Nail polish, face cream and perfumes touted as attractive sectors for halal cosmetics growth in 2020

By Guan Yu Lim contact

- Last updated on GMT

Halal nail polish, face cream, perfumes, and sustainable cosmetics touted as hot sectors for cosmetics growth in 2020 ©Getty Images
Halal nail polish, face cream, perfumes, and sustainable cosmetics touted as hot sectors for cosmetics growth in 2020 ©Getty Images

Related tags: Halal cosmetics, Nail polish, Perfume, sustainable beauty

Halal nail polish, face cream, perfumes, and sustainable cosmetics were touted as the hot sectors for cosmetics growth in 2020.

The data was according to the State of the Global Islamic Economy Report​ 2019/20 published by DinarStandard and Salaam Gateway.

The reports cites UAE as an attractive country to invest for the production of halal nail polish, the US for its product development and diversification in halal face cream, and Indonesia’s for its production of scents and perfumes.

According to the report, the Organisation of Islamic Cooperation (OIC) countries depend heavily on importing halal cosmetics.

Few OIC countries were manufacturing halal cosmetics, with non-Muslim majority countries such as South Korea being the primary producers.

Halal cosmetics spending

Muslim spending, comprising 1.8 billion consumers, on cosmetics globally increased by 4.9% from US$61 billion in 2018 to US$64 billion in 2019. According to the report, Muslims make up just 8% of the US$8 trillion global spending on cosmetics.

The top four Muslim cosmetics consumer markets as of 2018 were India (US$6 billion), Indonesia (US$4 billion), Russia (US$4 billion), and Malaysia (US$4 billion).

According to the data, halal product launches accounted for 2.7% of all launches in the global beauty and personal care category between 2017 and June 2019.

By 2024, muslim spending on cosmetics is forecast to grow 6.8% to reach US$95 billion.

Demand for natural, organic, vegan

The global consumer demand for ethical, vegan, and eco-friendly products have reflected in halal cosmetics too.

As a result, halal brands are getting other certification labels to help sell their products, and vice versa, organic, natural and vegan brands are getting halal certification to have wider market appeal​,” said the report.

Citing South Korea as an example, the country has exported doubled its plant-based cosmetics to OIC countries compared to 2018, and a dozen South Korean cosmetics manufacturers have sought halal certification over the past year to export their own brands as well as manufacture for Malaysian brands.

The report said there was opportunity in linking natural and organic labels, with halal cosmetics standards, leading to greater exports. This way, they can serve both OIC markets as well as Muslim millennials in non-Muslim majority markets.

Traceability

As consumers increasingly emphasis on the sustainability and traceability of ingredients, halal cosmetics brands have used technology to stand out from the crowd.

For instance, Malaysia’s halal cosmetics brand, Miss Elwani joined a global halal blockchain registry integrated with the Verify Halal app.

South Korea’s Se Jung Shipping is applying for halal certification for its trucking service and is developing an app for traceability.

Malaysia has also launched a blockchain-powered halal digital chain, HADIC, which also covered the cosmetics sector.

Although the report acknowledged: “Blockchain is gradually being adopted but it is still too early to gage economic impact. There are significant opportunities for investors in halal cosmetics start-ups and for multinationals to develop dedicated halal certified product lines​.”

South Korea halal interest

According to the report, the halal cosmetics sector has not had much support from OIC governments, especially when compared to South Korea, where the Ministry of Food and Drug Safety is providing free training sessions on halal cosmetics certification.

South Korea had recently signed a MoU with the Halal Development Corporation of Malaysia, to produce halal cosmetics in Malaysia.

South Korea cosmetics export to OIC countries grew by 46.2% to reach US$232.5 million in 2018. Its global exports also grew 26.5% to US$6.26 billion, driven in part by halal certification.

For example, one of South Korea’s cosmetics manufacturers, Aekyung, had one of its brands halal certified by Indonesia’s MUI.

Opportunities

The report explained that halal regulations for the sector remained fragmented, with few OIC countries introducing or revising standards. It called for greater regulatory alignment to bolster export growth.

The halal sector continued to remain niche globally, with multinationals companies investing in other cosmetics sub-segments instead.

However, it was hopeful that Indonesia’s mandatory halal certification requirements could alter market perceptions of halal cosmetics, given the country’s population of 260 million.

The report concluded that investing in early-stage, high growth cosmetics companies that were halal certified, could potentially generate substantial returns given the tightening of halal cosmetics regulations and growing demand for eco-friendly halal cosmetics.

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