March 2012 P E R S O N A L C A R E 37 Murray Hunter – University Malaysia Perlis ANALYSIS At a time when many markets are reaching saturation point, Muslims are becoming much more concerned consumers, creating some of the fastest growing consumer segments in the world. This represents a major growth opportunity for cosmetic and personal care companies. Halal products are very quickly entering the mainstream markets within Europe and the United States. In addition the ‘Halal’ concept is becoming much more sophisticated in the Middle East and some Asian countries. Muslim consumer Halal awareness has widened from being concerned with meat-based products a decade ago to a wide range of products today. Muslim consumers are seeking Halal integrity of processed foods, beverages, pharmaceuticals, insurance, travel, leather products, and even entertainment. This has also spread to a growing awareness about cosmetics and personal care products, where recent research has cited that more than 20% of Muslim consumers are concerned about Halal issues with the products they are using. 1 Halal personal care products in the market today include hair shampoos, conditioners, bath and shower gels, cleansers, creams, lotions, talc and baby powders, toners, make up, perfumes, eau de colognes and oral care products. In contrast to personal care, cosmetic market growth is not uniform and slightly slower than personal care segments, as modesty has an important influence on Muslim female consumers. However this varies according to the country and upbringing where some women wear a full length style robe and veil while others do not. Market size There are various estimates about the current size of the Halal cosmetic market ranging from US$5-14 billion sales per annum. These estimates probably vary due to the different definitions given to what constitute Halal products, where in some markets, particularly in countries like Indonesia and Malaysia, all products have been considered Halal due to their predominately Muslim populations. 2 About half these sales are in the Middle East, with US$2.1 billion sales in Saudi Arabia alone. 3 Although per-capita consumption rates are not as high in other Islamic markets, sales are growing around 15% per annum according to the author’s own estimate. Halal or Islamic cosmetics are now available in many places, including onboard sales on Saudi Airlines, 4 supermarkets (including in Europe and the US), specialty Halal shops and widely through the internet. Some manufacturers have integrated the concepts of Halal, organic and fairtrade into their products in the European market. 5 Given that one person in five is Muslim in the world and Muslims in Western countries are becoming more aware of Islamic teachings, the Halal cosmetic market should continue to grow solidly. There are two major parts of the potential certified Halal market, country markets where the Muslim population make up the majority and country markets where Muslim consumers are a minority group. This represents around 20% of the global population. The major countries in these two markets are shown in Table 1 and Table 2. 6 The markets listed in the Table 1 vary greatly in the stage of development and are relatively heterogeneous due to differing individual country tastes and preferences, although specific markets will tend to be homogeneous due to similar cultural, historical and social consumption traits. Markets like Indonesia, Pakistan, Bangladesh, Nigeria, Iraq, Sudan, Uzbekistan etc., have low per capita incomes, where aggregate consumption of many consumer items would be very low, until some further development takes place. Despite the relative affluence of the UAE and other Arab Gulf States, in some cases supply chains are still typically third world. In Asia, rural and urban populations have vastly differing aspirations and values, and South Asian Muslims speak a multitude of different languages and practice different customs. We also see the Muslims of Northern Africa are vastly different in dress and custom from the Muslims of Turkey and Iran for example. Some Muslims identify more strongly with Western values than others, therefore different markets will have different needs. The emerging Halal cosmetic and personal care market Figure 1: The concept of Halal in relation to HACCP and GMP Niche markets The major countries where the Muslim population is the minority are also potentially substantial markets for Halal certified products, representing large market segment potentials (Table 2). The US, Russia, China, France and Germany rank among the top Islamic economies according to aggregate Islamic GDP figures. Recent reports indicate that Halal sales in the US are increasing around 80% per year, where a number of new retail outlets specialising in Halal products are increasing. A&P , Loblaws, Food Basics and Wal-Mart are allocating space for Halal products in their stores. 