The emerging halal cosmetic and personal care market

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The emerging halal cosmetic and personal care market
Personal Care March 2012

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  • 1. Murray Hunter – University Malaysia Perlis ANALYSISThe emerging Halal cosmetic and personal care marketAt a time when many markets arereaching saturation point, Muslims arebecoming much more concernedconsumers, creating some of the fastestgrowing consumer segments in the world.This represents a major growthopportunity for cosmetic and personalcare companies. Halal products are veryquickly entering the mainstream marketswithin Europe and the United States. Inaddition the ‘Halal’ concept is becomingmuch more sophisticated in the MiddleEast and some Asian countries. Muslimconsumer Halal awareness has widenedfrom being concerned with meat-basedproducts a decade ago to a wide rangeof products today. Muslim consumers areseeking Halal integrity of processed foods,beverages, pharmaceuticals, insurance,travel, leather products, and evenentertainment. This has also spread to agrowing awareness about cosmetics and Figure 1: The concept of Halal in relation to HACCP and GMP.personal care products, where recentresearch has cited that more than 20% have been considered Halal due to their in these two markets are shown in Table 1of Muslim consumers are concerned predominately Muslim populations.2 About and Table 2.6about Halal issues with the products half these sales are in the Middle East, The markets listed in the Table 1 varythey are using.1 with US$2.1 billion sales in Saudi Arabia greatly in the stage of development and are Halal personal care products in the alone.3 Although per-capita consumption relatively heterogeneous due to differingmarket today include hair shampoos, rates are not as high in other Islamic individual country tastes and preferences,conditioners, bath and shower gels, markets, sales are growing around 15% although specific markets will tend to becleansers, creams, lotions, talc and baby per annum according to the author’s own homogeneous due to similar cultural,powders, toners, make up, perfumes, eau estimate. Halal or Islamic cosmetics are historical and social consumption traits.de colognes and oral care products. In now available in many places, including Markets like Indonesia, Pakistan,contrast to personal care, cosmetic onboard sales on Saudi Airlines,4 Bangladesh, Nigeria, Iraq, Sudan,market growth is not uniform and slightly supermarkets (including in Europe and the Uzbekistan etc., have low per capitaslower than personal care segments, as US), specialty Halal shops and widely incomes, where aggregate consumptionmodesty has an important influence on through the internet. Some manufacturers of many consumer items would be very low,Muslim female consumers. However this have integrated the concepts of Halal, until some further development takesvaries according to the country and organic and fairtrade into their products in place. Despite the relative affluence of theupbringing where some women wear a the European market.5 UAE and other Arab Gulf States, in somefull length style robe and veil while others Given that one person in five is Muslim cases supply chains are still typically thirddo not. in the world and Muslims in Western world. In Asia, rural and urban populations countries are becoming more aware of have vastly differing aspirations andMarket size Islamic teachings, the Halal cosmetic values, and South Asian Muslims speakThere are various estimates about the market should continue to grow solidly. a multitude of different languages andcurrent size of the Halal cosmetic market There are two major parts of the potential practice different customs. We also seeranging from US$5-14 billion sales per certified Halal market, country markets the Muslims of Northern Africa are vastlyannum. These estimates probably vary where the Muslim population make up different in dress and custom from thedue to the different definitions given to the majority and country markets where Muslims of Turkey and Iran for example.what constitute Halal products, where in Muslim consumers are a minority group. Some Muslims identify more strongly withsome markets, particularly in countries This represents around 20% of the Western values than others, thereforelike Indonesia and Malaysia, all products global population. The major countries different markets will have different needs. March 2012 P E R S O N A L C A R E 37
