Having enjoyed sustained growth, the Spanish company has ambitious plans for expansion, especially after Banco Sabadell acquired a 25 percent stake in the company in 2010.

Eighty percent of the company’s products are exported, with 70 percent sold in markets outside the European Union, including in the growing markets of the Muslim world.

An IESE case study on Eurofragrance considers how organizations can profitably navigate the lucrative market for halal goods, and the challenges that this may present, particularly in relation to obtaining halal certification. The case considers the role played by transnational private regulatory agencies in addressing these issues.

What Is Halal?
Islamic teaching lays out explicit rules regarding food production and the slaughtering of animals.

However, the interpretation of what is permissible, or halal, according to Islamic law is getting more complex by the day. As the pace of innovation grows exponentially, it becomes harder for Islamic authorities to determine what is halal, and forbidden ingredients can sometimes find their way into products.

This situation is not helped by the fact that there is no one certifying body for halal products, and different branches of Islam make different proclamations.

Consider the experience of Eurofragrance: Its first foray into the halal market was in Egypt, where the company simply had to declare that its products contained no alcohol or pork derivatives.

However, the Indonesian and Malaysian markets were another story. The certification requirements there were much more complicated and fragmented, with no clear guidelines for producers to follow.

To deal with this minefield, Eurofragrance contacted the Halal Feed and Food Inspection Authority (HFFIA), a not-for-profit certifier established in Holland under the guidance of a council of Islamic scholars and recognized for its demanding standards in providing the accreditation.

Created to address the issues faced by Muslims living in non-Muslim countries, the HFFIA provides a rigorous inspection of the whole product — from the supply of raw materials to the processing and distribution. HFFIA audits are also recognized in Malaysia and Indonesia, which are considered to be among the strictest countries when it comes to halal regulations.

The thoroughness of HFFIA illustrates just how seriously this issue is being taken worldwide.

Three Main Obstacles
Given the sheer size and steady expansion of Muslim populations around the world, the market for halal-certified goods is predicted to grow by up to 25 percent a year over the next decade — signaling profitable opportunities for a market already worth an estimated $2.3 trillion in 2010.

For international firms looking to expand into these markets, there are several considerations that need to be borne in mind. Eurofragrance, for example, encountered three main obstacles.

Certification Complexities. Every individual flavor needed to be documented. This meant that suppliers had to provide much more detailed product information. Doing so slowed down the entire production process and conditioned the speed with which the company could adapt its products to consumer demand.

This can be a source of frustration, especially if competitors opt for less stringent halal certifications and succeed in growing faster as a result.

Local Competition and Barriers. Some Muslim countries apply extremely strict halal codes to foreign goods, while homegrown producers seem to get off more lightly, in what can almost be perceived as a “religious trade barrier.”

It may be that consumers in Muslim countries are more likely to trust in halal products made by local, Muslim companies, as opposed to foreign, non-Muslim competitors.

Cost. Having a recognized certifier does increase process, handling and raw material costs — and it remains to be seen whether consumers are willing to pay a premium for genuine halal products.

A Market Set to Grow
Although Eurofragrance initially only turned to HFFIA as a way to satisfy the stringent requirements of the Indonesian market, it has since come to realize that having a respected certificate can give leverage in certain key Muslim contexts. This has opened up significant market opportunities.

Moreover, the close working relationship between Eurofragrance and HFFIA has led toward the welcome promotion of a global halal standard.

However, the relationship has also raised doubts among Eurofragrance executives. There are many other certifiers that operate on a purely commercial basis and are less demanding in providing the halal accreditation. This presents a real dilemma between quick sales growth and high quality standards.

With the Muslim population growing fast in non-Muslim countries, it is only a matter of time before other companies follow suit. Indeed, major players such as Haribo and Nestlé are already launching halal products in Europe with considerable success.

