China Food

China’s children’s food is in the window of structural opportunities. How to seize the opportunities for entrepreneurship and innovation?

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a series of policies such as “double reduction” are giving birth to a great demand for children’s health food.
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“Double minus” The policy has been implemented for more than 100 days, and the behavior trajectory of Chinese primary and secondary school students has undergone profound changes. For us, there is a long-standing question that we urgently want to find out: what impact will the profound changes in the behavior of parents and students caused by such a series of policies have on China’s food and beverage venture capital, as the starting point of the food and beverage industry How should operators seize the important opportunities in this change?
 
With great curiosity about this issue and awe of the great potential of the children’s food market, we invited many well-known domestic nutrition experts, education experts, entrepreneurs in the field of children’s food, investors and e-commerce platform experts to discuss and study this topic with us.
本文的核心观点预览:
  • “Double reduction” and other policies have had a profound impact on China’s education system. These policies are essentially intended to optimize the “quality” of the national population. This impact is extending to diet and nutrition, and will give birth to a great demand for children’s healthy food;
  • A counter intuitive fact: Chinese children are facing severe malnutrition;
  • The root causes of Chinese children’s dietary problems: parents’ nutritional knowledge is relatively limited, and there is less excellent supply on the market;
  • With the dual rotation of demand and supply, China’s children’s food industry is in an important time window of structural opportunities;
  • Children’s food is very complex, which can be said to be one of the most difficult directions in the food and beverage consumer goods industry. Compared with ordinary food consumer goods brands, children’s food brands need to be comprehensive, balanced and scientific in the company’s fundamental capabilities;
  • Judging from the competitive trend of children’s food industry, customer life cycle management will be a very important ability of children’s food brand;
  • From the perspective of macro nutritional elements and use scenarios, there are many innovative spaces for high-quality carbon water, protein and fat, and there are potential entry points for school dinner scenes, sports scenes and family dinner scenes;
  • Generation alpha has their unique identity, emotional resonance and social ecosystem. How to seize these new contacts and make effective use of them will be an important ability of this generation of children’s food companies;
  • Agricultural technology and alternative protein technology also bring different imagination space for children’s health food entrepreneurship and innovation.
 

“double reduction” and other policies have had a profound impact on China’s education system, and this impact is extending to diet and nutrition

In late July 2021, the “double reduction” policy was issued with great momentum. The policy aims to “deepen the governance of after-school training institutions, build a good education ecology, comprehensively reduce the total amount and duration of homework, reduce students’ excessive homework burden, and promote students’ all-round development and healthy growth”.
 
We believe that a series of policies such as “double reduction” in recent years are essentially intended to optimize the “quality” of the country’s population.
 
On the one hand, by optimizing the education system to reduce parents’ anxiety and economic burden, and through “three child” and other policies to deal with the current population structure problems of aging and low fertility in China.
 
On the other hand, we can clearly perceive that optimizing population “quality” is the key strategy of the country.
 
*** People’s fitness needs and promoting people’s all-round development should be taken as the starting point and foothold of sports work, and the national strategy of national fitness should be implemented.
 
At present, this strategy has played a very significant role in the cultivation of young population. After the implementation of the “double reduction” policy, primary and secondary schools in many regions have 4-5 physical education classes per week. Following the “double reduction” policy, the Ministry of Education announced that the physical education in the middle school entrance examination will have the same score as that outside the language number, and will be fully implemented in 2022. Wang Xueli, director of the sports industry development research center of Tsinghua University, believes that the increase in the weight of sports in the middle school entrance examination and the policy of sports entering the college entrance examination are expected to stimulate parents to pay more attention to children’s sports and physical health.
 
The double reduction policy has brought about a rapid rise in sports training. Source: CCTV
 
A series of policies such as “double reduction” have released the pressure of sports time and homework in the school, and also dealt a heavy blow to K12 discipline education and training. These training classes used to occupy a large proportion of Chinese primary and secondary school students’ off campus time. Many of these released time were guided by the state to the sports and fitness scene, and the enthusiasm of the market and capital also poured in.
 
“After the announcement of the double reduction policy, many of our campuses were full, so we had to announce a new notice of course renewal and suspend the course renewal for new students who have not completed two months,” said the founder of a chain sports training institution in Hangzhou, “On the phone, we can hear that the intention of parents is very high. Even some parents pay directly when they come, and they don’t have to take experience classes. At present, the registration situation has increased by 2-3 times compared with previous years.”.
 
The head of an indoor skiing teaching company in Beijing said that after the “double reduction”, investors will come to discuss investment matters with them almost every day.
 
Professor Ren Hong from the school of sports and human sciences of Beijing University of physical education tells us that there are three major factors that determine physical quality – genes, amount of exercise and nutrition. The increasing attention to sports will also extend to nutritional supplement. At present, Chinese children actually have large problems and room for optimization in physical health, nutritional supplement and daily diet.
 