7 Many of the other countries down the list represent very small markets. However, in Europe and the Middle East, per capita consumption of cosmetics is high. 8 Possibilities exist that in some countries there may be potentially lucrative niches. There is one important point that should be made here. Islam has no geographical boundaries, thus diversity rather than homogeneity is the key to this market where faith is the only common bonding factor. Even as Muslims lean towards Western style consumption and lifestyles, they are embracing their faith with much more reverence than perhaps previous generations that had to struggle to survive. Muslim obligation under the Tawhid (the relationship between man and God) is something that enters into everyday life and as a consequence, Muslim consumers are seeking products and services that are Syar’iah compliant (the path shown by God). However on the other hand, some research shows that approximately 20% of Muslim consumers do not look for Halal certifications when purchasing a product and that the majority of consumers will buy products that do not have the logo if there are no alternatives. 9 More research is required in this area. Central to the Syar’iah are the concepts of Halal and Toyyibaan, which govern all the economic activities of man in production and consumption of wealth, where certain means of gaining a livelihood are declared unlawful. 10 Halal means lawful or permitted for Muslims, 11 a concept that is much wider than food issues. It concerns whether operations and procedures are undertaken according to the Syar’iah. 12 Toyyibaan is an even wider concept than Halal, which means good, clean, wholesome, ethical in the Islamic concept. Under the concept of Toyyibaan, food and other products must be clean, safe, nutritious, healthy and balanced. 13 Toyyibaan would also mean ANALYSIS 38 P E R S O N A L C A R E March 2012 Table 1: Markets where the Islamic population is the dominant group. Ranked by Muslim GDP at purchasing price parity Rank Country Total Muslim Muslim Muslim GDP GDP population population population USD (PPP) per capita (%) (billion) USD (PPP) 1 Turkey 71,892,808 99 71,173,879 879.12 12,900 2 Indonesia 237,512,352 88 207,000,105 771.075 3,725 3 Iran 65,875,224 98 64,557,719 737.94 10,624 4 Saudi Arabia 28,146,656 100 28,146,656 564.6 23,243 5 Pakistan 172,800,048 97 167,616,046 397.7 2,600 6 Egypt 81,713,520 90 73,542,168 363.6 5,500 7 Algeria 33,769,668 99 33,431,971 222.5 6,500 8 Malaysia 25,274,132 60.4 15,265,575 215.9 13,316 9 Bangladesh 153,546,896 90 138,192,206 186 1,300 10 UAE 4,621,399 96 4,436,543 160.6 37,300 11 Nigeria 146,255,312 50 73,127,656 146.35 2,035 12 Morocco 34,343,220 99 33,999,787 124 4,100 13 Kuwait 2,596,799 85 2,207,279 110.5 39,305 14 Albania 3,619,778 70 2,533,845 13,94 6,300 15 Iraq 28,221,180 97 27,374,544 99.23 3,600 16 Kazakhstan 15,340,533 57 8,744,103 95.5 11,100 17 Syria 19,747,586 90 17,772,827 78.3 4,500 18 Tunisia 10,383,577 98 10,175,905 75.4 7,500 19 Libya 6,173,579 97 5,988,371 72.5 12,300 20 Azerbaijan 8,177,717 95 7,768,831 62.2 7,700 Table 2: Markets where the Islamic population is a minority group. Ranked by Muslim GDP at purchasing price parity Rank Country Total Muslim Muslim Muslim GDP GDP population population population USD (PPP) per capita (%) (billion) USD (PPP) 1 USA 303,824,640 3.5 10,633,862 487 45,800 2 India 1,147,995,904 13.4 153,831,451 415.3 2,700 3 Russia 140,702,096 10.5 14,633,017 215.1 14,700 4 China 1,330,044,544 3.0 39,901,336 211.5 5,300 5 France 64,057,792 7.5 4,804,334 159.5 33,200 6 Germany 82,369,552 3.7 3,047,673 104.2 34,200 7 Thailand 58,851,357 14.0 8,239,190 65 7,900 8 UK 60,943,912 2.7 1,645,485 57.75 35,100 9 Japan 125,449,703 1.0 1,254,497 42.1 33,600 10 Italy 57,460,274 2.4 1,379,047 41.92 30,400 11 Philippines 74,480,848 14.0 10,427,319 35.4 3,400 12 Netherlands 15,568,034 5.4 840,674 32.4 38,500 13 Singapore 3,396,121 17.0 577,477 28.7 49,700 14 Canada 33,212,696 1.9 631,041 24.2 38,400 15 Israel 5,421,995 14.0 759,079 19.58 25,800 16 Spain 40,491,052 1.5 607,365 18.3 30,100 17 Angola 10,366,031 25 2,591,508 14.5 5,600 18 Austria 8,205,533 4.5 369,248 14.2 38,400 19 Kenya 28,176,686 29.5 8,312,122 14.13 1,700 20 Belgium 10,258,762 3.6 369,315 13 35,300 21 Poland 38,633,912 2.0 772,678 12.6 16,300 22 Hungary 10,106,017 6.0 606,361 11.5 19,000 23 Australia 21,007,310 1.5 315,109 11.4 36,300 that agriculture must be undertaken within a sustainable regime of practices, 14 raw materials should be produced sustainably, and business should be done with good intentions. 