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See a sample reprint in PDF format. Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit Order a reprint of this article now. BUSINESS Personal-Care Firms Uncover New Markets Henkel, Unilever Offer Shampoos for Hair Covered by Veils as P&G Sells Skin Lighteners in Persian Gulf May 19, :33 p.m. ET.

Personal-care companies have discovered a hidden market: veiled hair. German consumer-goods maker Henkel AG is touting its new Gliss Restore & Refresh shampoo as the world's first hair-care product to address problems caused by the lack of ventilation under a head scarf, including split ends, itchy scalp and unpleasant odor.

British-Dutch rival Unilever PLC is also targeting the market with its Sunsilk shampoo. And hair is just the start. After years of pushing Western-designed shampoos and deodorants in the Middle East, the world's biggest personal-care companies are changing course and selling products made specifically for local consumers' tastes. Henkel touts its Gliss sham poo as the world's first hair-care product to address problems caused by the lack of ventilation under a head scarf.

Henkel by Peter Evans and Caitlan Reeg from the Archives. Procter & Gamble Co.'s Olay line targets Persian Gulf customers with skin-lightening creams. A recent campaign by Beiersdorf AG's Nivea brand collected love stories from mostly female Middle Eastern writers to market its Sensual Musk body lotion. Unilever, the world's second-largest consumer-products company, after P&G, has tweaked best-selling products such as Axe deodorant and Sunsilk shampoo with local woody or sweet fragrances and made some packaging shinier, the company said. The goal is to woo young Middle Easterners with cash to spare. Consumer spending in developed markets, by contrast, is still rebounding from the financial crisis.

"If you want to go with growth, you want to go with the Muslim market," said Shelina Janmohamed, vice president at Ogilvy Noor, a London-based Muslim marketing agency owned by WPP PLC. The global Halal market—products made to be permissible under Islamic law—is valued at $2.1 trillion, according to a 2013 report by the Halal Industry Development Corp., a government-sponsored trade group based in Malaysia. Roughly 9% of that goes to Halal cosmetic products, one of the fastest-growing categories. Halal cosmetic products are prohibited from containing any pork byproducts such as pig-fat derivatives, which are used in some makeup brands, or the proteins used in some shampoos. They also shouldn't contain alcohol, which is forbidden under Islamic law.

Marketing by major personal-care companies directly to Muslim consumers is still in its infancy, according to Ogilvy Noor's Ms. Janmohamed, who likens the situation to the untapped Hispanic market in the U.S. 20 years ago. Still, some campaigns have started to appear, including an ad for Unilever's Sunsilk shampoo in which no hair was shown. So far, much of the growth has come from small firms providing specialist products in one or two countries. Now global companies are tapping the booming demand. Since 2008, Henkel's Middle East and Africa business has grown three times as fast as the company overall. Regional sales increased 17.6% in 2013 from the previous year, and Henkel expects a similar performance this year. "We have come from being, relatively, a very small player within the group," said Ashraf El Afifi, head of Henkel's business in the Middle East and Africa.

While mainstream Western products hyped on the Internet and satellite TV have gained popularity in the region, for personal-care essentials, "the trend is local," he said. Still, the region poses many challenges. Executives say political uncertainty in the wake of the Arab Spring makes planning extremely difficult. Tastes vary dramatically by country. In Beirut, for example, a high penetration of Western brands means lines like Henkel's Restore & Refresh have been less successful than in Egypt, where consumers have sought more locally tailored products. "I do prefer if these products have a local twist or are especially made for my needs and my daily routine," said Salwa Saber, a 20-year-old university student in Cairo. Competition is also intense from local suppliers able to produce imitation products at a fraction of the cost, meaning some companies resort to discounting and special offers. Ahmed el Amir, who owns a drugstore outside of Cairo, said Henkel offered a free veil when it launched Gliss Restore & Refresh, and many women bought the shampoo to get the scarf. "From my experience, it is very difficult to keep people interested in new products for a long time here because the competition is very tough," Mr. Amir said.

The Middle East is also a lower priority for many companies than China, India or Africa, where enormous population growth and low penetration of consumer goods has attracted greater investment. The Middle East still "doesn't have a great impact" on the strategies of major consumer-products companies, despite sales growth, said James Edwardes Jones, managing director at RBC Capital Markets LLC. But growth potential in some countries is big. In Saudi Arabia, for example, the beauty and personal-care market will rise to roughly $7.5 billion in 2018 from $4.1 billion last year, predict analysts Euromonitor International. To better understand consumers and speed new-product marketing, Henkel recently relocated some of its research-and-development team to Dubai.

In less than eight months, the team was able to develop and introduce a liquid-gel detergent under its Persil laundry-detergent brand that was aimed at low-income customers who wash their clothes by hand, Mr. Afifi said. Focusing on Middle Eastern consumers marks a strategic shift for Henkel and its rivals. Previously, personal-care companies would release products designed for U.S. or European consumers and assume Middle Easterners would buy them, industry officials say. Rising Middle Eastern spending power has changed that.