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Universiti Sains Malaysia dean of the School of Pharmaceutical Sciences Prof Dr Syed Azhar Syed Sulaiman said the committee could ensure that the pharmaceutical industry in the country would be transparent and committed in responding to the needs of Muslim consumers who were sensitive over halal issue.

He said the committee could work closely with monitoring agencies such as the Islamic Development Department (Jakim) in finding ways to resolve the halal issue in the pharmaceutical industry.

“We should be ashamed of ourselves as the halal pharmaceutical industry in the country is still lagging behind that of non-Islamic countries like Thailand and Belgium,” he said.

He was when presenting a paper entitled ‘Halal Medicine in the Pharmaceutical Industry: Steps Towards Production and Empowerment’ at the ‘Halal Food Crisis: Towards a Solution’ seminar here, Wednesday.

– BERNAMA

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The Shoura Council approved a set of draft rules and regulations for a comprehensive food system in the Kingdom.

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Tony Alabastro

A Philippine Department of Trade and Industry delegation will be arriving in Brunei tonight for a four-day visit to promote the International Food Exhibition (IFEX) 2013, the Philippines’ most important trade centre for food, the Philippine Embassy said yesterday.

Philippine Ambassador to Brunei Nestor Z Ochoa said the International Food Exhibition (IFEX) is the biggest government-sponsored international food and beverage show in the Philippines, and the most preferred marketing venue for food exporters wishing to attract foreign and local buyers.

DTI’s Commercial Attache Alma Argayoso will lead the CITEM delegation, which will be meeting tomorrow, Monday, with the BIMP-EAGA Business Council (BEBC) Brunei Darussalam, National Chamber of Commerce and Industry, Brunei Darussalam International Chamber of Commerce and Industry and Department of Economic cooperation, Ministry of Foreign Affairs and Trade, and the Ministry of Primary Resources.

CITEM will also conduct a briefing tomorrow afternoon at the Philippine Embassy Chancery for local business representatives of companies engaged in seafood processing of prawn, muscle, cuttlefish and fish crackers, tapiocas, banana and potato chips, sesame biscuits, beef strips, chicken frankfurters with cheese, roast ribs, chili sauces, kueh cincin, kueh sapit, kueh mor, layered cakes, Brunei Halal products, canned goods, flour-based foods and spices, beef bakso, frozen and ready- made kelupis (sticky rice wrapped in pandan leaves), curry puff and steamed fruit cakes. Batik cakes, home-made pastries, different flavours of halal snow balls snack, and other processed food.

Relaunching itself as “Asia’s Ethnic Food and Ingredients Show”, IFEX will feature a bigger showcase of fresh, processed, Halal, and organic Asian food products, according to the Centre of International Trade Expositions and Missions (CITEM), DTI’s export promotion arm.

“A main showcase, Halal Food Asia, exhibits Halal edibles and opens up the lucractive Halal food market worth US$632 market’s need. Over a billion Muslims live in Asia and it is where several centres for Halal standardisation, research, testing, production and international trade have emerged to cater to this market,” CITEM said.

CITEM said IFEX’s focus is on Asia and its importance as the world’s biggest source of tropical materials and as a rapidly growing market.

We have opted to defer the show in 2013 and make it biennial starting 2013, as we invite exhibitors from all across the region to join us and make this event an unmissable one for buyers, CITEM said.

Data from the Food and Agriculture Organisation (FAO) said that 42 per cent of the more than US$4 billion global trade of tropical fruits comes from Asia – a region expected to supply 69 per cent of the world’s mangoes, 46 per cent of pineapples, and 20 per cent of papayas by 2014. Asia also accounts for two-thirds of total current aquaculture production and hosts 85.6 per cent of the world’s fish farmers, CITEM said.

Tropical fruits and seafood are two of IFEX’s main product showcase. Power Fruits of Asia, presents Asia’s major fruit exports such as mangoes, pineapples and papayas; and Seafood Asia, highlights Asia’s various marine products. Another main showcase is Halal Food Asia.