15 Therefore in the strict sense of these concepts, Toyyibaan influences management styles, human resources policies, business ethics, raw material selection, and manufacturing methods. This means that entering the Islamic market requires a company to take a holistic approach to comply, not just the launch of a new product or brand. Increasing market internationalisation means that new product choices are available to consumers from companies and service providers which consumers do not know and are yet to trust. Many products utilise animal based product formulations, which may or may not have been slaughtered according to Islamic 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: w Pork or pork by-products. w Animals that are dead or dying prior to slaughter. w Blood and blood by-products. w Carnivorous animals. w Birds of prey. w Land animals without external ears. w Alcohol. w Animals killed in the name of anything other than Allah (God). Muslims living as a minority in a non- Islamic society have a number of problems identifying what items are Halal and Haram (forbidden in Islam), without product certification. For example, gelatine, lard ANALYSIS March 2012 P E R S O N A L C A R E 39 Figure 2: Strong Halal cosmetic competition in Malaysia with many philosophical and technical issues to resolve. and tallow can be either Halal or non-Halal, depending upon the source and method of processing. Cross contamination is a major problem in stores and particularly restaurants where pork is also served. Therefore from the Muslim consumer standpoint: w Products must be produced without any forbidden ingredients. w Products must be proved to be in the interests of the consumers’ health and wellbeing. w Products must be clean and hygienic, have supply chain integrity. 16 w Products must benefit those who produced them. w Products must benefit the community they came from. 17 w Products and the materials that make up these products must be traceable from the origin, to have total confidence (as shown in Fig. 1). 18 An emerging industry of Halal certification bodies has been created to attempt to verify these issues. Methods of discovering ‘Haram impurities’ in products are rapidly improving. Now the type of animals raw materials are derived from can be identified using polymerase chain reaction (PCR) which greatly improves the potential for Halal integrity, allowing the development of Halal supply chains and product tracking. The Halal certification process involves: w Halal accreditation should be done with an Islamic Association with a good international reputation. w All processes must comply with requirements under the Syar’iah. w All ingredients must be checked as to their suitability to be certified Halal. All ingredients must be certified Halal before the product can be certified Halal. w Any Haram (unlawful products) must be processed in separate facilities and never come into contact with Halal certifiable products. w Halal and products considered Haram can never be stored together. 19 Thailand is taking the lead with their world class Halal Science centre at Chulalongkorn University in Bangkok established in 1994. 20 The centre focuses on developing standards, Haram ingredient detection for certification purposes, production system development with a Halal-GMP/HACCP framework, and consumer information services as well as research. The Halal centre has recently developed a completely integrated approach to Halal integrity through a supply chain integration system with a positive Halal ingredient list, a procurement and manufacturing procedure certification and supply chain tracking system called HAL- Q, converging GMP , HACCP , Halal, and Toyyibaan into a single set of procedures. 21 These advances will solve many Halal integrity issues now allowing much easier world trade with a trusted certification and tracking system. Conclusion In a world that is becoming more spiritually conscious, awareness of Halal cosmetics is still low within the Muslim community. Muslim consumers are increasing in affluence and beginning to focus upon their religious obligations that demand for Halal cosmetics is set to increase exponentially. Muslim consumers would be expected to exhibit strong loyalty to trusted Halal and Toyyibaan certified products over non- compliant products based on behaviour in other Muslim markets. In addition to Syar’iah compliance, Halal products will require brand building. However, how this