  • 2. ANALYSIS Table 1: Markets where the Islamic population is the dominant group. Niche markets The major countries where the Muslim Ranked by Muslim GDP at purchasing price parity population is the minority are also Rank Country Total Muslim Muslim Muslim GDP GDP potentially substantial markets for Halal population population population USD (PPP) per capita certified products, representing large (%) (billion) USD (PPP) market segment potentials (Table 2). The US, Russia, China, France and 1 Turkey 71,892,808 99 71,173,879 879.12 12,900 Germany rank among the top Islamic 2 Indonesia 237,512,352 88 207,000,105 771.075 3,725 economies according to aggregate 3 Iran 65,875,224 98 64,557,719 737.94 10,624 Islamic GDP figures. Recent reports 4 Saudi Arabia 28,146,656 100 28,146,656 564.6 23,243 indicate that Halal sales in the US are increasing around 80% per year, where a 5 Pakistan 172,800,048 97 167,616,046 397.7 2,600 number of new retail outlets specialising 6 Egypt 81,713,520 90 73,542,168 363.6 5,500 in Halal products are increasing. A&P , 7 Algeria 33,769,668 99 33,431,971 222.5 6,500 Loblaws, Food Basics and Wal-Mart are 8 Malaysia 25,274,132 60.4 15,265,575 215.9 13,316 allocating space for Halal products in 9 Bangladesh 153,546,896 90 138,192,206 186 1,300 their stores.7 Many of the other countries down the list represent very small 10 UAE 4,621,399 96 4,436,543 160.6 37,300 markets. However, in Europe and the 11 Nigeria 146,255,312 50 73,127,656 146.35 2,035 Middle East, per capita consumption 12 Morocco 34,343,220 99 33,999,787 124 4,100 of cosmetics is high.8 Possibilities exist 13 Kuwait 2,596,799 85 2,207,279 110.5 39,305 that in some countries there may be 14 Albania 3,619,778 70 2,533,845 13,94 6,300 potentially lucrative niches. 15 Iraq 28,221,180 97 27,374,544 99.23 3,600 There is one important point that should be made here. Islam has no 16 Kazakhstan 15,340,533 57 8,744,103 95.5 11,100 geographical boundaries, thus diversity 17 Syria 19,747,586 90 17,772,827 78.3 4,500 rather than homogeneity is the key to 18 Tunisia 10,383,577 98 10,175,905 75.4 7,500 this market where faith is the only 19 Libya 6,173,579 97 5,988,371 72.5 12,300 common bonding factor. Even as Muslims 20 Azerbaijan 8,177,717 95 7,768,831 62.2 7,700 lean towards Western style consumption and lifestyles, they are embracing their Table 2: Markets where the Islamic population is a minority group. faith with much more reverence than perhaps previous generations that had Ranked by Muslim GDP at purchasing price parity to struggle to survive. Muslim obligation Rank Country Total Muslim Muslim Muslim GDP GDP under the Tawhid (the relationship population population population USD (PPP) per capita between man and God) is something (%) (billion) USD (PPP) that enters into everyday life and as a consequence, Muslim consumers are 1 USA 303,824,640 3.5 10,633,862 487 45,800 seeking products and services that are 2 India 1,147,995,904 13.4 153,831,451 415.3 2,700 Syar’iah compliant (the path shown 3 Russia 140,702,096 10.5 14,633,017 215.1 14,700 by God). However on the other hand, 4 China 1,330,044,544 3.0 39,901,336 211.5 5,300 some research shows that approximately 20% of Muslim consumers do not look 5 France 64,057,792 7.5 4,804,334 159.5 33,200 for Halal certifications when purchasing 6 Germany 82,369,552 3.7 3,047,673 104.2 34,200 a product and that the majority of 7 Thailand 58,851,357 14.0 8,239,190 65 7,900 consumers will buy products that do 8 UK 60,943,912 2.7 1,645,485 57.75 35,100 not have the logo if there are no 9 Japan 125,449,703 1.0 1,254,497 42.1 33,600 alternatives.9 More research is required in this area. 10 Italy 57,460,274 2.4 1,379,047 41.92 30,400 Central to the Syar’iah are the 11 Philippines 74,480,848 14.0 10,427,319 35.4 3,400 concepts of Halal and Toyyibaan, which 12 Netherlands 15,568,034 5.4 840,674 32.4 38,500 govern all the economic activities of man 13 Singapore 3,396,121 17.0 577,477 28.7 49,700 in production and consumption of wealth, 14 Canada 33,212,696 1.9 631,041 24.2 38,400 where certain means of gaining a 15 Israel 5,421,995 14.0 759,079 19.58 25,800 livelihood are declared unlawful.10 Halal means lawful or permitted for Muslims,11 16 Spain 40,491,052 1.5 607,365 18.3 30,100 a concept that is much wider than food 17 Angola 10,366,031 25 2,591,508 14.5 5,600 issues. It concerns whether operations 18 Austria 8,205,533 4.5 369,248 14.2 38,400 and procedures are undertaken according 19 Kenya 28,176,686 29.5 8,312,122 14.13 1,700 to the Syar’iah.12 Toyyibaan is an even 20 Belgium 10,258,762 3.6 369,315 13 35,300 wider concept than Halal, which means good, clean, wholesome, ethical in the 21 Poland 38,633,912 2.0 772,678 12.6 16,300 Islamic concept. Under the concept of 22 Hungary 10,106,017 6.0 606,361 11.5 19,000 Toyyibaan, food and other products must 23 Australia 21,007,310 1.5 315,109 11.4 36,300 be clean, safe, nutritious, healthy and balanced.13 Toyyibaan would also mean38 P E R S O N A L C A R E March 2012
