How to deal with the challenges of compliance access and low-end competition in the 100 billion nutraceutical food industry?

Nutrition and health food seems to be becoming a hot "star" track in the field of health consumption.

Yicai learned that at the 2024HNC Health and Nutrition Exhibition held in Shanghai from June 18 to 21, the proportion of international brands among more than 2,000 exhibitors has increased to 4%.

The consumption data of various e-commerce platforms during the 618 period also showed the strong momentum of tonic and health care products: the turnover of improving sleep and health drinks in JD Health increased by 335% and 115% year-on-year respectively, and the turnover of tonic products increased by 286% year-on-year; On Douyin, the total transaction value (GMV) of tonic products increased by 55% year-on-year, and 196 explosive products with GMV exceeding one million yuan were paid.

The data shows that the industry is growing rapidly, but what are the hidden dangers behind this? What are the measures of companies entering the nutraceutical field?

Compliant access is key

According to the China Chamber of Commerce for Importers of Medical Insurance and Health Products, from 2008 to 2023, the import and export value of dietary supplements in mainland China has increased year by year, with the total import and export value increasing from US$716 million in 2008 to US$10.759 billion in 2023. In addition, according to the "2023 Dietary Supplement Industry Development Report" released by the China Medical Insurance and Health Products Importers Chamber of Commerce, the market size of the health food industry in mainland China is about 400 billion yuan, and the output value of nutrition and health is about 800 billion yuan with functional foods and related products.

(Image source: Blue Book of China's Nutrition and Health Food Industry)

"At this stage, companies in the fields of medicine, cosmetics and food are focusing on the layout of nutritional and health products, which is the focus of the industry. However, the industry still needs to consider the compliance, legality, and specific health benefits that should be present during the product launch process. Fei Hongtao, CEO of China Food Anxin, told reporters.

From the perspective of mainland supervision, nutraceutical food needs to follow two existing regulatory systems, one is the legal system, namely the Food Safety Law, and the other is the standard system, that is, the National Food Safety Standard. "The same raw material can be used to make medicine, health food or ordinary food, it does not depend on what the product is, but on how to do it; When made into a drug, it can reflect the therapeutic effect, and when it is made into a health food, it can claim its function, and when it is made into an ordinary food, it can only play a 'side ball', and cannot promote any function. Fei Hongtao added.

At present, the official definition of health food (commonly known as "blue hat") with the highest standard and requirements in mainland China is "food that claims to have specific health functions or is for the purpose of supplementing vitamins and minerals", and needs to be labeled through registration and filing; There is also a consensus in the industry on the definition of health food, that is, the organizers of the Boao Health Food Science Conference and Expo (FHE) said that health food refers to foods that have been scientifically proven to have specific health benefits in foreign or domestic countries and have been marketed.

Fei Hongtao added that at this stage, in the field of health food in mainland China, there are 24 functional catalogues that need to be registered, including: help enhance immunity, help antioxidant, assist in improving memory, relieve visual fatigue, help improve bone density, help regulate intestinal flora, etc., most of which need to be tested for human experiments and animal experiments, and 2 items need to be tested for prohibited ingredients; The raw materials that need to be filed include: coenzyme Q10, spirulina, fish oil, melatonin, ginseng, Ganoderma lucidum, etc.

In response to all kinds of dazzling names, Fei Hongtao also explained that the "dietary supplements" mentioned more often in the industry are actually the mention of health food in European and American countries, and nutritional health food is also a more general mention in this field in China, but this field cannot be regarded as a classification at the regulatory level, but is just a common name for the industry; The development of the nutraceutical industry comes more from the gradual increase in consumers' health needs.

Some industry insiders told reporters that in addition to health food products, a considerable number of international health products can be sold as 'food' in China directly through cross-border platforms, without registration and filing, and product functions and ingredients are not restricted by domestic regulations. Although this saves time and money, the suitability of these products for Chinese people does need to be systematically evaluated, and the coordination and harmonization of international standards should be improved.

