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Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

Author: Wu Rong (original)

Nestlé, the world's largest food company, is paving the way for the accelerated growth of its Nestlé Health Sciences business in China.

Today, Xiaoshidai learned from the official website of the Data Bureau of Taizhou Pharmaceutical High-tech Zone (Gaogang District) that the environmental impact assessment report of the health food R&D and production lily project (phase I project) of Nestle Health Science (China) Co., Ltd. (hereinafter referred to as "Nestle Health Science China") is being publicized.

The document disclosed for the first time that the company will establish a local production line for protein powder and probiotics in China. According to the documents, Nestle Health Science China plans to invest 148 million yuan to establish a production line in two phases in the idle workshop of its original cosmetics manufacturing business, and after the completion of the first phase of the project, it will form an annual production capacity of 36.5 million protein powder packs and 36.5 million probiotics.

With consumers' increasing concern about health in recent years, the market size of protein powder and probiotics in China continues to expand. Previously, Nestlé sold protein powder and probiotic products in China through cross-border e-commerce such as Tmall Global, which were all imported products.

The optimism about the development opportunities of the above categories is an important reason why Nestlé Health Science China chooses to invest in localized production lines. The creation of a localized production line will undoubtedly help Nestle follow the changes in the Chinese market faster and bring protein powder and probiotic products that are more in line with the needs of Chinese.

Let's take a look at the details.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

Latest investments

According to the latest disclosure of the public document, Nestlé Health Science China plans to invest 148 million yuan in the company's current site in Taizhou Pharmaceutical High-tech Industrial Park, using the idle workshop of the original cosmetics manufacturing business of the Nestle factory to build the "Nestle Health Science (China) Co., Ltd. Health Food R&D and Production Lily Project" in two phases.

Among them, the first phase of the factory will build two dry blending lines for protein powder and probiotics, as well as supporting auxiliary facilities such as R&D, warehousing and quality inspection. After the completion of the first phase of the project, it will form an annual production capacity of 36.5 million protein vermicelli packs and 36.5 million probiotics.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

In fact, not long ago, Anna Mohl, CEO ·of Nestlé Health Sciences, visited Taizhou with her delegation. At that time, Anna · Moore said that Taizhou is very important to Nestlé Health Science's global layout, and the next step will be to expand more production lines to the Taizhou base to bring more health and nutrition products. And the disclosure of this document confirmed the "spoilers" about the production line at that time.

Behind the above-mentioned localized production line in this "official announcement", Nestle is increasingly optimistic about the development of protein powder and probiotics in China.

Xiaoshidai noticed that in the past, Nestlé did not sell protein powder and probiotic products in China, but they were all imported products and sold through cross-border e-commerce such as Tmall Global.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

Taking protein powder as an example, Xiaoshidai noticed in Nestlé Health Science's Tmall overseas flagship store that its products were imported from United States, emphasizing keywords such as "enhancing physical fitness and fitness shaping". In terms of probiotics, Nestle's probiotic brand "Garden of Life" also has an overseas flagship store on Tmall, and its products are also imported from United States, highlighting selling points such as "90 billion probiotics to enhance self-protection".

Why be optimistic

So, what is the attraction of protein powder and probiotics, which is worthy of the willingness of giants like Nestlé to invest in them and join local production?

Let's start with protein powder. Maybe you haven't bought it, but you must have seen it on social media as a "muscle-building partner for fitness people".

In recent years, the protein powder market has ushered in a boom as the fitness craze continues to heat up and consumers pay more attention to their health. According to the report of Zhiyan Consulting, the market size in 2021 will be less than 2 billion yuan, and the market size in 2022 will be about 2.15 billion yuan, and it is expected that by 2024, the market size of China's protein powder industry will reach 2.3 billion yuan, with a compound annual growth rate of 9.5%.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

According to the analysis of the Prospective Industry Research Institute, the growth of the fitness population is an important factor driving the growth of protein powder demand. From 2021 to 2023, the penetration rate of fitness people in China will be between 20% and 30%, far lower than nearly 50% in United States and more than 40% in Europe, showing great market potential.

At present, the major players in the Chinese protein powder market include local brands such as Tomson Bio-Health and Combit, as well as international brands such as Optimum Nutrition and MuscleTech.

