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China in Focus — Sports Nutrition: Sector is soaring…but how much is going under the radar?
What is certain though, is that the Chinese consumer's interest in sports and wellness, especially among the young, is gold standard.
And that’s why we’ve made sports nutrition one on the topics for our three-part ‘China in Focus’ series.
According to Euromonitor, the China sports nutrition market is valued at US$206m, having experienced a CAGR of 42% for 2014-17. It is forecast to continue to grow at a CAGR of 25% between 2017 and 2020.
However, most industry execs expect the actual market to be far larger, because while this data accounts for products registered and sold in the domestic market, it doesn’t account for the large volumes of products coming in from international brands via cross border e-commerce.
As Jeff Crowther, executive director at the Health Products Association – China told us: “No one really has a good idea the size of the market. However, most sources agree the growth rate is 20%.
“Some of the figures out there will be conservative, as they have no way to track the ‘under the radar’ stuff. Keep in mind the actual market is probably 50% larger than some estimates.”
When it comes to the biggest players, according to Euromonitor, these were the top performing brands at the end of 2017...
Another local player trying to muscle in on the action is Aland, the owner of US-based International Vitamin Corporation and a major force in contract manuring globally.
On the local market, Aland is a well-known brand, and has recently launched its AlandV bars.
While the product has been inspired by China’s growing interest in sports and nutrition, Aland’s Aaron Gong told us he was targetting a broader range of consumers through mainstream retail channels.
“Our brand business expanding very quickly, and part of that is with our own new sports nutrition project AlandV.
“However, we are trying to differentiate by going through bar form and not powders. In my opinion sports is still a very new category for China consumer.
“So instead of focusing on body builders and athlete, we are looking at mainstream convenience with ingredients that make sense to the consumer.”
Gong said he saw little point in trying to compete with the specialist international brands entering the market through e-commerce, and said delivering convenient products to health conscious consumers with busy lifestyles was a better option.
“Many of the Western products that are coming in are big and bulky powders, which is not good for Chinese consumers, and especially not the Chinese ladies. That’s why we have twisted the formula, the packaging and the messaging.”
Indeed, Gong believes many Chinese consumers are still uncertain about the different types of proteins and benefits, and as such has removed the protein bar from convenience stores and is focusing on the energy version.
As Crowther from HPA points out, the major challenge around protein bars, especially for international brands, is the price point, which remains far too high for mainstream consumers.
“That’s why we focus on energy bars for the mass market and FMCG channels,” added Gong, even though the firm has a cost advantage by manufacturing in China.
Take a look at our video interview with Gong for more on his three strategic priorities for sports nutrition in China...
As we reported in parts one and two of our China in Focus series earlier this week, the growing importance of sports nutrition has been noted by ingredient firms in the probiotics and omega-3 space.
Krill oil supplier Aker Biomarine sees significant potential in the sector and has created a sports nutrition prototype containing microencapsulated krill powder and whey protein.
Meanwhile Ganeden is pinning its hope on the wealth of clinical evidence that supports the sports benefits of its probiotic BC30.
If you missed our video with Ganeden’s Simon Wang, where he elaborates on this, here it is again...
One key development that could be set to further spur the Chinese sports nutrition market was Xiwang Group's acquisition of Iovate Health Sciences International Inc, the Canadian owner of nutrition supplement MuscleTech.
"Here we have a China company that will now want to make money from its deal and will therefore help raise greater awareness of sports nutrition in the country. The fact they were prepared to buy an international brand shows the potential here,” said Crowther.
Aland is also continuing to monitor new opportunities and plans to help introduce US personalised fitness and nutrition firm FitnessGenes enter China.
The company received $5m of funding from SGHF, which has previously invested in Aland.
“We are currently at the project stage,” said Gong. “But we will help them get into the country. It is not possible to ship genetic material out of China, so it will be done here. But we think the combination of personalisation, fitness and nutrition could be very successful.”
As ever in China, the only blot on the landscape is regulations. For international brands in particular, uncertainty over the shape and form of cross-border e-commerce regulations beyond the end of the year remain, while the costs and duration of seeking to achieve the required approvals to operate in-market remain high and lengthy.
Like Crowther told us recently, the China market is booming despite the regulations, not because of them. And while sports nutrition is fighting fit, it is no exception.