Halal Creams, Shampoos: Consumer Giants Catering to Muslim Values

Unilever and L’Oreal are among the companies modifying supply chains for Indonesia ahead of a new labeling law.

Picture used for representational purposes only. (Photo: iStock)

Some of the world’s biggest consumer groups are making halal face creams and shampoos for Indonesia ahead of a new labeling law, part of a broader push to cater to growing Muslim populations as sales in many Western markets slow.

Unilever, Beiersdorf and L’Oreal are among the multinationals converting their supply chains for the world’s biggest Muslim-majority nation.

The law, the first of its kind, requires food to be labeled halal or not in 2017, followed by toiletries in 2018 and medicines in 2019.

The companies say demand for beauty products that are halal, or target specific cases like veiled hair, will grow as the Muslim middle class grows. They note that Indonesia could influence other countries such as Malaysia where halal products made locally or by small, niche companies are also popular.

Third-Party Suppliers Certifying Ingredients as Halal Will Ease Production

Halal certification is official recognition that a product was manufactured in keeping with Islamic Sharia law. This means it must not contain traces of pork, alcohol or blood, and must be made on factory lines free of contamination risk, including from cleaning.

Makers of cosmetics and toiletries say the burden is more administrative than financial, and therefore see compliance as unlocking new revenue streams.

German chemicals company BASF, which sells ingredients to toiletry manufacturers, now has 145 of them certified halal.

There is a trend that these halal products are being requested increasingly, and the importance of being able to supply them is growing.

Dirk Mampe, German Chemicals Company BASF

More than 1.5 billion people around the world are Muslim, accounting for about a quarter of the global population.

Market research firm TechNavio sees halal personal care products’ sales growing 14 percent per year until 2019, outpacing the broader market.

Getting Certification is a Complicated Process

French cosmetics giant L’Oreal already has a halal-certified factory in Indonesia. Most products under its Garnier brand, from face washes to skin lightening creams, are halal-certified, a spokeswoman said.

The personal care industry already depends largely on plant-derived ingredients, so the rules for halal often affect production more than formulation.

But certification can get complicated. For example, the maker of an Indonesian skin cream with a dozen ingredients from around the world would need to give Indonesian authorities proof from other certification bodies that each ingredient was made in a halal way.

Malaysia-based Dagang Halal has made a business from that complexity by establishing an online database of halal certificates to ease their exchange and expedite the process for applicants.

Unilever, which owns five of Indonesia’s top ten beauty and personal care brands, says all nine of its factories there already meet halal standards and that it is currently working with third-party suppliers of imported ingredients.

Understanding Muslim Values Worldwide

Alan Jope from Unilever said the key for multinationals is understanding Muslim values generally and how they influence habits in specific markets with different cultures.

He guessed that one third of the top twenty markets for Unilever’s 20 billion euros-per-year business were countries with large Muslim populations, from India to Nigeria. He said better meeting their needs was a top strategic priority.

To that end, Unilever has introduced products such as a gel body moisturizer that absorbs quickly beneath long undergarments and a long-lasting toothpaste appealing to those fasting for Ramadan.

Like rival Henkel, it sells a line of shampoo for veiled hair, but Jope said the industry needs to improve its advertising.

We need to be doing a better job reflecting Muslim values, like featuring more women in hijabs, in our brand communication.

Alan Jope, Unilever

(This article has been edited for length.)