  • 3. ANALYSIS law (see Table 3). This causes much uneasiness among many Muslims as they feel they are violating Islamic teachings by using such products. In addition, through advances in biotechnology, new ingredients are being formulated into products where Halal status is unknown. It is important to the majority of the Muslim community that some system is in place to assure them that the products they purchase and consume are lawful under Islam. Forbidden ingredients There are a number of ingredients which Muslims cannot consume in any form, which include: ɀ Pork or pork by-products. ɀ Animals that are dead or dying prior toFigure 2: Strong Halal cosmetic competition in Malaysia with many philosophical slaughter.and technical issues to resolve. ɀ Blood and blood by-products. ɀ Carnivorous animals.that agriculture must be undertaken take a holistic approach to comply, not ɀ Birds of prey.within a sustainable regime of practices,14 just the launch of a new product or ɀ Land animals without external ears.raw materials should be produced brand. ɀ Alcohol.sustainably, and business should be done Increasing market internationalisation ɀ Animals killed in the name of anythingwith good intentions.15 Therefore in the means that new product choices are other than Allah (God).strict sense of these concepts, Toyyibaan available to consumers from companiesinfluences management styles, human and service providers which consumers Muslims living as a minority in a non-resources policies, business ethics, raw do not know and are yet to trust. Many Islamic society have a number of problemsmaterial selection, and manufacturing products utilise animal based product identifying what items are Halal and Harammethods. This means that entering the formulations, which may or may not have (forbidden in Islam), without productIslamic market requires a company to been slaughtered according to Islamic certification. For example, gelatine, lard March 2012 P E R S O N A L C A R E 39
  • 4. ANALYSISand tallow can be either Halal or integration system with a positive Halal cosmetics is still low within the Muslimnon-Halal, depending upon the source ingredient list, a procurement and community. Muslim consumers areand method of processing. Cross manufacturing procedure certification and increasing in affluence and beginning tocontamination is a major problem in supply chain tracking system called HAL- focus upon their religious obligations thatstores and particularly restaurants where Q, converging GMP HACCP Halal, and , , demand for Halal cosmetics is set topork is also served. Therefore from the Toyyibaan into a single set of increase exponentially. MuslimMuslim consumer standpoint: procedures.21 These advances will solve consumers would be expected to exhibitɀ Products must be produced without many Halal integrity issues now allowing strong loyalty to trusted Halal and any forbidden ingredients. much easier world trade with a trusted Toyyibaan certified products over non-ɀ Products must be proved to be in the certification and tracking system. compliant products based on behaviour interests of the consumers’ health in other Muslim markets. In addition to and wellbeing. Conclusion Syar’iah compliance, Halal products willɀ Products must be clean and hygienic, In a world that is becoming more require brand building. However, how this have supply chain integrity.16 spiritually conscious, awareness of Halal will be done within an industry dependingɀ Products must benefit those who produced them. Table 3: Some raw materials that are of concern to Muslim consumers.ɀ Products must benefit the community they came from.17 Albumen Sometimes used as a coagulating agent and protein in productsɀ Products and the materials that make and usually derived from egg whites. up these products must be traceable Allantoin Sometimes used in creams and lotions as a wound treating agent from the origin, to have total and derived from uric acid from cows and other mammals. confidence (as shown in Fig. 1).18 Ambergris Used as warm fresh sea-like notes and fixative in some fineAn emerging industry of Halal certification fragrances and derived from the intestines of whalesbodies has been created to attempt to Amino acids Used as ascetic ingredients (protein builders in nature) in shampoosverify these issues. and sometimes derived from animal sources. Methods of discovering ‘Haram Arachidonic acid An unsaturated fatty acid used in some skin creams and lotions as animpurities’ in products are rapidly eczema and rash soother and derived from animal livers.improving. Now the type of animals rawmaterials are derived from can be Cholesterol A steroid alcohol found in all animal fats and egg yolks sometimesidentified using polymerase chain used in eye creams and shampoos, etc.reaction (PCR) which greatly improves the Collagen and elastin Proteins derived from animal tissues.potential for Halal integrity, allowing the Cystine A sulphur containing amino acid used as a nutritional supplement,development of Halal supply chains and in emollients, hair treatment, and anti-aging products, derived fromproduct tracking. The Halal certification animal sources.process involves:ɀ Halal accreditation should be done Ethanol Alcohol which is forbidden to be consumed in Islam. It is widely with an Islamic Association with a debated whether alcohol should be allowed in personal care and good international reputation. cosmetic formulations.