Halal products gaining market share in Spain’s $15 billion beauty and personal care industry

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Spain exported close to $500 million in cosmetics products to OIC markets in 2015 and its domestic Muslim spend is estimated at $380 million. With increasing demand among Muslim consumers for halal-certified cosmetics products, and growing interest in Spanish cosmetics companies to get certified, what are the opportunities to launch a halal cosmetics brand in Spain?

HIGH GROWTH COSMETICS INDUSTRY

The global beauty and personal care industry is valued at $426 billion in 2015, according to Euromonitor International. The industry covers a wide range of sectors, from fragrances, hair care, skin care, and color cosmetics to baby care, sun care and deodorants.

Spain’s beauty and personal care products market was estimated at $15 billion in 2015 and is projected to grow by a rate of 7.4 percent cumulative annual growth (CAGR) to reach $21 billion by 2020, based on Eurostat and BMI Research estimates.

Industry growth in Spain is driven by the demand for natural and organic cosmetics, internet retailing options, fast fashion retail and private label brands.  

Cosmetics and fragrances are two big sub-sectors. In 2015, Spain’s consumption of cosmetics products alone reached $7.29 billion, which represents an increase of 1.5 percent compared to 2014, according to STANPA, the national association of cosmetic, perfumery and toiletry.

Fragrances is one of the fastest growing sub-sectors, enjoying sales growth of 4 percent in 2015, according to Euromonitor International.  

In these two big sub-sectors, Spain is the sixth largest exporter with over $3.7 billion in foreign sales.

KEY PLAYERS

Five manufacturers have captured an estimated 40 percent of Spain’s cosmetics industry, according to the U.S. Embassy in Spain.

French company L’Oreal was the largest player, generating $900 million in revenues in Spain in 2015, assuming growth in line with global revenues of 13 percent between 2014 and 2015

The next four largest by 2015 revenue earned in Spain are Unilever ($618 million); Coty ($313 million); Grupo Puig ($251 million), and Procter and Gamble ($98 million).

NASCENT HALAL MARKET POISED FOR GROWTH

Halal cosmetics is becoming increasingly important among Muslim consumers globally, with awareness growing regarding the non-permissible ingredients that may exist in certain products. As a result, organizations such as Malaysia’s JAKIM and the Emirates Authority for Standards & Metrology (ESMA) have launched certification services for halal cosmetics products.

In Spain, the country’s 2 million Muslims spent an estimated $380 million on cosmetics products domestically in 2015. This domestic market is projected to grow by 3.4 percent CAGR to reach $450 million in 2020.

Spain is also a key exporter of cosmetics products to Organisation of Islamic Cooperation (OIC) countries. Exports of cosmetics products to the 57-member grouping have grown to reach $499 million in 2015 by 4 percent CAGR, up from $425 million in 2011.

KEY HALAL PLAYERS

While the halal cosmetics Industry in Spain is at a nascent stage, the industry is poised for substantial growth given Spain’s key role as a cosmetics exporter.

Tomas Guerrero Blanco, Director of the Madrid office of Instituto Halal, told Salaam Gateway, “We have seen a strong interest in companies seeking to export to the Gulf.  During April in Dubai, 44 Spanish companies were present at a cosmetics [trade fair] - only two have our certificates … the Spanish companies want to sell their products in UAE and [they are] speaking with Instituto [Halal] in the hope they can get halal certificates.”

To date, two companies have been halal-certified by Instituto Halal, the largest certifier in Spain – ADP Cosmetics and Laboratorias Valquer.

ADP Cosmetics, founded in 2011 and based in Spain, is a subsidiary of the nanotechnology company AdParticles, which produces cosmetics ingredients. ADP Cosmetics has developed the brand “EnhanceU” cosmetic ingredients for use in natural sun care and color skin care products, which are available in over 100 countries globally. 

Laboratorias Valquer, founded in 1975, is a Spanish cosmetics products manufacturer. The company has over 550 formulas thatare used in private label hair care and beauty products available through the company’s online store and from international distributors.

CHALLENGES AND CONSIDERATIONS

There are several considerations to successfully launch a halal brand for OIC markets.

Understand what the consumer wants and tailor your product messaging accordingly

Determine which markets you seek to export to and the profile of your target customer – undertake primary research to determine which product features are most appealing to consumers, which adjustments need to be made and the impact certification would have on product sales.

Spain is in a good position to capitalize on growth of the beauty and personal care market in the Middle East, especially in the GCC. Its top three OIC markets in 2015 for cosmetics were UAE ($105 million), Saudi Arabia ($76 million) and Algeria ($45 million).

According to Euromonitor International, the Middle East and Africa has the highest CAGR of 6.4 percent for the period 2015 to 2020 and will drive global future growth. Saudi Arabia is set to drive sales from $5.3 billion in 2015 to $9.3 billion in 2020. The UAE leads the region on per capita consumption of $239 in 2015 to rise to $295 by 2020.

Prepare your company for halal certification

Initiate a conversation with certifiers to determine the cost and the requirements of certification, including the need for Muslim staff with the appropriate technical expertise.

The cost of gaining certification should be seen in the context of the overall benefit, and a few adjustments rather than a fundamental change in operations.

According to Houda Zaaizaa Ait Taleb of the commercial export department of leading Spanish confectionary company Dulcesol, speaking at Alimentaria’s Halal Congress in April 2016, “If we compare the cost to the results of halal certification – and apart from the audit, it’s a matter of modifications such as new packaging – all of which is an initial cost – the advantages and results are greater than the cost.”

© SalaamGateway.com 2016