Opinion: Malaysia cosmetics brands’ huge potential

There is great demand for halal cosmetics in the cosmetics market among Muslims, and globally. The trend for halal cosmetics can be seen from the latest report authored by Dubai authorities and Thomson Reuters through the Global Islamic Economy Summit 2015, with the global Muslim market in fourth place with US$46 billion (RM198 billion) after the United States with US$81 billion, Japan (US$77 billion) and China (US$49 billion).

This trend shows that the demand for halal cosmetics is greater than the total sales in Germany and India. Many mainstream global brands in the cosmetics industry, such as Estee Lauder and L’Oreal, play important roles in expanding the cosmetics business through their acquisition strategies and market focus.

Reviewing the history of both brands, Estee Lauder, for instance, has acquired many other cosmetics brands, including those aimed at Asian consumers, and the brand’s formulas contain ginseng as one of the ingredients, like Osiao. On the other hand, L’Oreal acquired the Chinese make-up and skincare brand, Yue-Sai, as part of its portfolio to expand its business in the East.

According to the great demand for halal cosmetics, those gigantic brand names in the industry may take this opportunity to cater to the market through the acquisition of existing cosmetics with a halal portfolio or introduce a completely new brand like Estee Lauder, which back in history introduced the Aramis brand as its first men’s product line in 1964. Following its success, many other new brands were introduced like Clinique, Prescriptives and Aerin.

In contrast, the Malaysian cosmetics industry is emerging and there is high competition among local brands and global brands. However, the local cosmetics brands like SimplySiti are expecting to be among the top cosmetics brands in the Asian market, and face the prospect of being among the preferred global halal brands in the future. This is based on the various achievements since the date of the brand’s creation in 2010 until the present.

Apart from that, the strategies approached by SimplySiti through government bodies like the Malaysia External Trade Development Corporation (Matrade) and the Department of Islamic Development Malaysia (Jakim) to understand the rules and regulations governing the cosmetics trade formed a strong foundation in creating the brand, especially in Malaysia, a country with a majority Muslim population. Therefore, by associating the brand with halal status, it will gain trust from those who demand that status besides following the rules, regulations and brand image.

According to the Chandlerian perspective and those of Jenkinson and Mayer, cultural and economic determinism is assumed and they believe that dominant industries establish the “rules of the game” for all other players in the same country. However, Malaysia is quite unique with a multiracial society; thus to assume culture in producing a product is a bit tricky. However, in the case of SimplySiti, it represents a commercial brand name and attractive packaging, targeting Malaysia essentially before penetrating abroad in countries like Brunei, Indonesia and Singapore. Further, a local Malaysian brand like SimplySiti can be a potential global brand with focus on the halal global market.

By referring to the countries with the highest Muslim consumers’ expenditure from the Global Islamic Economy Summit — United Arab Emirates with US$4.9 billion, Turkey with US$4.4 billion, India with US$3.5 billion, both Russia and Indonesia with US$3.4 billion and Malaysia with US$2.6 billion — potential cosmetics brands from the emerging markets may consider to have a step forward in venturing abroad, especially to those countries, in the future.

Moreover, in the cosmetics industry, pricing can be one factor, but the most important in this industry is a distribution channel and promotion. By illustration of the history of Estee Lauder, giving free samples or gifts with purchases could be a good investment in terms of promotion, rather than competing on pricing.

Availability of the cosmetics brands is also another important factor. This means that the brand is easy to locate, for example at a counter in a department store, in a supermarket, online, at an airport duty free shop, and many other reliable places.

Furthermore, the local cosmetics brands may consider venturing into other product lines like halal shampoo, which are dominated by those global brands and foreign brands like Sunsilk’s Clean & Fresh, Ivy, Saaf Cosmetics, One Pure and Inika.

In sum, the local cosmetics brands like SimplySiti, Ronasutra, and others could take this opportunity to cater for the halal demand, which is rising consistently, not only in Malaysia but worldwide. Malaysia’s local brands have an extra advantage because they can benefit from the herbal sources which are only available within Southeast Asia and the country of origin.

Malaysia, as a well-known moderate country with a majority Muslim population, could add another value for customers’ consideration. By looking at SimplySiti as a model of a successful local cosmetics brand that succeeded within five years of its date of creation, the possibility to penetrate the global halal market is achievable by considering many aspects mentioned. A strong foundation in target markets is the key to the next step ahead in the Malaysian cosmetics industry.

The writer is a Global Brands researcher at the Centre for Evolution of Global Business and Institution, The York Management School, University of York, United Kingdom