ɀ All processes must comply with Gelatine Thickener & emulsifier used in shampoos, facemasks, and other requirements under the Syar’iah. cosmetics, derived from cow and pig ligament, skin and bones.ɀ All ingredients must be checked as to Glycerine A by-product of soap manufacture used in cosmetics, toothpastes, their suitability to be certified Halal. All soaps, ointments, and medicines, of concern when derived from ingredients must be certified Halal tallow-based soaps. before the product can be certified Halal. Hydrolysed Sometimes used in shampoos and other hair treatments.ɀ Any Haram (unlawful products) must animal protein be processed in separate facilities and Keratin A protein used in shampoos, hair rinses and permanent wave never come into contact with Halal solutions derived from hooves, horns, feathers, and hair of certifiable products. various animals.ɀ Halal and products considered Haram Lactic acid Used a preservative in the formation of plasticizers derived by can never be stored together.19 bacterial fermentation of sour milk, etc.Thailand is taking the lead with their Lanolin An emollient used in skin care products derived from wool.world class Halal Science centre at Lard Used in shaving creams, soaps, and cosmetics and derivedChulalongkorn University in Bangkok from hog fat.established in 1994.20 The centre Lecithin Used in eye creams, lipsticks, hand lotions, soaps, and shampoos,focuses on developing standards, Haram being derived from either egg yolks or soybeans.ingredient detection for certificationpurposes, production system Myristic acid An acid used in shampoos, creams and cosmetics which can bedevelopment with a Halal-GMP/HACCP derived from both plants and animals.framework, and consumer information Tallow, tallow fatty Used in cosmetic and personal care formulations as surfactants andservices as well as research. The Halal acids and alcohols usually derived from animal fat.centre has recently developed a Vitamin A Used in cosmetics and personal care products and can be derivedcompletely integrated approach to Halal from both plant and animal sources.integrity through a supply chain40 P E R S O N A L C A R E March 2012
  • 5. on glamour as a brand attribute to anoverly modest set of consumers, stillremains to be seen. Halal issues involved with cosmetics The rise and rise ofand personal care products are far frombeing totally agreed upon and without non-alcoholic perfumesskeptical criticisms. For example, thereare different schools of thought about Fine fragrances have a long history with The non-alcoholic fine fragrancewhether Islamic teachings prohibit the Arabs since ancient times and this industry has grown from a smallalcohol use on the body outside oral connection can still be seen with the specialised market where a few tradersconsumption. Not all Muslims are in agarwood trade and ‘attar’ traders in imported concentrates from France, whichagreement over this as many of the Egypt, Tunisia, Syria, Jordan, Gulf States, they diluted and bottled, for sale at nightblogs22 and comments at the end of and Lebanon. This ‘attar’ trade has markets and shopping centres to over aonline articles show.23 Advertising and become modernised in Indonesia, US$800 million industry at retail levelmarketing methods are also leading Malaysia, and Singapore with companies today. It is still growing tremendously.to criticisms as the billboard shown in offering non-alcoholic ‘knock offs’ of the Originally the industry ‘copied’ andFigure 2 is ambiguous in what it is big name fine fragrances. Conventional imitated the popular fine fragrances ofactually promoting to the consumer. fine perfumes usually contain 70%-80% the world, but today companies are As we have seen with the ‘Arab of high pharmaceutical grade ethanol as a developing their own localised scents, ownSpring’, Muslims in many countries are carrier, with parfum de toilette or eau de brandings and developing loyal customernow engaging in debate about what form parfum up to 90% ethanol. Ethanol acts followings. Non-alcoholic fine fragranceof society and government they should as a carrier for fine fragrances, has