In terms of policy, the State Council has also actively guided children’s healthy diet. Previously, the State Council issued the national nutrition plan (2017-2030), which focuses on “popularizing nutrition and health knowledge, optimizing nutrition and health services, improving nutrition and health system, building nutrition and health environment and developing nutrition and health industry” And put forward clear quantitative targets for China’s children’s anemia rate, exclusive breastfeeding rate, growth retardation rate, obesity rate and parents’ awareness of health knowledge. Two of the six “major actions” are aimed at children.
 
For the food and beverage industry, we believe that these policy oriented and extended scenes in the time dimension will give birth to a very large demand for children’s health food / sports nutrition products and bring huge opportunities.
 
A counterintuitive fact:
Chinese children are facing severe malnutrition

Although over the past 40 years of reform and opening up, the dietary and nutritional level and physical development level of Chinese children have been greatly improved, the problem of child malnutrition in China has not been fundamentally solved.
 
According to the definition of malnutrition by the World Health Organization, it mainly includes:

(1) Insufficient nutrition, such as wasting, stunting, and UN ⁃ derweight; (2) insufficient or excessive trace elements, such as trace element deficiency (lack of important vitamins or minerals), excessive trace elements, etc.; (3) excessive or unbalanced nutrition, such as overweight and obesity And non communicable diseases related to diet (such as heart disease, stroke, diabetes and certain cancers).

The situation in China over the past decades is that (1) the situation has improved considerably, but has deteriorated in (2) and (3). In particular, the health problems that China’s children are facing are mainly overweight, obesity, diabetes, premature development, high uric acid, and unbalanced nutrition intake.
 
Due to the gradual affluence of life and the invasion of Western food culture, China’s food culture and habits have changed greatly after the reform and opening up. From the perspective of modern nutrition, we can find many deficiencies in the current universal food structure:
  • Although the consumption of meat, egg and milk increased, the total protein intake showed a downward trend, and the high-quality protein intake was still low;
  • The proportion of carbon water is too high, and many of them are high GI carbon water;
  • The overall fat intake is too high, and the proportion of high-quality fat is very small;
  • Seasonings such as heavy oil, salt and sugar in some dishes;
  • Additives, antibiotics and hormones accumulated in the food system are eventually ingested by consumers.
Changes in nutritional intake of Chinese residents, source: CDC nutrition data Yearbook
 
Analysis of protein intake of Chinese residents, source: Luo Jiexia, Xu Shiwei
 
According to the 2021 nutrition knowledge and practice report of school-age and preschool children jointly issued by Danone open scientific research center and the education and training center of China Nutrition Society, the proportion of dietary imbalance of Chinese children is high, and more than 50% of children aged 3-12 fail in the score of dietary balance.
 
Balanced intake of various foods at different ages, source: report on nutritional knowledge and practice of Chinese school-age and preschool children
 
Dietary scores of children of different ages, source: report on nutritional knowledge and practice of Chinese school-age and preschool children
 
Just as the old Western proverb says: you are what you eat, this unreasonable diet structure, coupled with the widespread phenomenon of “over supply of food” among parents (especially in intergenerational feeding), the health problems of contemporary Chinese children caused by diet are very worrying.
 
According to the data of cucd of Tsinghua University in 2012, the obesity rate of children under the age of 6 in China is as high as 16%, which is even higher than that of the “world’s fattest” United States, which is a shocking data. Childhood obesity is related to adult health. For example, childhood obesity has a significant positive correlation with adult systolic blood pressure, diastolic blood pressure and total cholesterol, and a significant negative correlation with adult high-density lipoprotein.
 
Malnutrition status of children under 6 years old (72 months old), source: Liu Shuming, Professor of Sociology Department of Tsinghua University
 
Obesity rate of children of different ages in the United States in 2018, source: Centers for Disease Control and Prevention
 
According to Statista data, the incidence rate of I diabetes in China was nearly 3% in 2019, which has risen to fourth in the world.
 
Incidence rate of type I diabetes in children aged 0-14 years from source: Statista, 2019
 
“At present, Chinese children and adolescents are indeed tall and heavy, but their sports ability is obviously declining, which is particularly worrying. It is not too much to mention it from the perspective of our national strategic crisis.” we also consulted Professor Ren Hong of the school of Sports Human Sciences of Beijing Sport University on the physical health of Chinese children, She said: “In the past, we thought that chronic diseases only existed in the middle-aged and old age gradually appeared in the group of primary and middle school students. As we all know, the proportion of hypertension in primary school students is very high, but the problem of abnormal uric acid and premature development is also very serious. In a physical examination for freshmen this year, the proportion of uric acid exceeding the normal range was about 56% for boys and 40% for boys. Before The proportion of our children’s early development is about 12% and 15%, and now it is about 40%. In fact, these are related to improper nutrition. The calorie and nutritional structure are not clear. It is due to excessive calorie intake, but there is still an unreasonable nutritional structure. We don’t eat enough, but the caloric capacity exceeds the standard, so there are so many obese and overweight, so so there are so many children’s early development “.
 

causes of Chinese children’s dietary problems: parents’ nutritional knowledge is relatively limited, and there is less excellent supply in the overall market

As mentioned above, Chinese children are facing severe health problems brought by diet. The key cause is that parents’ nutritional knowledge is relatively limited, children’s product research and development is difficult to have both “delicious” and “healthy”, and the overall excellent supply of the market is relatively small.