How can systems and regulations keep pace with the times? Jiang Junying, CEO of Komar Meibao, told reporters during the 2024 HNC Health and Nutrition Exhibition that on the one hand, with the continuous development of new functions, existing raw materials will involve the extension of some functions, such as the addition of weight loss effects of raw materials with blood sugar-related effects.

Wang Fang, director of the international information center of the local brand Meibao Group, said that the field of nutrition and health food needs a good product competition environment, and this requires the company's R&D standards, production quality and related qualifications from the source, and improve industry standards, which can further reduce the pressure before the review and approval process.

Wang Fang told reporters that the current trend of internationalization of nutritional and health food is obvious, and import and export trade has also become the norm. In the process of gradual optimization of review and approval standards, domestic brand exports and international brand imports will require a series of international general standards, which may cover raw materials, excipients, additives, etc., and also involve product functional evaluation, ingredient effectiveness, safety analysis, etc., and even the traceability system of some import and export products, etc., all need to be gradually established.

Avoid low-end competition

According to the "2023 Health and Nutrition Industry Brand Channel Development Insights" compiled by the China International Health and Nutrition Expo, raw material innovation is becoming a new trend in the field of nutrition and health food. For example, in dietary supplements, minerals such as copper and zinc, as well as vitamins D2 and K2, have increased significantly; Following the popularity of prebiotics and probiotics, postbiotic supplements have received widespread attention; Consumer demand for mental health and beauty has promoted the growth of L-theanine and collagen applications; In addition, some niche functional plant ingredients such as herbs, algae and seaweed, and healthy mushrooms are growing rapidly.

What is the development trend of the domestic nutrition and health food industry? Chen Shiguo, deputy director of the Food and Health Center of Zhejiang University, said that at present, the mainland nutrition and health food market is ushering in new development opportunities, and several major characteristics of the industry include: product innovation and quality improvement, consumer segmentation and personalized needs, sustainable green production, sales to digital transformation, and product internationalization.

In detail, on the one hand, the degree of innovation and R&D investment in the nutraceutical food industry will be increasingly enhanced, and product R&D and quality control will also be further improved; On the other hand, as companies begin to segment their products for consumer groups of different ages and with different health needs, the provision of nutritional solutions will be more accurate based on a large number of scientific studies. In addition, e-commerce platforms, as an important channel, will use AI technology to analyze user behavior and improve marketing accuracy.

"The homology of medicine and food is also a key area of concern." Chen Shiguo said that there are currently more than 100 kinds of food and drug homologous species in the mainland, among which the food and drug homologous species suitable for development into bulk food have more room for development.

How should companies that are entering the nutraceutical space respond to these changes?

Chen Shiguo suggested that, first of all, we should still pay attention to technological innovation and R&D investment, including the use of scientific research results to develop products with clear health benefits, which is a relatively long process, enterprises can lay out or track the latest scientific and technological achievements in advance, continuously improve product formulations and production processes, improve product quality, and highlight differentiated advantages. Second, some food and beverage companies can share R&D resources with scientific research institutions to shorten the product development cycle, and at the same time create attractive sub-brands to attract consumers with both emotional and functional appeals.

In addition, it is necessary to continuously learn and update the regulations and quality control methods in this field, understand the connotation and key elements, and set up a strict product quality control system to ensure the stability and reliability of each batch of products, and lay the foundation for the long-term sustainable development of the enterprise.

Fei Hongtao also said that for nutrition and health food companies, health, effectiveness, legal compliance are the focus of their continuous attention. On the one hand, enterprises should improve their innovation capabilities to avoid low-end competition at the subsequent price end, and on the other hand, enterprises should also strengthen basic research on raw materials and products, support product research and development with scientific evidence, ensure the health efficacy of products, and avoid so-called "conceptual" additions. In addition, the market also needs to strictly manage product health claims, pay attention to the compliance of advertising and publicity, and avoid the red line of product claims.

(This article is from Yicai)