India’s Halal Market: Opportunities in Cosmetics, Personal Care Segments
India has the world’s third largest Muslim population at more than 150 million, and presents huge market opportunities for halal-based entrepreneurs.
Halal or ‘permitted’ in Arabic, defines the suitability of a particular product for consumption under Islamic law. Halal products should contain no derivatives of pork or alcohol. In the case of meat products, animals must be slaughtered according to Islamic procedures.
While the concept of halal is often associated with food, it is actually applicable to all kinds of consumer goods and services. The global Islamic halal economy consists of food products, cosmetics, banking and finance, travel, and pharmaceuticals, among others.
Global halal market centers, new focus on consumer goods
The growing demand for halal qualification by Muslim consumers around the world has led to several countries establishing government and non-government agencies to provide formal certification services. Previously, halal certification was considered to be an area of responsibility for local religious bodies.
In 2006, Malaysia became the first country to establish the Halal Industry Development Corporation (HDC) after religious bodies convinced the government of the need to establish halal standards in the fast moving consumer goods (FMCG) sector.
Later, in 2015, the UAE established a non-governmental certification body, the International Halal Accreditation Forum (IHAF).
Official endorsement of halal standards in Islamic countries often compels companies to actively seek halal compliance to boost sales among a population increasingly aware of religious tenets. This compliance in turn secures consumer loyalty.
Since organizing its halal industry, Malaysia has become a global hub for halal products: its halal exports reached US$897 million in 2018 alone. Indonesia’s halal initiative has led to the development of halal tourism clusters (hotels, malls, and entertainment centers) and industrial hubs that manufacture halal products.
Demand for halal products especially spikes during the holy month of Ramadan (Islamic calendar), when Muslims fast from dawn till dusk. This year, Ramadan began on May 17 and will end on June 16.
Among those capitalizing on this seasonal trend are supermarket chains in the UK. They estimate £200 million in revenue potential associated with consumer goods catering to Muslim shoppers during Ramadan.
In India, the halal industry is predominantly linked to the consumption of halal meat. With only a handful of companies involved in selling halal personal care products, the industry is clearly an untapped segment within the highly competitive FMCG market in India.
Below, we discuss opportunities for investors in the Indian halal market, especially in the cosmetics and personal care industry.
Wider market for non-alcohol, vegetarian personal care products
The cosmetics and personal care industry is among the fastest growing consumer products segment in India, throwing up huge opportunities for international companies.
Multiple macroeconomic drivers have fueled the robust growth in India’s personal care, cosmeceutical, and cosmetics industry over the last few years. These include the expanding organized retail sector, large youth population, increase in the number of working women, changing lifestyles, growing demand for men’s cosmeceuticals, rising disposable incomes, and increasing affordability of luxury and lifestyle-oriented products.
A market outlook report by the Associated Chambers of Commerce & Industry of India (ASSOCHAM) estimates that India’s grooming and cosmetic industry will grow to US$35 billion by 2035 from US$6.5 billion in 2017.
Key segments in the industry are skin care, bath and shower products, hair care, oral care, and cosmetics. High performing products include those with multipurpose properties, such as those with anti-ageing benefits, moisturizing care, and sun tan protection.
Healthcare problems associated with traditional cosmetics are also compelling consumers to shift towards more organic-based products. Indian consumers, especially the youth cohort, are becoming conscious of the ingredients and manufacturing process of beauty and personal grooming products.
It has, in turn, scaled-up the scope for selling halal products.
A recent study noted that consumer preference for personal care products in India strengthened when labels such as ‘natural’, ‘organic’, ‘botanical’, ‘free from’ some harsh chemical, and even ‘religious compliance’ were present.
Some of these concerns have led to the innovation of breathable cosmetic (halal) goods, which allow water to penetrate the skin during ritual cleansing. Iba Halal Care became the first halal-certified manufacturer of personal beauty products in India, in 2014, and sells across India through e-commerce platforms as well as in seven Indian cities through offline retail.
A halal personal care product has the potential to attract non-Muslim consumers as well. While emphasizing their adherence to Islamic principles, companies can additionally promote their brand’s vegetarian, alcohol-free, safe and quality products, in turn appealing to a market base that is much broader and becoming increasingly health conscious. For instance, Iba markets its personal care products as free from animal cruelty and vegan.
Companies hoping to enter the halal market in India will need to establish their identity and credibility to gain the trust of consumers. Honest marketing and transparency regarding compliance is key; any scandal involving religious sentiments in India have long-term repercussions on a company’s image.
In the past, a few Indian brands sought certification from Indian halal agencies to market their goods in countries with a large Muslim population to highly positive outcomes. Bikano, an Indian manufacturer of Indian snacks and sweets, saw its sales in Malaysia jump by 30 percent after its products received halal certification. In another instance, CavinKare, a Chennai-based manufacturer of personal care products saw its sales of shampoo rise sharply after halal certification.
Personal care brands may look at other FMCG segments to understand the potential of selling to halal markets. Indian brands such as Daawat basmati rice, Goldwinner oil, Vadilal ice cream, Amrutanjan Healthcare, and Gujarat Ambuja Exports have all benefited from a stronger foothold in global markets like Singapore, Malaysia, and the Gulf Co-operation Council (GCC) countries of UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman, after securing halal-certification.
Getting a product halal certified in India
Halal certification generally involves a three-step process in India. Even if the process varies among different certifying agencies, the documents required will be similar.
Applications may also be submitted online.
An application should be forwarded on the official letterhead of the company. It should be accompanied by the following:
- Approvals from the relevant health safety authorities of the state (province) in which the product is to be sold;
- A list of ingredients;
- An undertaking by the company that the product is free from any ingredients containing alcohol or pork derivatives;
- Copy of export license and a list of export markets;
- A specimen of the products in its original packaging; and,
- Layout of the production unit and storage facilities.
An audit will be carried of the production facilities. Sanitation and due respect for Islamic practices relating to preparation and packaging of products will be observed. A team consisting of a religious scholar and a competent technical advisor will carry out the audit.
Based on the recommendation of the auditing team, a body of experts shall grant the product a halal certificate.
There are a limited number of halal certification agencies in India, and these are private entities. The government of India does not endorse any of these agencies in the absence of an official halal standard. Instead, halal certification agencies observe Islamic law to the letter.
Companies should note that halal certification is not compulsory for products intended to be sold in India.
India Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce material for foreign investors throughout Eurasia, including ASEAN, China, Indonesia, Russia, the Silk Road, & Vietnam. For editorial matters please contact us here and for a complimentary subscription to our products, please click here.
Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services throughout India and the Asian region. We maintain offices in Delhi and Mumbai and throughout China, South-East Asia, India, and Russia. For assistance with India investment issues or into Asia overall, please contact us at email@example.com or visit us at www.dezshira.com.