a fits well with the colourful flowery fashionhave in the future, where interpretation cooling effect on the skin, and assists the of Malaysia and persona of the modernof religious doctrine and openness to odour radiate from the skin through Malay woman. Fragrance is seen as anoutside influences are being redefined as evapouration. However Muslim consumers important accessory where creativewe write. There is little doubt that the frown upon using alcohol on their skin in marketing companies develop personalitycontrol of outside influences will be less line with their beliefs, and seek based lines matched to the colours ofthan before as satellite TV and the alternatives. Instead of using ethanol, their fashions through direct marketinginternet are being freed up. How this non-alcoholic perfumes are water-based. channels. This lucrative market niche hasequates to the future demand of Some even utilise apricot kernel, and not been left to the locals. Astute Frenchcosmetics and awareness about jojoba oils to bring a more natural companies have been seen entering thiscomposition is yet to be fully known. opulence to the fragrance. market bringing with it a European flare.However one thing is certain, the Muslimmarket will gradually represent 15%-20%of the total market – something that science, industry and entrepreneurship: a Ummah. In: Saifuddeen SM, Mohd. Salleh S,cannot be ignored. focus on the Asia-Pacific region. New York: Sobian A. Food and Technological Progress: An As a final word, the objective of this Nova, 2009. Islamic Perspective, Kuala Lumpur, MPHarticle was to skim through some of the 7 Burgmann T. Growing Muslim population Publishing 2006: 173.issues related to the market, supply pushing companies to produce products they 15 Al-Qur’an (7:58)chain, and ethical issues concerning can eat. The Toronto Star, 22 July 2007. 16 Sungkar I. Developing the halal value propositionHalal cosmetics and personal care www.thestar.com/business/article/238551 from farm to folk. In: Proceedings of the 3rdproducts in the market today. The (accessed 31 January 2012) Malaysian International Agro-Bio Businessintention of the author is to point out 8 Rossi E, Prlic A, Hoffman R. A study of the Conference. Kuala Lumpur, 12-13 July 2007.that another new and potentially European cosmetic industry, executive 17 Hunter M. An Islamic business model: a Tawhidsubstantial market segment is growing summary. European Commission, Directorate approach. SME-Entrepreneurship Globaland should be taken seriously, not General for Enterprise and Industry, November Conference 2008, 4 July 2008, Monashnecessarily for market positioning 2007. ec.europa.eu/enterprise/cosmetics/doc University, Australia.purposes, but at least for consideration in /exec_summ_cosmetics_2007.pdf (accessed 18 Hunter M. The concept of HalalGAP as a meansingredient selection and product 31 January 2012). of gaining unfair competitive advantage. Worldcertification. 9 Othman R, Mohd Zaihani SH, Ahmad ZA. Food Shortage Conference – Series II, 9-10 July Customers’ attitude towards halal food status: 2009. Putra World Trade Centre (PWTC), KualaReferences a survey on Penang Muslim customers. In: Lumpur.1 Malaysian External Trade Development Proceedings of the 2nd National Conference 19 Rahman HA. Halal agro-industry supply chain. Corporation (MATRADE) research. on Entrepreneurship and Small Business. World Food Shortage Conference – Series II,2 See consumer brands of the top 100 Vistana Hotel, Penang, 9-10 December 2006. 9-10 July 2009, Putra World Trade Centre companies in the Muslim world (2010) 10 Al-Qur’an (5:5), (2:168). (PWTC), Kuala Lumpur. www.tinyurl.com/84kudyw 11 Chaudry MS. Social and moral code of Islam, 20 www.halalscience.org/en/main/index.php3 Kamarul Azman Kamaruzan. Halal cosmetics: Batu Caves, Selangor, Malaysia. Masterpiece 21 Dahlan W. Enabling Halal industry and trade between real concerns and plain ignorance, Publications 2006: 15. through Halal science and technology. 1st East The Halal Journal. 12 Halal-Haram Guide, Penang, Consumers Asia Agri-Business Seminar 2010, 30 November www.halaljournal.com/article/ 3375/halal- Association of Penang, 2006: 17. 2010. Malaysia Expo Exposition Park, Serdang cosmetics:-between-real-concerns-and-plain- 13 Amin M. Wisdom of the Prophet Muhammad, (keynote speech). ignorance. (accessed 31 January 2012). Lahore, Pakistan, Sh. Muhammad Ashraf, 22 For example: http://www.halalblog.com/4 www.alarabiya.net 1965. 2007/03/07/halal-organic-cosmetics-2/5 www.saafpureskincare.com 14 Abdullah A, Huda N. Nutrition Security in 23 For example: http://www.alarabiya.net/6 Hunter M. Essential oils: art, agriculture, Muslim Countries: The Drive Towards a Healthy articles/2009/09/12/84711.html March 2012 P E R S O N A L C A R E 41