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    Notes From Asia

    The Growing Impact of Halal On Asia’s Cosmetic Industry

    ...

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    Michelle Yeomans, Consultant12.01.16
    There’s been real progress for halal beauty this year as Cosmax became the first Korean cosmetics manufacturer to receive halal certification from Majelis Ulama Indonesia for its Jakarta facility. Getting the green light from one of the world’s three major halal certification agencies has given the brand a head start in capturing South East Asia’s burgeoning demand for halal-friendly beauty products.

    With segment sales expected to reach nearly $2.5 billion in Asia alone by 2020, this development is a reminder to other cosmetic players that if they wish to remain competitive, they must devise some sort of “halal strategy.” Here, Happi looks at which markets the industry is particularly feeling the pressure from and the work going on behind the scenes to determine the real cost of investing in halal.


    Demand Outside Muslim Countries


    Halal is an Arabic term used to describe items that are considered acceptable for consumption or use and applies to all aspects of life for the practitioners of Islam, including pharmaceuticals, personal care, skin and hair care products. In Asia, however, demand is not necessarily coming from Muslim majority countries.

    Thailand, the Philippines, Australia and New Zealand are all working on bills on the manufacture, accreditation and trade of domestically produced halal products.

    However, in Indonesia, where Muslims account for 80% of the population, the market is taking a more extreme approach by introducing mandatory halal certification for cosmetics following the passing of the Halal Product Guarantee Law by the Indonesian National Assembly.

    To establish the impact of this on the industry as a whole, Dr. Alain Khaiat, VP-technical and scientific affairs at the ASEAN Cosmetic Association, informed Happi that Cosmetics Europe, the Personal Care Products Council and the Japanese Cosmetics Industry Association have sponsored a study by the University of Indonesia to assess the financial impact the industry faces on entering this sector.


    Challenges


    According to Khaiat, the challenge is that halal cosmetics ranges must be cost effective for consumers, yet the industry will have to invest in costly processes that assures formulas, ingredients, packaging formats and transportation containers all adhere to halal principles.

    “Going down the halal route will be expensive for the cosmetics industry. We need to know how the principles will be implemented across the board and how small local brands are going to be affected,” explained Khaiat.

    Key challenges he said, include regulating third party suppliers, providing training for employees and the appropriate labeling of claims and marketing on final products.

    “Ensuring a system is in place and upholding it to guarantee the halal nature of products and factories in Indonesia is imperative here for gaining consumer trust,” stressed Khaiat.

    Furthermore, he contends that while major beauty players may be able to afford going down this route, SMEs could struggle to raise funds to make those well-needed changes to production processes and facilities and will be eaten up by the competition in the long run.

    “We could then start to see halal-only cosmetics stores with this mandatory law and even if the international players can afford the process, they will have more ranges to manage and that will not come easily,” said the industry expert.

    However, Khaiat insisted that the cost of not investing in this segment would be just as costly, as Korean brands are discovering now.

    Korea Steps Up

    While Indonesia is currently the only market to implement this mandatory law, interestingly enough, it has been Cosmax and fellow Korean players that have been feeling the heat to push forward and achieve halal certification.

    According to James Noh, director general of the Korea Institute of Halal Industry, competition is rife in Korea so expanding ranges to cater to Muslim consumers in other markets is a way for brands to separate themselves from the pack.

    “In Korea, the concept of ‘natural beauty’ is favored in the skin care product sense and I’ve found that not using animal ingredients is a widespread trend for selecting materials in the cosmetics industry. This trend will provide good ground for Korean cosmetics to be halal friendly,” Noh told Happi.



    Michelle Yeomans
    Email: Michelle.yeomans@gmail.com

    Michelle Yeomans is an award winning multimedia journalist. She has been reporting on cosmetics industry movements in EMEA, US and Asia for five years and has won an award for her coverage of the complexities of operating in the Middle East. Michelle’s passion lies in tracking the beauty culture and trends of the Asia Pacific region. Ever the AV enthusiast, she also relishes the opportunity to create engaging video and podcast content for the B2B industry.
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