Halal beauty is synonymous with quality and transparency. Demand for halal cosmetics is growing globally and it cannot be classed as a “niche” area of the industry. So how does that intersect with K-beauty? We chatted to Dr James Noh, senior lecturer and founder of the Korea Institute of Halal Industry, about the change in attitude to halal beauty and how this affects the Korean market.
The term ‘halal’ is widely known as a religious dietary practice of the Muslims. What does it mean by halal cosmetics, and what are the key features of halal beauty products?
Usually, halal applies to meats and processed foods intended for human consumption. However, beauty products also matter because human skin can absorb some ingredients of cosmetic products used on lips or eyes. From the early 2000s, we have witnessed a rapidly increasing demand for beauty products whose ingredients are compliant with Islamic standards and do not cause adverse health effects in humans. In 2008, Malaysia introduced the halal cosmetics manufacturing standards, and Malaysian and Indonesian companies began to launch halal beauty product in earnest by the 2010s.
When we set religious aspects aside, the bottom-line of halal cosmetics is that what ingredients are used. Generally, halal ingredients come from plants, aquatic organisms, minerals, compounds, and microorganisms that do not present a potential harmful effect to the human body.
In particular, much caution should be given to terrestrial animals. Any ingredient derived from animal blood or porcine animals is strictly forbidden. The use of ingredients derived from bovine, ovine, caprine animals and poultry is allowed only when the Islamic rules of slaughter have been observed. Forbidden ingredients include drinkable alcohol, such as liquor. Under unavoidable circumstances, cosmetics manufacturers may use denatured alcohol only. The maximum limit for residues of alcohol in halal foods is extremely low, whereas – as long as it is not edible – halal cosmetic products can contain alcohol content at a reasonable level.
Halal beauty consumers are also interested in vegan cosmetic products because they do not contain any animal-derived ingredients, but manufacturers should pay extra attention to a potential risk factor, for example, a source of alcohol content or other additives that may contain non-halal elements. Thus, the best solution to become a ‘halal (permissible)’ cosmetic product is to acquire halal certification.
Muslim spending on cosmetics in the Middle East is growing at a fair clip, forecast to reach $95 billion by 2024 with increasing natural, organic and vegan cosmetics certifications, according to the State of the Global Islamic Economy Report, a market analysis report published in Dubai. How do you find the current halal beauty market size and Muslim cosmetics consumer trends?
In the past year, the global cosmetics market has been severely affected by the COVID-19 pandemic and halal cosmetic products were no exception. According to the State of Global Islamic Economy Report 2020-2021, Muslim spend on cosmetics increased by 3.4% in 2019 to $66 billion and is forecast to drop by 2.5% in 2020. The report also says that Muslim cosmetics spend will grow at a 5-year CAGR of 2.9% to reach $76 billion by 2024.
These figures are lower than those forecast in the previous year which estimated a 5-year CAGR of 6.9% and a total revenue of $95 billion by 2024. Like other consumer product sectors, the halal cosmetics market has been significantly impacted by the COVID-19. Extended stay-at-home and social distancing practices have drastically affected sales of makeup and perfume products, whereas sales of facial sheet masks and at-home hair dyes rapidly grew during the pandemic.
As mask-wearing continued, lipstick sales fell but conversely, eye makeup sales grew. Aside from these, many companies released halal, cruelty-free, and vegan cosmetics to keep up with growing ethical consumerism among the young Muslim population.
What are the most outstanding features of Korean cosmetics for Muslim consumers? And what makes them buy Korean beauty products?
By and large, Muslim consumer perception of Korean beauty products consists of the following three elements:
- Koreans have crystal clear skin (this notion is heavily influenced by Korean Wave drama actors and actresses)
- Korean cosmetics are made with fine natural ingredients
- Korean beauty companies have innovative technologies.
The first perception leads Muslim consumers to redefine what they think of beauty under the globally popular K-beauty. The second perception encourages local manufacturers to import ingredients from Korea and integrating them into their quality products. The third perception gives consumers confidence that Korean cosmetics are cost-effective and trendy.
As a result, Korean cosmetic exports to Islamic countries has continuously increased over the past few years.
Global beauty companies have huge ambitions for the growing halal cosmetics market. What are the leading companies and countries in the global market? Is there a Korean company that has been successfully increasing its presence in this emerging market?
Many global beauty companies have made considerable achievements in Southeast Asia, operating their own local manufacturing facilities. For example, Unilever expands Indonesia-made and halal-certified personal care products for Muslim consumers not only in Indonesia but also in neighbouring countries.
Another global beauty giant, Shiseido acquired halal certification for its Vietnam-manufactured Za products for export to other Southeast Asian countries. Besides Shiseido, other Japanese beauty companies, such as Kao and Lion have successfully launched halal version products of their own brands in Indonesia and Malaysia.
Korean cosmetics manufacturers are actively engaged in OEM market. Cosmax established its Indonesian affiliate for supporting local OEM customers. Kolmar Korea operates a halal-certified cosmetics production line in Korea, supplying brand products to its Malaysian customers. Cosmecca, Megacos, and other Korean manufacturers are fully ready for making their headway into overseas markets with appropriate halal certifications.
Now, ‘halal’ does not simply stand for ‘Muslim’, rather it is a symbol of quality assurance. What are the essential requirements for halal-certified cosmetics?
Basically, halal-certified cosmetics require the use of permitted ingredients and a manufacturing system preventing cross-contamination.
For the ingredient side, neither main components nor additives should contain non-halal element. Solvents used for extracting and dissolving process should not be originated from animals. Moreover, filters for water purification and growth media for microorganisms must be animal-free.
For the manufacturing system side, a Good Manufacturing Practice (GMP) must be in place because halal certification requires not only halal elements in ingredients but also hygienic and safe production systems. In this regard, Malaysia and Indonesia introduced the halal assurance system, defining essential requirements for halal production systems.
Korean companies are intensifying their efforts to explore the halal cosmetics market, the so-called ‘blue ocean’ of K-beauty. What are the major challenges they face when entering into new markets and what are the key conditions that allow Korean cosmetics companies to tap into rising demand among 1.8 billion Muslim consumers?
The ideal approach is to set up and operate another manufacturing facility dedicated and exclusive to halal cosmetic products so that they can be treated separately from non-halal products. Alternatively, companies may design and implement a series of systematic procedures to prevent a risk of cross-contamination at their manufacturing facilities.
However, either way, cosmetics manufacturers have to bear additional costs and expenses. Although this extra burden may discourage companies from acquiring essential halal certifications for their export products, fortunately enough, recently, large Korean OEMs and ODMs willingly began to invest in new plants dedicated to halal beauty products, and we anticipate that the halal-certified cosmetics products will consistently increase for years to come.
One thing that I’d like to add for those Korean beauty companies that cling to ‘Made in Korea’ is that they need to build a localized supply chain as many Japanese companies do. Products that maintain a high level of brand awareness but suffer from intense competition in the Korean market, or have already reached the maturity stage of their product life cycle, would be able to find a breakthrough in Indonesia or Malaysia, if they are locally manufactured and marketed with appropriate halal certifications.
With this strategy, Korean cosmetics companies can not only meet increasing local consumer demand but also set up an outpost to advance to the global halal beauty market, covering South Asia, Central Asia, Middle East and Africa.
Want to hear more? Dr James Noh will be running a session at in-cosmetics Korea 2021 called “The future of Halal Beauty and the response of K-Beauty” so check it out!