The 2010 IFEX in Manila attracted over 400 local and foreign exhibitors from Brunei, Bulgaria, Canada, India, Japan, Korea, Malaysia, Taiwan, Turkey, and USA, and close to 3,000 trade buyers and visitors from North America, Europe, Australia, the Middle East, Northeast Asia and the Asia-Pacific, CITEM said.

It has become a main sourcing hub for international food retailers, including Wal-Mart (US), FBC Worldwide (US), Mon Chong Loong (US), Hirasho Shoten Health Co (Japan), Heuschen Schrouff (Germany), manning Impex (UK). Wilby Commercial (Canada), the Americana Group of companies (ME),the Al Maya Group of Companies (ME), Shankar (ME) and NTUC Fairprice (Singapore).

“My experience with IFEX was very unique in terms of flavours and tastes. Beyond the food, there were some very fascinating, touching, compelling and spiritual stories, that made that very good food even more memorable,” US journalist and gourmet chef Louisa Chu told CITEM.

“I think IFEX is the best show for people like us, the distributors, to come and see what markets can offer, to find people and talk to the people on what they can offer potential suppliers, I think there’s a great future for IFEX,” Maciek Szala, a buyer from Poland, told CITEM.

“IFEX has so many new innovative products, something they do not have anywhere else in the world,” Tatijana Maglutac, a buyer from Russia, told the organiser.

– brunei-online.com

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This is to ensure a continuous enforcement and avoid losses suffered by the companies when there are irregularities found in halal standards of their products, an Islamic scholar said.

“This will also ensure that there is a common mechanism practised by these producers to ensure that the processes and ingredients are halal, instead of just being on their toes when the authorities check on them,” International Islamic University Malaysia’s department of Fiqh and Usual al-Fiqh associate professor Dr Azman Mohd Noor said.

He also called for more transparent procedures before the authority declares irregularities in halal status of products and services.

A test on the irregularities must be carried out in more than one lab and handled by more than one team.

This will help avoid discrepancies in fatwa issued by religious authorities, both locally and overseas.

“This will also help ensure there are no irregularities when an announcement is made. The question of inspection process flow when handled with doubt will affect industry players and the halal industry,” he said when met on the sidelines of the World Halal Forum 2012 here yesterday.

Azman was one of the panelists at a session on “Halal and Tayyib – Interacting with leading Islamic Scholars” at the forum.

There have been a few products that were declared non-halal due to the finding of swine DNA by the Department of Islamic Development Malaysia (Jakim) lately.

As of June 2010, there were six Halal Malaysian Standards published by Standards Malaysia.

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HALAL Industry Development Corp Sdn Bhd (HDC) expects halal exports to grow moderately by six per cent this year, curtailed by the possible impacts of a global economic crisis.

Minister of International Trade and Industry Datuk Sri Mustapa Mohamed announced yesterday that Malaysia’s export value for halal products in 2011 stood at RM35.4 billion. This is some 50 per cent more than in 2010.

However, Mustapa cautioned that the surge in exports was more a function of better data collection of halal product exports than actual jump in export figures.

“This is a significant milestone for the halal industry. HDC has developed a database for comprehensive halal statistics, which makes it possible for us to report the performance of the halal industry.

“I believe that with this year’s achieved export value, we are a leading exporter of halal products and the biggest among Organisation of Islamic Cooperation countries,” Mustapa said at Matrade headquarters here yesterday.

Malaysia’s halal ingredients sector is in the lead with an export value of RM12.3 billion (35 per cent), followed closely by food and beverages 11.9 billion (34 per cent) and Palm oil derivatives (such as oleochemicals) RM7.0 billion (20 per cent).

The top five export markets are China, the United States, Singapore, the Netherlands and Japan.

HDC is yet to compile import figures for halal products into Malaysia. However, it expects to have this data available by the middle of the year.