will be done within an industry depending ANALYSIS 40 P E R S O N A L C A R E March 2012 Table 3: Some raw materials that are of concern to Muslim consumers. Albumen Sometimes used as a coagulating agent and protein in products and usually derived from egg whites. Allantoin Sometimes used in creams and lotions as a wound treating agent and derived from uric acid from cows and other mammals. Ambergris Used as warm fresh sea-like notes and fixative in some fine fragrances and derived from the intestines of whales Amino acids Used as ascetic ingredients (protein builders in nature) in shampoos and sometimes derived from animal sources. Arachidonic acid An unsaturated fatty acid used in some skin creams and lotions as an eczema and rash soother and derived from animal livers. Cholesterol A steroid alcohol found in all animal fats and egg yolks sometimes used in eye creams and shampoos, etc. Collagen and elastin Proteins derived from animal tissues. Cystine A sulphur containing amino acid used as a nutritional supplement, in emollients, hair treatment, and anti-aging products, derived from animal sources. Ethanol Alcohol which is forbidden to be consumed in Islam. It is widely debated whether alcohol should be allowed in personal care and cosmetic formulations. Gelatine Thickener & emulsifier used in shampoos, facemasks, and other cosmetics, derived from cow and pig ligament, skin and bones. Glycerine A by-product of soap manufacture used in cosmetics, toothpastes, soaps, ointments, and medicines, of concern when derived from tallow-based soaps. Hydrolysed Sometimes used in shampoos and other hair treatments. animal protein Keratin A protein used in shampoos, hair rinses and permanent wave solutions derived from hooves, horns, feathers, and hair of various animals. Lactic acid Used a preservative in the formation of plasticizers derived by bacterial fermentation of sour milk, etc. Lanolin An emollient used in skin care products derived from wool. Lard Used in shaving creams, soaps, and cosmetics and derived from hog fat. Lecithin Used in eye creams, lipsticks, hand lotions, soaps, and shampoos, being derived from either egg yolks or soybeans. Myristic acid An acid used in shampoos, creams and cosmetics which can be derived from both plants and animals. Tallow, tallow fatty Used in cosmetic and personal care formulations as surfactants and acids and alcohols usually derived from animal fat. Vitamin A Used in cosmetics and personal care products and can be derived from both plant and animal sources. on glamour as a brand attribute to an overly modest set of consumers, still remains to be seen. Halal issues involved with cosmetics and personal care products are far from being totally agreed upon and without skeptical criticisms. For example, there are different schools of thought about whether Islamic teachings prohibit alcohol use on the body outside oral consumption. Not all Muslims are in agreement over this as many of the blogs 22 and comments at the end of online articles show. 23 Advertising and marketing methods are also leading to criticisms as the billboard shown in Figure 2 is ambiguous in what it is actually promoting to the consumer. As we have seen with the ‘Arab Spring’, Muslims in many countries are now engaging in debate about what form of society and government they should have in the future, where interpretation of religious doctrine and openness to outside influences are being redefined as we write. There is little doubt that the control of outside influences will be less than before as satellite TV and the internet are being freed up. How this equates to the future demand of cosmetics and awareness about composition is yet to be fully known. However one thing is certain, the Muslim market will gradually represent 15%-20% of the total market – something that cannot be ignored. As a final word, the objective of this article was to skim through some of the issues related to the market, supply chain, and ethical issues concerning Halal cosmetics and personal care products in the market today. The intention of the author is to point out that another new and potentially substantial market segment is growing and should be taken seriously, not necessarily for market positioning purposes, but at least for consideration in ingredient selection and product certification. References 1 Malaysian External Trade Development Corporation (MATRADE) research. 2 See consumer brands of the top 100 companies in the Muslim world (2010) www.tinyurl.com/84kudyw 3 Kamarul Azman Kamaruzan. Halal cosmetics: between real concerns and plain ignorance, The Halal Journal www.halaljournal.com/article/ 3375/halal- cosmetics:-between-real-concerns-and-plain- ignorance. (accessed 31 January 2012). 