Blog: Dean BestHalal - once niche, now mainstream

Dean Best | 21 May 2007

The emergence of Halal is a trend to watch, not just for those of you in Muslim countries, but also increasingly for those in the West, where the Muslim population is on the rise.

just-food has been studying the phenomenon closely and recently attended a fair in Malaysia on the global market for Halal.

Even a cursory glance at the sales of Halal food – and the forecast for growth – highlights the sector’s potential. Halal food sales are now worth over US$560bn annually, and it is estimated that the category will exceed $850bn by 2020.

Muslim consumers spend a higher proportion of their income on food, while there are signs that non-Muslims are embracing Halal amid a clamour for food quality and safety.

Some in the West are being proactive. Australia is promoting its own specific Halal industry while UK retailers, including Sainsbury’s are selling Halal products in their stores.

A lot needs to be done to fully develop the sector – for instance, there are no global standards surrounding Halal – but there is no doubt that a once niche category is fast becoming mainstream.

Meanwhile on the home front, Sainsbury’s has successfully resisted investor pressure to unlock the value of its property portfolio.

Having just fended off an GBP11bn (US$21.7bn) private equity takeover bid, the supermarket group went on to post an expectation-beating 42% leap in annual profits last week.

The bumper result, Sainsbury’s said, was proof that its turnaround strategy is paying off. And as it moves “from recovery to growth”, Sainsbury’s insisted that now is not the right time to sell off its property assets.

Sainsbury’s is targeting sales growth of GBP3.5bn over the next three years. With a significant portion of this increase to come from the opening of new stores, from a retailing perspective the group’s management makes a sound point. If Sainsbury’s were to sell property to boost shareholder returns in the short-term, it could well be jeopardising its long-term growth by adding uncertainty to costs and limiting its ability to extend selling space. 

However, the strong results and ambitious plans for future growth appear not to have been enough to appease some of the group’s more vociferous investors.


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