For many Americans, the term “halal” may only conjure up vague images of meat on a stick sold by vendors on the streets of New York. However, new regulations that quietly passed in Indonesia last fall will soon bring it to the forefront of the beauty world, having implications for all multinational cosmetic and toiletry marketers—both inside and outside of the country. A recent interview with Renu Singh, a Project Lead in Kline’s Consumer Products practice, helps demystify this phenomenon.
What does halal even mean?
In a nutshell, halal is to Islam as kosher is to Judaism. It is an Arabic term that means “permissible” or “lawful.” It is an Islamic Shariah principle that encompasses food and drink, as well as all matters of daily life.
What does it have to do with beauty products?
When it comes to cosmetics, halal-certified products must not contain alcohol and non-permissible animal-derived ingredients (or haram, the opposite of halal), nor be animal tested. Non-permissible ingredients include canine and porcine derivatives, carrion, and ingredients derived from animals that are slaughtered incorrectly (not according to the Shariah law), insects, and reptiles.
What role do halal products play in the beauty world today?
The halal segment of beauty personal care is already sizable in places like Indonesia and the Middle East, as well as a rapidly growing niche in Europe and other parts of the world. Halal cosmetics and personal care products are widely recognized for their purity and high quality and are increasingly used by Muslims and non-Muslims alike.
What can you tell us about these new regulations in Indonesia?
The Halal Product Certification Bill, passed in Indonesia in September 2014 after a decade of deliberation by the government, requires that all products—including cosmetics—sold in the country be halal-certified by 2019. The law extends not only to the ingredients used in products, but also has stipulations for machinery and equipment used, as well as the manufacturing, packaging, and delivery processes.
Why Indonesia?
With more than a quarter billion people, Indonesia is the fourth most populous nation in the world, and nearly 90% of its inhabitants are Muslim. Indonesia has the largest share of the global Muslim population of any country—larger than the share of Pakistan or India—and Islamic concepts and principles are widely embraced by a majority of this population. Globally, Muslims constitute the world’s second largest religious group. It is predicted that the world’s Muslim population will grow twice as fast as non-Muslims over the next 20 years. By 2030, Muslims are expected to account for more than a quarter of the global population.
Why should multinational beauty marketers care about this development?
This is expected to have major implications for all multinational marketers of personal care products—both inside and outside of Indonesia—since the use of non-halal raw materials for cosmetics is often unavoidable and many multinationals do not currently manufacture products specifically for Indonesia. Indonesia is among the 30 top markets for beauty products in the world and is one of the largest and most dynamic markets in Asia. Global marketers cannot afford to exit or ignore it. To continue to play in Indonesia would likely require changes to processes and certification protocols. Imported products are also required to have the certification, either from a certifying authority in Indonesia or the country of origin. The verification process must be carried out by Muslim auditors, and all fees and additional costs for the inspection and processing must be handled by the company.
How have beauty marketers reacted so far?
Some multinational corporations like Colgate-Palmolive and Avon are among the early converters to halal certification, while several other firms are gearing up to customize their offerings for Indonesian consumers. L’Oréal has opened its largest factory in the world in Indonesia.
How will Kline’s new report on this topic help marketers of beauty and personal care products?
Our Halal Beauty and Personal Care: Market Analysis and Opportunities report will assess the market for halal-certified cosmetics and toiletries. Beginning with an assessment of the current market situation and dynamics, the study will be forward-looking in nature, taking into account the regulatory changes that are happening in Indonesia and project how the global market will respond to this change. The study will help marketers better prepare for these changes and navigate their options by understanding the current landscape and future implications.
