Global Halal Sector Expands Beyond Food, Signaling Significant Economic Boom

The halal sector, once primarily associated with dietary regulations, has extended its reach beyond Saudi Arabia and the wider Middle East, impacting global markets with its swift expansion into industries such as medicine, cosmetics, and sportswear. Recent figures indicate a 19% increase in the launch of halal products worldwide from 2018 to 2020, with the count rising from 16,000 to over 20,000 items.

Asia leads the charge, contributing 63% of these products, followed by Africa and the Middle East. This industry’s potential for substantial growth is overlooked by those who view halal merely as Islamic dietary rules.

Halal, an Arabic term meaning “permissible” or “lawful,” is applied to goods and services deemed acceptable under Islamic law as stated in the Quran. Famously, it refers to products that are pork and alcohol-free and meat slaughtered in a specific Islamic manner. Opposing this, haram means “forbidden.” Several governing bodies now issue certificates validating businesses’ adherence to halal procedures.

The halal sector was valued at $1.27 trillion in 2021 and is predicted to hit $1.67 trillion in 2025, says the acting chief product and partnership officer of the Islamic Development Bank. According to research by Frost and Sullivan, the swiftly growing global halal economy could reach $4.96 trillion by 2030, a substantial hike from its value of $2.30 trillion in 2020.

The world’s Muslim population, making up roughly 26% of global inhabitants, represents a rapidly expanding consumer segment. In Saudi Arabia, the birthplace of Islam, economic transformation is fueling a halal industry boom.

The halal sector’s burgeoning expansion now includes cosmetics, cleaning, and household items, among others, says Saudi businessman Hussein Shobokshi. Sustainability and responsible production are also being argued as part of the halal industry. Saudi Arabia, being the Middle East’s largest consumer of halal products, is now promoting the halal industry.

However, with increased attention from companies to the industry’s potential, there is a need to clearly define what constitutes halal. The Islamic Development Bank notes the major players targeting halal qualification include Procter & Gamble, Unilever, and Nestlé.

Saudi Arabia is working to redefine the halal product definition and establish a global reference for halal certification and inspection. The kingdom’s aspiration to lead in the halal economy aligns with its current transformation and position at the Islamic world’s center.

In October 2022, Saudi Arabia’s Public Investment Fund launched the Halal Products Development Co, which aims to invest in localizing the halal industry and increase ecosystem efficiency locally, including export plans.

The halal market potential extends from Saudi Arabia, through Asia and Africa, and beyond, with member countries of the Islamic Development Bank consciously working to develop their halal economies.

Even countries with non-majority Muslim populations, such as Thailand, Japan, and South Korea, strive to become key players in the halal market. Among these, Australia and Brazil are top halal meat and poultry suppliers to Middle Eastern countries.

Qatar, a member of the Gulf Cooperation Council, is rapidly growing in the halal economy. The nation encourages core sectors with high growth potential to develop products and services prescribed by Islamic law.

There is an undeniable boom in the halal market. Despite its global expansion and product diversity, a lingering challenge is the clarification of what defines halal. The need to finance the halal industry and manage its supply chain effectively is crucial.