Western banking institutions, and raised concerns that led consumers to reassess the ethical focus of business practices.

Islamic values that inform the choices of Muslim consumers are similar to the ethical, moral and spiritual values of people all over the world. As a result, the Islamic economy is emerging as a new economic powerhouse that is likely to have a significant global impact over the next few years.

A decade ago, the term halal, an Arabic word meaning “permissible”, was applied mostly to the food eaten by Muslims. Increasingly, it is being used to describe a range of products and services that encompass fields as diverse as fashion, beauty, technology and tourism.

Ethical

In the US, more and more consumers of organic produce choose to eat halal products from animals raised in an ethical and sustainable manner.

A growing number of tourists are also looking for a wholesome family experience, and are choosing hotels that are Muslim-friendly, such as those among the increasing network of “dry” hotels. Furthermore, with 1.2 billion mobile phone subscribers, media and entertainment organisations recognise the importance of the Muslim audience.

Halal influences in fashion, cosmetics and personal care products – which are in harmony with the animal welfare, natural healthcare, sustainability and environmental concerns of the wider population – are also becoming far more common on the high street.

However, in spite of this trillion-dollar-plus market, global brands based on halal principles are still rare and opportunities abound for companies to stake their claim.

In the food sector especially, despite the emergence of a slew of global brands such as Nestlé, Walmart and Carrefour, the gap in serving the increasing demand for quality halal food is still significant.

One reason might be that the credibility of halal food certification remains a barrier for the industry’s growth due to a fragmentation of standardisation and regulatory methods. In January, Dubai Municipality said it plans to launch the first international accreditation centre for halal food.

As Evans puts it: “The development of more robust standards and accreditation procedures that raise the level of professionalism is likely to have a significant impact on market growth. Standards tend to grow the market, and the halal sector has been, to date, characterised by a lack of transparent standards and certification procedures.”