In terms of investments for HALMAS Halal Parks, its nine parks have realised some RM625 million in investment in 2011.

The nine parks are Penang International Halal Hub, techpark@enstek, PKFZ Halal Flagship, Melaka Halal Park, Serkam and Selangor Halal Hub.

The target investment for halal parks in 2012 is RM1 billion.

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With a worldwide recession looming, the Halal sector is one of the few industries bucking the trend fueled by savvy consumers increasingly demanding purity of ingredients in their personal care products.

Not only is the Halal sector not affected by the recession, it has followed its own growth path, with the Institute for Personal Care Science of Australia valuing the global Halal Cosmetics market at a staggering $13 billion and growing. Muslims and non-Muslims alike are inspecting ingredients with a keen eye and making buying decisions based on purity of the products they use on their skin. Consumers across the spectrum read labels for ingredients and have become increasingly smart about what goes into their skin care, shampoo, toothpaste, hair dyes and cosmetics. By the same token, there is little difference in the Halal sector, where consumers want products which take both health and religious compliance into consideration and therefore are certified as Halal. The case for organic has been made. Today the growing demand for Halal products is following suit.

Definition of Halal
Essentially Halal is an Arabic term that means ‘permissible’ or ‘lawful’ under Islamic law. It is a term synonymous and increasingly used with another Arabic word, ‘Tayyib’, meaning wholesome, pure and clean. It is applied to many facets of a Muslim’s life such as food, drink, personal care and lifestyle. In Islam there are articles that are clearly prohibited or ‘Haram’ – the opposite of Halal. These include pork and all pork-related products, alcohol; carnivorous animals; birds of prey; and any food contaminated with any of these products, to name a few. Halal is core to the 1.6 billion Muslim consumers, both reassuring them and permitting them to use products and services in accordance to their lifestyle choices. And it is clearly a pivotal issue in the main preferences Muslims make in personal care products.

Halal and personal care

With regard to the growing Halal personal care industry, the Muslim consumer is not only buying Halal certified products for personal and religious reasons, but finds the Halal brand conscientious and ethical. It is important to remember that Muslim consumers are driven by the same need to look good and feel good about their bodies, so it is only natural that companies in the personal care industries should take the opportunities to offer products that meet their needs. We only have to look at the figures and surveys carried out to realise this booming sector.

Thirty years ago, Nestlé decided that they would begin catering for Muslims by offering Halal food. Today they are the world’s biggest Halal food manufacturer, with over $3 billion in annual sales just for their Halal operations. Who will be the next Nestlé, but for the personal care industry? Notably, the Halal cosmetics and personal care industry is seen to be the next big emerging sector for the Halal industry after food and Islamic finance. The global Halal cosmetics market is an estimated $13 bn of which the Middle East market size of personal care products is valued at $560 m. According to the largest international trade fair for beauty products, Beauty World Middle East, the market for beauty and grooming products in the region is growing by an estimated 12% annually, with Saudi Arabia leading the way. Boasting the Gulf Cooperation Council’s (GCC) largest economy, Saudi Arabia accounts for the bulk of the regional market, with total sales of $1.1 bn – $292.3 m in cosmetics and $821 m in fragrance – in 2011, according to market research company, Euromonitor. Euromonitor also found that the UAE spend on cosmetics and toiletries in the region exceeded that of France by 38% and the US by 6%. By 2014, the region’s personal care product sales sector could increase by 15.1% to reach annual sales of $1.88 bn, with sales of $578.5 m in cosmetics and $1.3 bn in fragrance. This apetite for Halal personal care products and cosmetics is also mirrored by an increased consumer awareness to match.

