Home Finished Lubricants Can Halal Open Doors to Lube Markets?
Can Halal Open Doors to Lube Markets?
estaff - June 22, 2016
The Asia-Pacific regions market for halal-certified products is booming, observers say, which means that there is growing demand for certifications of food-grade lubricants.
Halal is an Arabic term for objects or actions considered permissible under Islamic law. No ingredients or equipment used in the manufacturing, processing and storing of a halal products may contain or have been in contact with unauthorized animal derivatives such as lard or other verboten ingredients, including alcohol found in cleaning products.
Halal certification is often associated with the foodstuff industry, including lubricants used in food-processing applications. And its profile is rising in North America as well as in Asia.
For a food product or any product to be halal, all aspects of the production – from raw materials to final packaging – must be compatible with halal requirements, said Roger Othman, director of consumer relations for the Islamic Food and Nutrition Council of America. That means lubricants, which may come in contact with the halal product, must be approved for use. The best way to be approved is for the lubricant to be halal-certified.
IFANCA has certified a large number of lubricants and expects the number to increase, he added. The halal market for consumables is U.S. $2 trillion and it is growing by 5 percent to 8 percent a year. There will be suppliers of halal lubricants available for anyone interested in producing halal-certified products.
Fazil Hamid, CEO of Singapore-based SimplyHalal International, concurred. Halal food-grade lubricants are manufactured in Asia, Europe and America [by companies such as Germanys] Kluber Lubrication, and the market for such products is growing.
Its been a growing trend for lubricants companies in Indonesia to obtain the halal certification due to the growing population of Muslims, hence driving Islamic economic potential and increased demand for halal products, Pertamina Lubricants corporate secretary, Arya Dwi Paramita, told LubesnGreases.
A subsidiary of the state-owned oil company of Indonesia, Pertamina Lubricants produces a number of food-grade lubricants. Currently, in the full range of PT Pertamina Lubricant products, only Pertamina Food Grade FG HO 46 has been [halal] certified, while FG GO food-grade gear oil is in the certification process, Paramita added. We have been looking at other products, but the certification process takes time and has to go through various processes and trials. Pertamina hopes that it will have most of its lubricants halal-certified by 2019, which will align with its goal of becoming a world-class lubricant company, he commented.
According to State of the Global Islamic Economy Report 2015, the Muslim food and beverages market in 2014 was U.S. $1.1 billion, or 16.7 percent of the global market share, and is expected to reach U.S. $1.6 billion in 2020. The report forecasts the worlds Muslim population to grow at twice the rate of the global population, climbing 73 percent overall from 1.6 billion in 2010 to 2.8 billion in 2050.
This makes it evident that the global halal sector will be one of the fastest-growing consumer segments in the world in the coming years, according to Hamidon Hamzah of the Halal Industry Development Corp., an agency under Malaysias Ministry of International Trade and Industry.
A particularly significant surge in demand of halal-certified products may come from Indonesia – the worlds largest Muslim population – with the Halal Product Assurance Law, which requires all products meeting halal requirements sold in the country to be halal-certified by October 2019.
Indonesia is the first country in the world to regulate in this way, said Gilang Ardana, policy analyst at the American Chamber of Commerce in Indonesia, in a blog post on halal consultancy Halal Focuss website. Noncompliance is subject to severe administrative sanctions, he added. A penalty of five years imprisonment and fines of 2 billion rupiah (U.S. $152,000) will be imposed on any business that does not maintain the halal-ness of its products after they have obtained a halal certificate.
The rules resonate strongly in Indonesia, where almost 90 percent of the population is Muslim and consumption of processed foods is growing quickly. Turnover in Indonesias food and beverage industry hit a high of $87.6 billion last year, up from $77.6 billion in 2014. This was due in part to inflation but also powered by rising incomes and increased spending on food by the middle class, according to the market-entry consultancy Cekindo.
While this market is dominated by several large local companies, the Jakarta-based firm said international businesses and brands such as Nestle, Kraft and Unilever are having success in penetrating Indonesia with halal foods, and sending exports from there to Malaysia, Thailand, China and other nearby countries with receptive consumers.
Pertaminas Food Grade Hydraulic Oil (FG HO 46) was halal-certified recently by the Indonesian Ulema Councils Assessment Institute for Food, Drugs and Cosmetics, Arya pointed out.
British specialty chemicals firm Croda International Plc. is also looking to certify more of its portfolio, which includes base oils and additives for the lubricants industry, by certifying its production sites. Croda is also actively seeking to further expand its product offerings to meet the needs of customers and global consumers by obtaining certification for sites that currently do not possess halal registration, the company said in a statement earlier this month.
Croda noted that more than 200 of its products made at its manufacturing sites around the world are halal-certified, but did not disclose which sites are or are not certified, or which products in particular it is targeting. However, Croda products manufactured in Singapore are certified by the Islamic Religious Council of Singapore, which is recognized globally in key halal markets such as Brunei, Indonesia, Malaysia and the Gulf Cooperation Council countries.
Late last year, Croda expanded its alkoxylation facilities on Jurong Island, Singapore. The nearly GBP 18 million (U.S. $26 million) investment more than doubled the plants capacity. Croda supplies specialty ingredients for industrial applications, and automotive engine oils, industrial oils, greases and other lubricants, as well as the personal care market.
There are several vocal regional and global groups that lobby the opposition of halal certification on the grounds that many products are inherently and obviously halal, and that the unnecessary costs of certification are passed on to consumers of those products.
Missteps in the halal marketplace can be quite costly, too. In early 2014, consumers in Malaysia were scandalized when the health ministry said two batches of chocolates made by Cadbury Malaysia had tested positive for porcine DNA. Cadbury immediately recalled the two products, as pork is forbidden under halal rules, and had them retested at an accredited laboratory. The second batch of tests cleared the candies of any taint, and the Malaysian Islamic Development Department declared them to be halal – allowable for consumption by Muslims.
Despite this outcome, the incident left a bad taste with many consumers. To repair its image, the Mondelez subsidiary brought religious leaders to its Klang Valley factory to review its halal certification processes and meet with its internal Halal Committee. That fall, Cadbury followed up with a three-day Joy Shop Sale that rewarded Malaysians with deep discounts on its wares – a deal that over 7,000 people took advantage of.
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