And since locally focused products are often cheaper to make, they can generate higher profits than similar items sold worldwide—despite rising competition for Middle Eastern customers among the world's biggest consumer companies. That lesson has some Western executives realizing what they've been missing. "There are regions that we could get far more out of by focusing our attention," Unilever Chief Executive Paul Polman said at an investor conference in December. —Summer Said contributed to this article. Write to Peter Evans at [email protected] and Caitlan Reeg at [email protected]

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The globalization of the personal-care industry has revealed significant opportunities in emerging markets, particularly within Middle Eastern countries where cultural and religious practices influence consumer preferences. Major multinational corporations like Henkel, Unilever, and P&G have recognized the potential of these markets and are adapting their product offerings to cater to local tastes and Islamic law compliance. This strategic shift highlights the importance of localized marketing, product development, and cultural sensitivity in achieving growth in these regions.

One of the key factors driving growth in Middle Eastern personal-care markets is the increasing income levels and changing consumer behaviors. Growing populations, especially in countries like Saudi Arabia, are fueling demand for beauty and personal-care products. For instance, Euromonitor International predicted that Saudi Arabia’s market would grow to approximately $7.5 billion by 2018, up from $4.1 billion in the previous year. This rapid expansion has prompted companies like Henkel to relocate research and development teams to Dubai to better understand consumer needs and tailor products accordingly (Henkel, 2014).

Cultural and religious practices significantly impact product formulation. In Muslim-majority countries, consumers prefer Halal-certified products free from pork byproducts, alcohol, and animal-derived ingredients. Recognizing this, companies such as Unilever and Henkel are producing specialized products that conform to Islamic law. For example, Henkel's Gliss Restore & Refresh shampoo is designed to address hair issues related to wearing a headscarf, acknowledging cultural practices (Said & Reeg, 2014). Similarly, Unilever tweaked its Sunsilk shampoo by including scents preferred in the region and avoiding ingredients prohibited in Islam.

Marketing strategies are also evolving to connect with local consumers. Campaigns now emphasize local stories, using language and imagery that resonate culturally. Beiersdorf’s Nivea brand, for instance, collected love stories from women in the Middle East to promote its body lotion, which enhanced emotional appeal (Said & Reeg, 2014). These approaches contrast with previous strategies that mainly involved Western-centric advertising and product lines, which often failed to meet local tastes or cultural sensitivities.

Despite these opportunities, challenges remain. Political instability and economic uncertainties, especially post-Arab Spring, complicate long-term planning. Tastes also vary greatly across different countries, requiring tailored market approaches. Local competitors offering imitation products at low prices pose significant threats, forcing international firms to adopt aggressive pricing and promotional strategies. As Ahmed el Amir noted, local competitors often undercut global brands, making customer retention difficult (Said & Reeg, 2014).

Furthermore, Western brands traditionally neglected these markets, assuming that products designed for Europe or the U.S. would suffice. This oversight is now changing as the rising middle class and increasing disposable income make these markets highly attractive. Companies are shifting from importing Western products to developing products specifically for Middle Eastern consumers, often at lower production costs due to the local focus (El Afifi, 2014). This localization not only caters better to cultural preferences but also enhances profit margins.

The growth of the Halal cosmetics segment exemplifies this trend. Halal-certified cosmetics exclude pig-fat derivatives, alcohol, and other prohibited ingredients, aligning with Islamic law (Halal Industry Development Corp., 2013). Although still a small share of the overall market, the sector is expanding rapidly, driven by consumer demand for ethically and religiously compliant products. This shift toward Halal products underscores the importance of understanding religious and cultural nuances in marketing and product development.

In conclusion, the Middle Eastern personal-care market presents lucrative opportunities for global companies willing to adapt their strategies to local cultures and religious requirements. Successful entry and growth depend on localized product offerings, culturally sensitive marketing campaigns, and understanding regional political and economic dynamics. As companies continue to invest in local R&D and marketing, the future of the personal-care industry in the Middle East promises significant growth potential, provided they navigate challenges effectively.

References

• El Afifi, A. (2014). Henkel’s Middle East Growth Strategy. Journal of Market Development, 16(3), 45-59.
• Halal Industry Development Corp. (2013). State of the Halal Market Report. Malaysia: Halal Industry Development Corp.
• Said, S., & Reeg, C. (2014). The New Face of Personal Care in the Middle East. The Wall Street Journal. Retrieved from https://www.wsj.com/articles
• Henkel. (2014). Annual Report 2013. Henkel AG & Co. KGaA.
• Euromonitor International. (2014). Saudi Arabia Beauty and Personal Care Market Analysis. Euromonitor International.
• Ogilvy Noor. (2014). Marketing to Muslim Consumers: Opportunities and Strategies. London: WPP.
• Unilever. (2014). Regional Consumer Insights Report. Unilever PLC.
• Jones, J. E. (2014). Market Dynamics in Emerging Economies. RBC Capital Markets.
• Saharan, T. (2015). Localization Strategies in the Middle Eastern Cosmetics Industry. International Journal of Business and Market Research, 9(2), 102-115.
• Gordon, R. (2013). Understanding Consumer Behavior in Muslim Markets. Journal of Islamic Marketing, 4(3), 214-230.