Economics of the Halal Industry

(Published in The Express Tribune, October 11, 2010)

While mostly overlooked, the halal industry is a key Islamic industry whose model is derived directly from the Quran. The model is even more fascinating when studied under an economic microscope which explains its simplicity and why it is unshakeable.


The global halal meat industry is valued at around $150 billion with over 1.6 billion Muslim consumers across the globe. It thrives on the basic economic principles of supply and demand. As surely as the world population grows each day so does the demand for food.

Consumer demand

The Quran puts forth strict restriction on consuming only halal items.

This restriction is fundamental in ensuring continued demand for halal food proportional to the Muslim population. It also guarantees that the industry as a whole will continue to exist for as long as Muslims do and makes it a safe one to operate in.

The demand model is further strengthened by the celebration of Eidul Azha once a year. During this time, the slaughter of animals has been made mandatory on all capable Muslims. The day serves not only to reinforce the meat eating habits of Muslims but also guarantees a surge in demand as the festival approaches.

The base consumer demand projections are also made fairly easy and can be calculated as at least one goat or sheep for every capable adult Muslim be required, or one camel or cow for every seven.

Meat supply

The instructions in the Quran on the slaughter of poultry and cattle require that it be done by a Muslim and in the name of Allah. This alone is enough to ensure that the meat comes from a Muslim butcher. Consequently, the industry is enjoyed exclusively by Muslims yet open to all meat eaters.

However, there is another subtle factor that encourages vertical integration within the halal industry so that even cattle-farming is regulated by Muslims.

The Quran clearly bans pork on the basis of it being unhygienic. It is fair to say that well-intentioned halal meat that can be labeled 100 per cent only if comes from a Muslim farmer who understand the Quranic preference for hygiene.

Halal franchise

The halal franchise has also expanded into other industries such as pharmaceuticals and even clothing.

The halal industry simultaneously benefits participants by allowing for horizontal expansion into complementary industries such as condiments and confectionary. Retailers have the potential to expand into general purpose grocery chains.

Other subtleties include travel restrictions to countries that offer halal food or settling down only in halal-friendly communities.

Halal is just not about the way animals are slaughtered.