According to a survey conducted by KasehDia Consulting, a research and communications company, 57% of Muslim consumers surveyed in South-East Asian countries opted to choose Halal certified products if available. It is this consumer hunger that companies like European Halal Services Limited (EHS) – a Halal certification body specialising in cosmetics, personal care, pharmaceuticals and food ingredients – has taken the plunge with. If you want your products to be certified as Halal, you need a third party Muslim accreditation, through a Halal certification body. Nyra Mahmood, managing director for EHS said: “We have witnessed the opportunities for mainstream companies in a sector which has shown exponential growth over the last few years. “Our job is not only to connect the brand with the consumer, but to bring a better understanding of the Muslim demographic, which today makes up over 20% of the world’s population. In layman’s terms this is good economics.” Halal certification of personal care products is not the same as certifying Halal meat. It is not the simple issue of if a lipstick is ‘pork-free’ it is classed as Halal. The certification process focuses on actives and all other excipients in formulations, such as emulsifiers, preservatives, colourings and foaming agents. The Halal certification also looks at process plants, packaging, handling and manufacturing issues.

Specific ingredients
With an increasing global demand for Halal personal care products, and the complexity of ingredients used in these products, it would be naive for a company to assume that if it’s simply ‘pig free’ then it’s Halal. The complex nature of what ingredients are considered Halal is a matter of continuous evolution, especially with new scientific innovations and novel applications. Organisations like the International Halal Integrity (IHI) Alliance, a non-profit NGO, is working tirelessly to harmonise global Halal standards, through debate, scientific findings and examining the uses of different components. One of the main ingredients that come under the auspice of ‘Haram’ or forbidden in Halal certified personal care is alcohol. Even large brand names are scrutinising the use of alcohol in skin care, due to negative consumer perceptions. However, the skills of a trained chemist working in the Halal certification arena can discern which ingredients containing alcohol in the name, are truly ‘Haram’ and can provide details on the complexity of the field. For instance, benzyl alcohol is Halal because it is naturally produced in many plants and is commonly found in fruits and teas. Essential oils including jasmine and hyacinth also contain benzyl alcohol. In personal care formulations it is used as a bacteria killing agent, producing no intoxication and hence is classed as Halal, despite containing the word ‘alcohol’ in its name. Other alcohols like stearyl, cetearyl, myristyl, behenyl and cetyl alcohols are emulsifiers found in many personal care products, tend to be white, waxy solids, incapable of causing any intoxication, and despite the name ‘alcohol’ are permissible and Halal. Glyceryl stearate is another common emulsifier made by reacting glycerine with stearic acid – again both can be of animal or vegetable origin. However with most of these types of alcohols, there is no way of knowing where they originate – from plant or animal – unless you do a traceability check or laboratory analysis.

Traceability is core. It is vital to work back through the supply chain to check the provenance of any given product to be able to certify it as Halal. It is prudent to mention the confusion over the term ‘alcohol’ – widely used in personal care products, though it is viewed differently by scientists and the general public. Our everyday beers, wines or spirits contain alcohol. To the layman, alcohol is just that, alcohol, but to a scientist it is ‘ethanol’, and ‘alcohol’ encompasses a whole range of different properties, especially in the personal care sector. Simple alcohols, like ethanol, have a general chemical formula of CnH2n+1OH, where n equals any number from 1 upwards. If n=1, the compound is CH3OH – methanol or methyl alcohol. In the case of ‘layman’s alcohol’ (ethanol), n=2 and the formula is C2H5OH. This group of chemicals, also known as ‘aliphatic alcohols’ tend to cause intoxication when ingested. Hence as a general rule under Islamic rulings for Halal certifications, aliphatic alcohols are prohibited and therefore classed as Haram. But this is a very contentious issue, and Muslim scholars and Halal certification bodies have varying rulings on the level of ethanol that is ‘allowable’.

