The $4.5 billion UK halal food market opportunity

(Photo: London, England - September 1, 2013: A Halal food sign above a restaurant doorway in London / Lenscap Photography/Shutterstock.com)

Muslims in the UK are estimated to have spent $6.3 billion on food and beverages in 2014 and this is expected to grow at 5 percent per annum between 2014 and 2020. With emerging halal brands and increasing focus from mainstream players across the value chain, what are the considerations for new entrants seeking to target the UK Muslim consumer and more specifically, the halal food market?

HOW ATTRACTIVE IS THE UK HALAL FOOD MARKET?

The UK Muslim population was 2.71 million in 2011, up from 1.55 million in 2001, according to the national census. This growing Muslim population and the resulting halal food market have become established components of life and business in the UK.

UK Muslims contributed an estimated 31 billion pounds ($46.5 billion) to the national economy in 2014, according to the Muslim Council of Britain. Of this, Muslim household expenditure on food and beverages was an estimated $6.3 billion in 2014 with 5 percent CAGR to 2020.

This Muslim F&B expenditure accounts for 4 percent of total UK spend on  F&B. The assumption is that this $6.3 billion is not entirely spent on halal F&B. The BBC estimates the UK halal food market at $4.5 billion in 2014.

KEY PLAYERS

Halal has a strong presence in the UK supply chain, with the notable emergence of UK brands.

While the UK Muslims make up around 4.5 percent of the UK population around 25 percent of the country’s 352 abattoirs now incorporate halal production.

Notable suppliers include Euro Quality Lambs, a family business which is “the largest Muslim-owned lamb and slaughterhouse in Europe”, according to the company’s owner and director Rizwan Khalid.

Several notable food manufacturers focussed on the halal market have emerged.

These include KQF Foods, which made $7.3 million in revenues in 2014, and offers chilled, fresh and frozen halal meals across the UK.

Tahira Foods, which started in the UK in 1994, offers chicken, lamb, beef and turkey, and Ieat produces halal versions of traditional British meals, aiming for a new niche opened up by the changing demographics and consumer preferences of younger UK Muslims who are not just cooking and eating within their cultural family traditions.

Halal food is sold in over 3,000 independent food service outlets across the UK, and halal is increasingly offered in mainstream outlets.

Zabiha.com lists just under 4,000 customer-reviewed halal restaurants and outlets across the UK across a diverse range of cuisines, going beyond traditional South Asian food.

Mainstream brands recognise that halal represents a significant opportunity. KFC, for example, offers a halal menu at close to 100 of their UK outlets; Nandos is halal in 66 of their outlets and Subway has 202 halal outlets. All of these are in direct competition with the smaller halal-only outlets such as Chicken Cottage or Perfect Fried Chicken.

STUNNING

Stunning animals is not acceptable to many UK Muslim consumers and producers are differentiating themselves through producing non-stunned products.

In the UK, to a greater extent than most other countries, the halal sector is divided over the issue of the pre-slaughter stun. Stunning is used to render animals unconscious before slaughter, and is mandatory by law, with a dispensation for Jewish and Muslim communities to slaughter without stunning.

However, market pressures to maintain high line speeds, as well as mainstream views on animal welfare have made stunning a widespread practice.

This has become a divisive issue among Muslim consumers in the UK. In a 2013 report from the Agriculture and Horticulture Development Board, a survey of Muslim consumers found that almost 50 percent considered that ‘if the animal was stunned, the meat would be unacceptable.’

In a recent EU-wide survey of 13,500 meat eaters, only 1 percent voluntarily mentioned slaughter method as an important labelling issue; however, when prompted specifically about slaughter methods, 72 percent considered it should be stated on the product label.

Inevitably, these statistics were selectively used to support one side of the labelling argument, with the British Veterinary Association calling for “better consumer information on animal welfare at slaughter and the need for meat from non-stun slaughter to be clearly labelled.”

Some ready meal manufacturers in the UK, such as Brunei Halal and Ieat, made the decision to offer a totally non-stunned product range for their UK launches in 2014.

ANTI-MUSLIM SENTIMENT

There has been anti-Muslim sentiment against halal, which is often publicized in the press, although broadly the benefits have outweighed the costs.

In KFC’s halal trial, five or six outlets reverted to their traditional menu following a drop in sales. This was widely reported in the tabloid press but no column inches was given to the fact that the remaining 96 outlets saw increased sales and that KFC stuck with its halal menu in all of them.

EXPORT OPPORTUNITIES

There is a significant export opportunity for halal meat suppliers in the UK.

Dr. Phil Hadley, Head of Global Supply Chain Development for AHDB Beef and Lamb considers that there is a significant opportunity to develop the halal sector in the UK, especially for lamb, in both the domestic and export markets.

With 14 million sheep slaughtered annually in the UK, and with an estimated 20 percent of sheep meat being consumed by the UK’s Muslim population, there is clearly a market opportunity, especially in France.

35 percent of all UK sheep meat is exported and 50 percent of the export product goes to France. Dr Hadley believes that the issue is about being competitive on price. “UK sheep meat is roughly twice the price of New Zealand lamb, so we have to look at positioning high quality British produce at the top end of the market,” he told DinarStandard.

With 6 million Muslims in France and with new markets for UK lamb opening up in Kuwait and Saudi Arabia, there is clearly an opportunity for UK exporters.

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