Profit motive drives business to look at Islam

With big business always on the look out for the next gap in the market, John Hayes reports on the phenomena being dubbed as the rise of the Islamic Pound.

Shahzad Ahmed of Dixy Chicken in Leeds serves a customer at the fast food chain which specialises in Halal food. Picture: Emma Nichols.

Keen to profit from the UK's ever changing demographic, marketing executives from across all sectors of industry and commerce have embraced the buzzword "diversity".
First we had the Pink Pound – targeting the often very large disposable incomes (mainly due to not parenting children) of gay men and women. Then there was the Grey Pound – aiming at more affluent pensioners lucky enough to have avoided the pensions shortfall and benefited from the huge rise in property prices over recent years. And we've even had the Green Pound, with companies hoping to profit from individuals and organisations concerned with environmental issues.
But there is one rapidly growing section of society who, until fairly recently, have been largely ignored by the marketeers.
With Islam reported to be the fastest-growing religion on earth (one in every four people on the planet are Muslims), it is perhaps inevitable that more companies will seek to tap into the apparently lucrative Islamic Pound.
According to figures compiled by the market research firm Datamonitor, the liquid assets of high net-worth Muslims in the UK in 2002 were estimated at £3.6bn and this figure could rise to £6bn by 2012.
Islam is recognised as Britain's second-largest faith group, with nearly three per cent of the population describing their religion as Muslim in the 2001 Census. With 3.2 per cent of people in the Yorkshire and Humber areas and 16.1 per cent of people in Bradford describing themselves as Muslims in 2001 (a figure estimated to grow by six per cent per year), it is easy to see how important the Islamic Pound is to the local and national economy.
But unlike the aforementioned Pink, Grey and even Green markets, where firms have been able to identify an opportunity and then simply tweak and then market an existing mainstream product with a specially-targeted promotional campaign, the Islamic market requires a different approach and often requires products to be completely redesigned to comply with religious beliefs.
The financial services industry is a good example of how traditional western companies have adapted to attract Islamic customers.
Both Lloyds TSB and HSBC banks offer financial products aimed at the Islamic market.
Under Islamic (Shariah) law, both the payment and receipt of interest (Riba) are forbidden, which presents a problem for Muslims wishing to borrow, or save, without going against their faith.
Islamic bank accounts offer no credit interest, no overdraft facility and charge no fees.
Funds deposited with Islamic accounts also have to be invested ethically in accordance with Islamic law (ie no gambling, alcohol, weapons, etc). Islamic-friendly investments can include things like land, property, agriculture and commodities.
Both banks also offer Islamic mortgages which differ greatly from the traditional home loan product, where the bank makes its money by charging interest over the period of the loan.
Instead of lending money for a property, the bank buys the home on behalf of the customer, contributing up to 90 per cent of the purchase price. The customer pays the remaining percentage upfront and pays the outstanding sum over an agreed term, together with a rental payment.
Paul Sherrin, head of Islamic financial services at Lloyds TSB, said: "Britain is home to a large and fast-growing Muslim community, but many have found that their financial needs have been left wanting.
"Having spoken to Muslims across the country we know that more than three-quarters want current accounts and mortgages that fit with their faith.
"By making these products available nationwide we're bringing Islamic banking into the mainstream and we're giving the Muslim community access to financial services that meet their needs without compromising their religion."
According to Emile Abu-Shakra, press spokesman for Lloyds TSB, prior to the launch of Islamic banking services in the UK many Muslims kept their money "under their mattress" or saved it in traditional accounts, choosing not to touch the interest or donating it to charity.
Mr Abu-Shakra was also aware of Muslim families who had rented property for more than 40 years because they were unwilling to go against their faith and buy property with a traditional mortgage.
With half of the UK's two-million Muslims under the age of 25, Lloyds TSB has also recently introduced an Islamic student account which again complies with Shariah Law and offers an interest-free overdraft of £1,500 for three years, and a free iPod shuffle.
Although both the HSBC and Lloyds TSB are essentially conventional banks, which derive profit from interest-based financial services, they are able to provide services which comply with Islamic law on the advice of a panel of international scholars of Shariah.
The HSBC states on its website, "Conventional banks charge and pay interest, and HSBC is a conventional bank. But HSBC is also a customer-driven institution, and the reason it provides Islamic products is to serve a genuine financial need among Muslims. Of course, our Islamic products are available for Muslims and non-Muslims alike."
But it's not just the Islamic financial services industry that is making its mark in the wider community.
The Halal food industry is also enjoying rapid growth. Halal is a set of Islamic dietary laws which regulate the preparation of food.
According to Mr Abid Mahmood, managing director of the Halal fast food chain Dixy Chicken, the Halal food market in the UK is worth about £55bn per year.
Dixy Chicken is one of the fastest-growing fast food chains in the UK and is also rapidly expanding in Europe and Asia. Dixy Chicken operates 120 restaurants (60 of these in the North of England) and hopes to expand to 190 by the end of the year.
A spokesperson for the group said: "Dixy Chicken has been highly instrumental in introducing the Halal meat concept in the fast food sector, across the UK. In our desire to maintain the highest Halal standards, we have sourced only reputable suppliers to ensure that they do not engage in cruel or unethical practices towards the poultry. All our franchisees purchase Halal meat from these suppliers and there is continuous quality monitoring to ensure adherence to the highest standards."
However, Dixy Chicken's success is not limited to the Islamic market with Mr Mahmood saying, "Our food is enjoyed by everyone."
The Halal market has also not gone unnoticed by the major supermarkets.
A spokesman for Tesco said, "Where there is a demand for Halal products, we do stock a good range. It is very important to Tesco to have the correct range of offers available."
Despite this a recent report in the monthly Muslim News newspaper suggested that only four per cent of British Muslims would consider purchasing Halal meat from a supermarket, citing poor marketing of the products and a limited range of other ethnic type foods.
Undoubtedly, as the market continues to grow this is something the big supermarkets will be keen to redress and reach out further into the Islamic community.
As Britain's Muslim population continues to expand, bucking the trend of a generally aging population, and their youth become more economically active, the Islamic Pound is set to become even more important for the British economy. This is especially true in terms of taxes paid by young Muslims to cover growing pension and health care costs.
Speaking on the growth of the Halal business and the Islamic Pound in general, Mr Mahmood said: "This is big business and a great success story for England."
And hopefully, like Dixy Chicken's fast food, diversity is something we can all come to enjoy and benefit from in the future.

05 September 2006