The three-day summit kicked off on July 15 at Marina Bay Sands Expo and Convention Centre Singapore, featuring a raft of keynote presentations and panel discussions featuring industry experts across Asia-Pacific’s health and nutrition sector.
With China a major health foods market in Asia-Pacific, day two of the summit started off with a keynote presentation titled “Insights into China’s Nutritional and Health Food Industry” by Zhongpeng Zhang, secretary general of China Nutrition and Health Food Association (CNHFA).
China’s special foods market, including health foods or health supplements, infant formulas, and Foods for Special Medical Purposes (FSMPs) is now worth 600 million yuan (US$83.6m), Zhang pointed out.
The consumer market in China is also constantly evolving and he highlighted six key characteristics of the market in his talk.
One of the most prominent feature of China’s health foods consumer market, is how e-commerce has outpaced offline retail.
Today, brick-and-mortar stores including pharmacies and convenience stores are facing reduced footfall and challenges in getting consumers to buy health foods from their stores.
“The traditional offline stores are facing a lot of challenges, they are not seeing a lot of growth.
“There are about 600,000 pharmacy stores and 300,000 convenience stores across China, but sales of health functional foods have been lacklustre in these channels,” he said.
In contrast, online sales - especially livestreaming sales - continued to see an uptick, with TikTok snapping up shares from major platforms like Tmall and brands like GNC China are fast catching up on the trend.
With mini dramas becoming more popular these days, he believes that the channel would become the next go-to platform for brands in reaching out to the mass consumer market.
There are already examples where product advertisements and product links accompany mini dramas, allowing consumers to have instant access to products that they are interested in.
“Livestreaming is fast-developing in China and mini dramas may be the next hottest channel. For example, in a two-minute long video, there may be some product advertisements and links where viewers can click into and purchase it instantly.
“However, we are still in the early stages and there are also regulatory challenges to consider,” he said.
The pressure of declining offline retail has been felt by China’s health foods giant BY-HEALTH.
The company said in its FY24 annual results released in March that sales of vitamins and supplements were down by about 20% in offline pharmacies, while livestreaming e-commerce continued to fuel growth.
Another major player, H&H Group - parent company of Swisse and Biostime - also reported persistent decline in offline pharmacy sales last year.
Adding onto the complexity of China’s retail landscape is the rise of “private domain” (私域, Si Yu) channels.
The channel combines the aspects of traditional, e-commerce, and social commerce.
According to Zhang, product sellers and consumers within a private domain channel are connected by common values and missions.
“By sharing the same culture and values, the channel promotes ‘product stickiness’ with the consumers.
“Unlike the past, it is more about sharing and propagating common values through the products and not so much about hitting sales targets.
“It is mission driven - such as promoting family health or to learn a certain knowledge or skills,” he said.
He further pointed out that this model is appealing to the younger generation.
“This is because the younger generation in China now live in a better, more comfortable environment and so they tend to find motivation in sharing similar values,” he explained.
The young and the old, and trending products
Another feature of China’s health foods market is the prominence of the silver economy - where a growing ageing population means that the seniors are becoming the main consumers.
Third, the motivations for consuming health foods are also becoming more varied.
Younger consumers, for example, would be more willing to pay for health, beauty, self-indulgence, and “punk-style” wellness - a situation where they try to find ‘quick fix’ for unhealthy lifestyles such as staying up late etc.
“This means that there’s different sales strategies for targeting different groups of consumers.
“For example, the seniors would be more concerned with the functionality of the product, while young people would be more interested in product packaging and dosage formats like gummies and powder,” Zhang said.
Fourth, while probiotics, omega-3, and “foods as medicines” are popular in China for the past few years, products that claim to support specific organs are also gaining popularity, such as liver health products.
Fifth, consumers are also prioritising scientific evidence, such as clinical trial data of the bioactive ingredients, when making their purchase.
Lastly, health foods are becoming more “personalised” where they are designed for different age groups, genders, and health concerns.
China’s health foods firms stats
In China alone, there are 1,917 domestic manufacturing enterprises involved in the production and operation of special foods.
The majority are into health foods manufacturing, with 1,739 enterprises involved in this space, followed by 121 infant formula manufacturing firms, and 57 involved in FSMP manufacturing.
Another 540 overseas enterprises are also active in the special food production and operation industry in China.
Zhang said that the government’s policy has been designed to promote high quality, innovative products, as well as to spur economic growth.
An example is dedicating years 2024 to 2027 as the years of weight management.
“This is why there has been a surge in weight management products in the recent two years,” he said.