Asia's Growing Halal Demand Spurs Innovation and Profit

Jakarta: Many Halal certification organizations have emerged around the world, such as Malaysia's JAKIM, a well-known government agency. Different bodies inspect products and services by their own standards and print their Halal mark on the goods.

Indonesia, a beautiful developing country, is the world's most populous Muslim country, and the local brand Wardah, which focuses on Halal products, is popular among young women.

The company's advertising has a modern yet timeless style, featuring photos of Muslim models wearing headscarves and radiant smiles. Salespeople at the Wardah cosmetics counters all wear teal headscarves, the brand's color. "All women want to look beautiful," one salesperson said.

Wardah currently sells more than 300 cosmetic products at 22,000 locations in Indonesia and Malaysia. In 1995, the year it was founded, Wardah was a small local brand. After its popularity soared, it became the official sponsor of Indonesia's "99 Lights in the Sky of Europe" in 2013, in which the heroine used the company's headscarves and products.

Since then, the company has maintained this momentum, launching TV ad campaigns and sponsoring fashion events showcasing young designers' Muslim-friendly clothing lines. Over the past decade, the company now enjoys annual revenue growth of nearly 50% and controls 5% of the domestic market share.

The company's performance is impressive, and surprisingly, it is rapidly growing larger within the global Halal food market. According to a recent report by Deloitte Tohmatsu Consulting, the market was expected to exceed USD 1 trillion by 2015, with food accounting for 61% of world Halal trade, pharmaceuticals 26% and cosmetics 11%.

In Muslim-majority countries, even the non-food Halal market - such as daily necessities and cosmetics - has flourished. Malaysia's JAKIM said that 70% of the Halal certification applications it receives come from the non-food sector. Halal standards less strict than for food have so far been applied to basic necessities. However, many consumers prefer Halal-standard everyday goods, not only because they ensure they do not violate Islamic law, but also because they consider certified products a safer, healthier choice.

International consumer brands have recognized this trend and are keen to tap and develop the promising Halal market. Alcohol-free products such as Johnson & Johnson body wash and Anglo-Dutch giant Unilever's toothpaste have proven popular with consumers.

While older manufacturers have quickly customized existing products for the Halal market, new companies are developing innovative projects that comply with Islamic rules and principles.

Zahara, a new company based in Singapore, has launched a nail-polish product for Muslim women. In Islam there are five prayers a day, and before each prayer time Muslims must wash their face, hands and feet with clean water. For women, this includes removing nail polish. Because traditional nail polish is hard to remove, it is difficult for Muslim women to both enjoy beautiful nails and perform their prayers. To solve this problem, Amira Geneid, herself a Muslim, came up with a water-soluble nail polish that washes off easily before prayer. "I myself indulge in nail polish at any time of day or night," she said.

When starting the business, Geneid's familiarity with Muslim customs gave her important clues. The tech-savvy people around her who use social networking sites like Facebook and Instagram also helped her attract young people. She graduated from the National University of Singapore in 2014 and launched her business the following year.

As the Halal market gains world attention, companies are also launching related products and services, such as logistics services and chemicals used for food, cosmetics and other consumer goods.

Nippon Express, one of Japan's largest logistics operators, said it has obtained Malaysia's JAKIM Halal certification for its services. This proves the company can handle, store and transport Halal products between Japan and Malaysia. To export products from Japan to Malaysia, the company must ensure its entire logistics chain, including warehousing facilities and delivery trucks, complies with Islamic law. Nippon Express said improving its international business in line with Halal principles drives its overseas expansion plans. Certification company officials said it would supply Japan with the missing link in its Halal supply chain.

Nippon Express of Japan is preparing to provide integrated Halal logistics services in Malaysia.

"We have received many orders for export from Japan to Malaysia," said Aliff Omar, a business salesperson at Nippon Express. "The main reason is that the Olympics are coming, and also to attract Muslims to Japan."

Chemical companies worldwide are stepping up completion of Halal-certified chemicals. In 2010, a German chemical company's Malaysian operation began producing products from Halal raw materials, including cosmetics and pigments.

Halal certification has expanded to other categories. In 2014, major Japanese flavor manufacturer Ogawa established a Halal factory in Indonesia. Although flavors for food account for 90% of the facility's total output, demand for non-food fragrances is also growing rapidly.

Demand for companies' Halal services is also growing, including flights offering Halal menus and travel agencies providing Halal services for travelers with Halal needs.

Islamic finance - financial products that comply with Halal regulations - is also developing very rapidly.

The main driver of the Halal market's rapid growth is the growth of the Muslim population. By 2050 the Muslim population may reach 30% of the world's population, which means the Halal market will keep expanding. As most Muslim countries in Asia and Africa grow wealthier, the Halal market will also see greater profits.

Halal products and services gain enormous appeal not only because they comply with Islamic law; Halal certification has also become a mark of safety, health and high quality.

Din Syamsuddin, former chairman of Indonesia's top Muslim body MUI, told Nikkei that in the 21st century Halal is the organic option. This shows that both Muslim and non-Muslim consumers will help sustain the growth of the global Halal market for years, even decades.