4 www.alarabiya.net 5 www.saafpureskincare.com 6 Hunter M. Essential oils: art, agriculture, science, industry and entrepreneurship: a focus on the Asia-Pacific region . New York: Nova, 2009. 7 Burgmann T. Growing Muslim population pushing companies to produce products they can eat. The Toronto Star , 22 July 2007. www.thestar.com/business/article/238551 (accessed 31 January 2012) 8 Rossi E, Prlic A, Hoffman R. A study of the European cosmetic industry, executive summary . European Commission, Directorate General for Enterprise and Industry, November 2007. ec.europa.eu/enterprise/cosmetics/doc /exec_summ_cosmetics_2007.pdf (accessed 31 January 2012). 9 Othman R, Mohd Zaihani SH, Ahmad ZA. Customers’ attitude towards halal food status: a survey on Penang Muslim customers. In: Proceedings of the 2nd National Conference on Entrepreneurship and Small Business Vistana Hotel, Penang, 9-10 December 2006. 10 Al-Qur’an (5:5), (2:168). 11 Chaudry MS. Social and moral code of Islam, Batu Caves, Selangor, Malaysia. Masterpiece Publications 2006: 15. 12 Halal-Haram Guide, Penang, Consumers Association of Penang, 2006: 17. 13 Amin M. Wisdom of the Prophet Muhammad, Lahore, Pakistan, Sh. Muhammad Ashraf, 1965. 14 Abdullah A, Huda N. Nutrition Security in Muslim Countries: The Drive Towards a Healthy Ummah. In: Saifuddeen SM, Mohd. Salleh S, Sobian A. Food and Technological Progress: An Islamic Perspective, Kuala Lumpur, MPH Publishing 2006: 173. 15 Al-Qur’an (7:58) 16 Sungkar I. Developing the halal value proposition from farm to folk. In: Proceedings of the 3rd Malaysian International Agro-Bio Business Conference . Kuala Lumpur, 12-13 July 2007. 17 Hunter M. An Islamic business model: a Tawhid approach . SME-Entrepreneurship Global Conference 2008, 4 July 2008, Monash University, Australia. 18 Hunter M. The concept of HalalGAP as a means of gaining unfair competitive advantage . World Food Shortage Conference – Series II, 9-10 July 2009. Putra World Trade Centre (PWTC), Kuala Lumpur. 19 Rahman HA. Halal agro-industry supply chain World Food Shortage Conference – Series II, 9-10 July 2009, Putra World Trade Centre (PWTC), Kuala Lumpur. 20 www.halalscience.org/en/main/index.php 21 Dahlan W. Enabling Halal industry and trade through Halal science and technology . 1st East Asia Agri-Business Seminar 2010, 30 November 2010. Malaysia Expo Exposition Park, Serdang (keynote speech). 22 For example: http://www.halalblog.com/ 2007/03/07/halal-organic-cosmetics-2/ 23 For example: http://www.alarabiya.net/ articles/2009/09/12/84711.html March 2012 P E R S O N A L C A R E 41 The rise and rise of non-alcoholic perfumes Fine fragrances have a long history with the Arabs since ancient times and this connection can still be seen with the agarwood trade and ‘attar’ traders in Egypt, Tunisia, Syria, Jordan, Gulf States, and Lebanon. This ‘attar’ trade has become modernised in Indonesia, Malaysia, and Singapore with companies offering non-alcoholic ‘knock offs’ of the big name fine fragrances. Conventional fine perfumes usually contain 70%-80% of high pharmaceutical grade ethanol as a carrier, with parfum de toilette or eau de parfum up to 90% ethanol. Ethanol acts as a carrier for fine fragrances, has a cooling effect on the skin, and assists the odour radiate from the skin through evapouration. However Muslim consumers frown upon using alcohol on their skin in line with their beliefs, and seek alternatives. Instead of using ethanol, non-alcoholic perfumes are water-based. Some even utilise apricot kernel, and jojoba oils to bring a more natural opulence to the fragrance. The non-alcoholic fine fragrance industry has grown from a small specialised market where a few traders imported concentrates from France, which they diluted and bottled, for sale at night markets and shopping centres to over a US$800 million industry at retail level today. It is still growing tremendously. Originally the industry ‘copied’ and imitated the popular fine fragrances of the world, but today companies are developing their own localised scents, own brandings and developing loyal customer followings. Non-alcoholic fine fragrance fits well with the colourful flowery fashion of Malaysia and persona of the modern Malay woman. Fragrance is seen as an important accessory where creative marketing companies develop personality based lines matched to the colours of their fashions through direct marketing channels. This lucrative market niche has not been left to the locals. Astute French companies have been seen entering this market bringing with it a European flare.