It seemed a natural selling-point: Muslims make up 60% of Malaysia’s population of around 30 million, and are prohibited by Islamic dietary laws from drinking alcohol.
However, the market for nonalcoholic beer has been slow to catch on in Malaysia. Many customers are put off by the bottle it comes in, which looks like that of a regular beer. And the Malaysian authority that deems a product permissible for Muslims to consume, has so far not certified any nonalcoholic beer as halal.
Mr. Ruzi nevertheless is betting on tapping the Muslim market. Four months ago, he partnered with a distributor of the Netherlands-produced Bavaria 0.0% malt beverage, which had up to that time been largely marketed in Malaysia to non-Muslims. He has sold 500 cases since, or 12,000 bottles.
“There is a growing market for this sort of drink in Malaysia,” says Mr. Ruzi, who sells the malt-based beverages to restaurants and groceries, specifically targeting Muslim consumers.
Bavaria 0.0 % is one of several nonalcoholic malt-based beverages slowly gaining a following in Malaysia. Others include Barbican of Saudi Arabia and Istak of Iran. Bitburger Drive 0.0% Alkoholfrei of Germany, a nonmalt beer without alcohol, is also sold in Malaysia.
Elliza Abdul Rahim, who works for a public-relations firm in Kuala Lumpur tasted nonalcoholic beer on her honeymoon in Hawaii. “That was when I first encountered the fact that people actually made nonalcoholic beers,” she said, adding that she had since found Istak in Iranian restaurants in Malaysia but that otherwise nonalcoholic beers were hard to find in Malaysia.
Malaysia’s nonalcoholic beer market in 2013 was 3 million liters, and it grew at about 4% a year from 2008 to 2013. Lately, sales have picked up pace: Analyst Amin Alkhatib at market-research firm Euromonitor predicts nonalcoholic beer sales in Malaysia will rise to 3.6 million liters by 2016.
But Malaysia is still a tiny market compared with other heavily Muslim areas of the world.
In the Middle East and Africa region, nonalcoholic beer has grown at an average rate of 11.5% a year during the same period, according to Euromonitor. A total of 1.43 billion liters of nonalcoholic beer were sold in the region in 2013.
Mr. Ruzi said it has been easier to sell to Middle Eastern restaurants in Malaysia than traditional Malay ones, saying that 40% of his customers have Arab roots.
Distributors in Malaysia have found some Muslim niche markets for nonalcoholic beer: trend-seeking youths, travelers who have tried the drinks elsewhere and newcomers from countries where the drinks are already popular. With online advertising and visibility at shops and Muslim events, distributors hope to enlarge a market that includes non-Muslims who enjoy the malt taste but avoid alcohol.
But sales are unlikely to really take off without a halal stamp of approval: Many Malaysian Muslims prefer to steer clear of products without a local halal seal.
The halal certifier of products in Malaysia—the Department of Islamic Development Malaysia, known by its Malay acronym Jakim—holds huge sway. and won’t certify any product with beer in the name, no matter if nonalcoholic.
For example, the A&W restaurant chain started calling its root beer “RB” at all its outlets in 2013. Coca-Cola’s Malaysia affiliate renamed its root beer “A&W Sarsaparilla” in 2009, a spokesman said, one of the requirements to get its halal certificate renewed.
Of the nonalcoholic malt drinks for sale in Malaysia, only Bitburger Drive has “beer” embossed on its bottle, an automatic disqualifier for halal certification.
“I believe if the companies abide by certification regulations and obtain the halal label, that would boost their sales in Malaysia,” said Mr. Alkhatib.
Jakim said it turned down Mr. Ruzi’s request for a halal certificate because Bavaria 0.0% is produced in the same facilities as its alcoholic products and “the making process was similar to the production of the alcoholic.
The Netherlands body that approves products for Muslim consumers, the Halal Feed and Food Inspection Authority, stopped short of giving Bavaria NV a halal seal, citing as one reason that the malt beverage could be confused with the alcoholic version because only the 0.0 % is different in the name.
Instead it has provided what is labeled as a “statement”—less than a full halal certificate—saying that Bavaria NV follows Halal rules in the production process of the nonalcoholic malt drink.
Mr. Ruzi says the Netherlands body’s endorsement has helped him get new customers, such as Galletto’s, a restaurant near Kuala Lumpur that has mostly Muslims as customers and that advertises Bavaria 0.0% outside.
But Wan Zawakhir Zin, one of the owners, said some customers aren’t willing to try the product because of its beerlike bottle.
“From a Muslim’s point of view, although they have not tasted the contents, when they see the bottle, they are put off,” Mr. Wan Zawakhir said.
One exception is Naili Hastika Fahim of Kuala Lumpur, who said she tried a nonalcoholic malt drink and could see them becoming popular among Malaysian Muslims.
“We can’t drink beer,” she said. “But this is nonalcoholic, so we can try, just to see how it tastes.”