According to a report by the Prospective Industry Research Institute, with consumers' increasing attention to health and nutrition, the protein powder market is experiencing a dual upgrade of quality and demand, and consumers' demand for protein powder quality and personalization has improved. If it can meet the needs of consumers in terms of product innovation and diversification, it will undoubtedly help brands occupy a stronger position in the protein powder market.

In China, the development of the probiotics market is also directly related to consumers' health concerns.

According to data from the China Research Industry Research Institute, the scale of China's probiotics market will reach 109.38 billion yuan in 2023, with a compound annual growth rate of 14%, and the market size is expected to reach 137.7 billion yuan by 2026.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

Out of optimism about this field, many domestic and foreign enterprises and brands have laid out. Enterprises in the food field such as Guangming, Yili, Mengniu and JuneYao Health, and enterprises in the field of dietary supplements and pharmaceuticals such as Tomson Beijian and H&H International Holdings have a layout in this category. In addition, multinational companies such as United States DuPont and Denmark Chr. Hansen have also increased their presence in China in recent years.

The increase in participants has made the Chinese probiotics market highly competitive. In order to stand out in the highly competitive probiotics market, higher requirements are put forward for entrants in terms of product innovation, scientific research investment and brand building. As a food giant, Nestlé has certain strength in R&D and innovation, and if it can get closer to local consumers and further impress consumers, it is expected to break through in this track.

Development focus

Let's go back to the business itself.

Nestlé Health Science was founded in 2012 by Mark Schneider, former ·CEO of Nestlé. Today, Nestlé Health Science has established three major businesses around the world, including medical nutrition, consumer health (note: mainly dietary supplements), and innovative nutritional therapies (such as specialized nutrition for food allergies).

Although Nestlé Health Science has not been operating in China as long as Nestlé's coffee and other food businesses, the former has been one of Nestlé's key businesses as it looks to accelerate growth and expand into broader markets in the future.

In a recent interview with Switzerland media NZZ, Nestlé Chairman Paul · Schneider said that Mark · Schneider have rapidly expanded Nestlé's Health Science business and made it relevant. And even after Mark · Schneider leaves, Nestlé will continue to keep the business.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

Xiaoshidai once introduced that in China, the medical nutrition and consumer health care business in the Nestle Health Science sector has gradually landed.

Among them, medical nutrition products based on milk protein allergy, children's growth and development, and enteral nutrition products are the main sources of revenue, and consumer health care is still in its infancy. The latter brands include Garden of Life, Pure, Vital Proteins, Nature's Treasure, Orgain. Among them, the Garden of Life mentioned above mainly promotes probiotics, which are oriented to intestinal and digestive needs.

Earlier, Nestlé had planned to establish a good business foundation in China, and Nestlé Health Science will "walk on two legs", introducing more overseas new products and increasing localization.

In 2019, Nestlé HealthScience's Product Innovation Center in Taizhou, China, was officially inaugurated, and senior executives such as Grégory BEHAR, then CEO of Nestlé HealthSciences' business, visited the center.

At that time, Bigeret talked about the importance of building a factory in China and localising. He said that Nestlé Health Science decided to invest and build a factory in China based on three important opportunities, and will accelerate the pace of localization innovation in the future.

Nestle's latest investment in China has been exposed, and it wants to "eat" the protein powder and probiotics market

In Bigrel's view, Nestlé Health Science has decided to invest in the construction of factories and product innovation centers in China based on three important development opportunities: first, it can more quickly reflect the needs of local patients and consumers, secondly, it can use local talents and raw materials, and finally it can change more quickly with the development of the local market.

He also stressed that Nestlé HealthScience's philosophy is not just to "sell products", and the company is not satisfied with selling products sold in United States and Europe directly to the Chinese market. Although the principle of product formulation design remains the same, Nestlé hopes to adapt the product to the physique and taste of Chinese people through localization, while also adapting to local Chinese regulatory requirements.

Like the establishment of the Product Innovation Center, the investment in the localized production line once again unleashes Nestlé HealthScience's long-term commitment and confidence in the Chinese market. It will be interesting to see whether Nestlé Healthsciences' business will be on the fast track in China in the future.

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