Malaysia: The Emerging Market for Halal Cosmetics

As many traditional markets around the world rapidly saturate, the Muslim community is developing some fast-growing consumer goods across sectors on a global scale. One of the most promising sectors is the halal cosmetics industry. This market offers a key growth opportunity for personal care and cosmetics companies.

The term 'halal' generally refers to conduct or things that conform to Islamic law. Halal cosmetics are described as skin and body care products that do not use materials or ingredients forbidden by Muslim society.

The production of halal cosmetics is seen as an innovation in the skincare and cosmetics industry. In the fields of R&D, formulation and production, new technologies and internal and external methods have been introduced. The overall scope of halal compliance is much higher, as it covers all aspects of manufacturing, from the sourcing of raw materials to production, transport, goods management, warehousing and retail.

The concept of 'halal' is becoming increasingly complex. Ten years ago, people's understanding of halal was very limited, focusing mainly on meat products. Today, it concerns a wider range of consumer products and concepts.

Increasing consumer awareness, but lack of standardization

Consumer awareness has significantly increased regarding the product ingredients of skincare and cosmetics. This has also led to increased demand for halal cosmetics.

More and more consumers are willing to pay higher prices for such products, because their faith is fully considered. This change in consumption patterns has encouraged the traditional beauty market to focus on developing new halal-certified products. Today, supermarkets can offer a range of personal care products that meet halal standards, including shampoo, soap, body wash, conditioner, lotion, toner, facial cleanser, face cream, perfume, cosmetics, toothpaste and powder.

A major factor driving this change is that the Muslim population has an increasingly high proportion receiving higher education, which has led to a shift in spending toward high-quality and safe products. Muslim consumers pursue halal integrity in pharmaceuticals, beverages, food, insurance, leather products, entertainment and tourism. A large part of the Muslim population is slowly seeking a pure space for different cultures and religions in their daily lives.

Generally, millennials have an increasingly high preference for natural, organic and vegan products. Halal cosmetics and skincare are considered safer products by all consumers—both Muslim and non-Muslim—because the processing and the raw materials used in production are natural and have strict certification guidelines. This is another important factor driving the development of the global halal cosmetics industry.

Halal certification enables Muslims to identify genuine halal products and thus live according to their religious virtues. However, regulations on the reliability of halal ingredients vary from country to country. This factor may limit some enterprises from entering the global halal cosmetics market. For cosmetics manufacturers, it is difficult to obtain a legitimate halal certification that is accepted in all Muslim-dominated countries. For companies interested in seizing this emerging market opportunity, the lack of standardized global guidelines for the production of halal cosmetics is a challenge.

Global market potential

Globally, current demand for halal cosmetics is estimated at about US$20 billion. The market is growing rapidly, and halal products are quickly entering the mainstream consumer market. The Asia-Pacific halal cosmetics market appears to be a fast-growing market, accounting for 75% of demand. In countries with large Muslim populations, such as Malaysia, Indonesia, India, Bangladesh and Pakistan, demand for halal cosmetics is expected to be high as socioeconomic conditions improve.

Malaysia has been investing heavily in various emerging halal products, with the goal of becoming the center of the global halal industry, including halal cosmetics. Jabatan Kemajuan Islam Malaysia, or JAKIM, as a reliable certification body, has gained worldwide recognition. Given the high income levels of countries in the region, the Middle East is another important natural market.

More and more companies are starting to invest in the development of cosmetics that meet halal requirements, including multinational companies. For example, Colgate-Palmolive has added halal toothpaste to their product line. Some small and medium-sized enterprises in the Asia-Pacific region are also becoming major players in the halal cosmetics market.