Certification process
Companies wanting to be Halal certified must go through the certification process, which encompasses a number of steps. In essence EHS has a straightforward guide on product approval for Halal certification. To simplify things for companies a basic five step procedure starting with ‘Application’, ‘Assessment’ has been established – determining whether a company meets the ‘Halal Criteria’, which simply put as an example is, if a lipstick has pork-related ingredients or aliphatic alcohols, it does not meet our ‘Halal Criteria’. A zero tolerance policy on alcohol allows clients to obtain universal acceptability of their product across consumer markets. Thirdly, an audit is conducted which includes an inspection and evaluation of manufacturing sites, company processes and procedures. This leads onto ‘Recommendations’– any nonconformance issues will be highlighted in the report, and when these have been remedied, the company in question receives the Halal Certification. Also, an independent UK government laboratory is working with EHS to develop a methodology for testing the final product for traces of aliphatic alcohols and porcine proteins. Ultimately, the objective is two-fold; to help companies connect to this ever growing market through high-quality Halal certified products and give ample choice and value this new, robust savvy consumer base.

Conclusion
Research by advertising and marketing giant, Ogilvy & Mather, has shown that the ‘new’ Muslim consumer is a “critically important segment for marketers.” With the Halal industry worth over $2 trillion and growing by $500 bn annually, Ogilvy Noor – the Islamic Branding arm of Ogilvy & Mather – in partnership with market researcher, TNS, found that Muslim youth accounts for 11% of the world’s population and this demographic is fast becoming “technology-savvy, innovation-loving, globally-travelled and well-educated.” In Europe alone the spending power of the Muslim population is close to $100 bn and in terms of Halal certified personal care, Muslims want to see brands addressing modern beauty with faith and ethics. The fact that Halal certification also engages in scientific advancement, providing modernity to the Halal process, gives consumers added confidence in brands. The future of this industry looks more and more viable, with companies and business-related organisations looking to a sector which promises big returns and has a consumer base demanding better products and services.

Dr Mah Hussain-Gambles MBE is a pioneer in the Halal certification and standard-setting sector. Having developed the West’s first Halal organic skin care range, Saaf Pure Skincare, she also authored the ‘Modern Compendium of Halal Cosmetics’ for Malaysia’s Halal Development Corporation (HDC) – a government-affiliated body, developing the Halal industry in Malaysia.

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Consumer demand for Halal and Kosher-based dairy ingredients is on the rise globally said a German ingredients supplier, but demand not only demands careful evaluation of ingredients, but also strict regulation of product packaging, production processes and facilities.

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In his presentation he explained which processing aid or Hidden ingredients are used in fresh apple, apple juice, fortified milk in USA & Canada, Bakery products, Pasta, Potato Products, Mayonnaise, Tartar Sauce, seasoning, dry mixes, Beta Carotene, Soft Drinks, Fruit Drinks, Cheese, Whey, Infant Baby Formulas, Cereals, Turmeric Powder, Butter, Margarine, Vanilla Extract in Cookies, Malt Flavoring and Malt Extract in Cereals based on his 30 years of US food industry experience, and his recent experience with Kraft Foods USA until December 2011, which led him to also include the Hidden ingredients used in Kraft BBQ Sauce.

He also mentioned that not all Kosher certified food products are consider Halal unless they meet the Halal requirements. He provided a list of 17 ingredients, if any single ingredient of those 17 ingredients present in a Kosher certified food product then that kosher certified is not consider Halal based on MCG criteria for Halal status.

He provided a solution to Muslim consumers of USA/Canada for not consuming Haram Hidden ingredients in a food product if the food product has a Halal or Kosher symbol(if kosher certification meets the Halal requirements)on the food package because many Muslim consumers in USA and Canada have little knowledge of hidden ingredients in food products and their Halal status.

MCG also had a booth at the exhibition to show how they are serving the Muslim Ummah through the Halal Food Book “A Comprehensive List of Halal Food Products in USA”,  and through their website www.muslimconsumergroup.com which is logged in 135 countries with 1100 visits per day and their www.canadianhalalfoods.com website for Canadian Muslims.

Muslim Consumer Group do not Halal certify any food product or ingredients if alcohol is used in food flavors or during processing.

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