Last week Birmingham-based Pak Supermarkets announced it would open the country's largest ethnic food supermarket in August. Though it will cater for Afro-Caribbeans, Eastern Europeans and Somalis, its key demographic will be the local Muslim community with half the range expected to be halal.

Pak is not the only one taking advantage of the growing appetite for halal food. In September, Tesco, which sells halal in 60 stores, announced plans to bring £148m of Malaysian halal products to the UK over the next five years. Asda already sells halal sweets, fresh meat, stock cubes and ready meals, while Sainsbury's is actively growing its range and believes there are still major opportunities.

Suppliers, too, are stepping up their presence in the sector, according to Khalib Hussain, owner of Pak Supermarkets. "They have become more aware of the need to provide a halal range. Cadbury's halal chocolate is popular with us and when Walkers made its crisps halal it saw an increase in sales."

So why the sudden interest?

Over the past few years, demand for halal food has soared. The sector is now worth £700m annually. With the community's spending power estimated at a whopping £20.5bn that looks set to grow, fuelled by the growing affluence of the UK's three million-strong Muslim population and a change in shopping habits among the second generation.

"The first generation of immigrants are still very traditional in eating and shopping habits and will continue to go to the small independent stores, " says Faiza Akmal, account manager at Tahira Foods, which supplies the major multiples. "Younger Muslims are more likely to experiment and be open to European modes of consumption. They are happier in a one-stop-shop arrangement at a large supermarket rather than trawling local butchers."

Another factor behind the increase in supply is logistics. Retailers have only recently been in a position to build a supply chain infrastructure to be able to cope with the complexity of the market, according to Steve Ewells, senior buyer, World Foods, at Tesco. "As we now have a dedicated World Foods buying team we are able to specialise in this area," he says.

There has also been a surge in interest from non-Muslims, says Hussain. "Customers have become more interested in halal products, both Muslims and non-Muslims."

Louise Jones, Sainsbury's world food buyer, agrees: "These ranges don't just reflect demand from customers from our ethnic backgrounds, but also the increasing number of our customers who are embracing the notion to try something new."

Even so, some retailers and manufacturers remain concerned about being overly associated with 'Muslim brands' or offending non-Muslims in the wake of the terrorist attacks.

"Retailers still seem very wary of targeting Muslims even though they have been part of British society for years," says Marian Salzman, chief marketing officer of advertising giant JWTs, warning that they will need to change their tune. "It is the next big thing and if supermarkets don't get even more involved then independent chains and private equity groups will."

Clearly, some are already getting more involved and independents like Pak will soon face greater competition for the Muslim pound. As Zahimi Bin Chic, MD of KasehDia, which organised last month's World Halal Forum, says: "There are a lot of multinational players getting involved. Food companies cannot be global players unless they do halal." n