3.1 parents’ cognitive basis of nutrition knowledge determines children’s diet content and eating habits, but at present, Chinese parents’ nutrition knowledge is relatively limited

Parents’ cognitive basis of nutritional knowledge determines children’s dietary content and eating habits. Parents’ low level of nutritional knowledge and poor eating habits will affect parents’ use of their nutritional knowledge to make correct dietary choices for their children. In addition, a large part of children’s nutritional knowledge comes from daily communication with parents, and parents’ nutritional cognition will affect children’s nutritional cognition and eating habits Nutritional habits.
 
Unfortunately, according to the current research, Chinese parents’ cognition of nutrition knowledge is relatively limited.
 
The Chinese Journal of child health published a study earlier. The results showed that parents in Shenzhen generally lack nutritional knowledge, resulting in many misunderstandings in food selection and dietary behavior. Although most parents can recognize the health benefits of vegetables, fruits and miscellaneous grains and the benefits of food diversification, they can supplement micronutrients such as milk, breakfast, calcium, iron and vitamins For example, Chinese parents have relatively low understanding of dietary fiber regulating immune function, probiotics regulating immune function, less understanding of the role of zinc and vitamin A, and insufficient awareness of some in-depth professional nutrition knowledge. In Danone open scientific research center and China Nutrition Society In the 2021 report on nutritional knowledge and practice of school-age and preschool children jointly released by the education and training center, half of Chinese children’s parents failed in the score test of nutritional knowledge.
 
Nutrition knowledge scores of parents of children of different ages, source: nutrition knowledge and practice report of Chinese school-age and preschool children
 
Different stages of growth and development have different physiological characteristics, and different periods need different dietary structure and nutrient element structure.
 
Preschool is a critical period of physical and intellectual development in a person’s life. During this period, children have vigorous metabolism, rapid growth, accelerated intellectual development and vigorous vitality. Taking brain development as an example, children can basically complete 90% of their brain development before the age of 5 and 75% at the age of 2. Therefore, this period provides sufficient and correct training for children Nutritional supplement is very important. Malnutrition during this period will not only damage the growth, development and health of children, but also have an irreversible impact on the health status of children in adulthood.
 
We also mentioned earlier that childhood obesity is related to adult health. For example, childhood obesity has a significant positive correlation with adult systolic blood pressure, diastolic blood pressure and total cholesterol, and a significant negative correlation with adult high-density lipoprotein.
 
Children’s brain development curve, source: A., Berardi, N., & Maffei, L. (2009). Enrich the environment to empower the brain. Trends in neuroscience, 32 (4): 233-9
 
Except the reproductive system, other organs and systems of school-age children have developed to close to the adult level. The physical development of children in this period has accelerated, gradually entered the second growth peak, and independent activities have increased.
 
Dr. Chen Shanquan, director of nutrition and food safety program at Shenzhen University of Hong Kong, told us that this period is often a critical period for people to develop their tastes and dietary habits. The physical fitness and incidence rate of chronic diseases in children are related to the actual intake of nutritional factors. At present, the diet structure of many Chinese children is “high calorie density, low nutritional density, high salt, high oil and high sugar, and over processing”. This “food education” makes many Chinese children feel that natural food is not delicious, the threshold for salt, oil and sugar is getting higher and higher, and they don’t even know what the food tastes like.
 

3.2 in the past, most children’s food products were “adult food for children”, and there were few excellent supplies on the market. The combination of “delicious” and “healthy” is a big problem in product research and development

For a long time, the main research and development idea of China’s children’s food has been “childization of adult food”, that is, the food developed by adults is regarded as the content, and the cartoon packaging that can reach children is regarded as “children’s food”, or simply eat adult food for children. There are relatively few excellent food products customized for children from the perspective of nutrition science.
 
Children’s food and adult food of “adult food for children” cannot meet the needs of children in some key factors:
  • The traditional sterilization technology of prepackaged food, such as high temperature and high pressure, will destroy the nutrients in the food;
  • Children eat less than adults and are in a critical developmental stage, so they will require higher nutritional density of food;
  • The types and demands of trace elements in children are greater than those in adults, and these trace elements have a significant positive correlation with children’s physical and mental development;
  • Children have certain requirements for the interest of food. Many studies have proved that the consumption of more interesting food (color, shape, taste and other factors) for them exceeds 50% – 100% of ordinary food.
Chinese traditional diet is broad and profound, but from the perspective of nutrition science, there are also some disadvantages, such as insufficient protein intake, excessive intake of refined carbon and water, and insufficient intake of high-quality fat. From the perspective of nutrition science, children’s health food should make up for these deficiencies of traditional diet. However, on the whole, children’s food on the market has not been able to solve these pain points , with less high-quality supply.
 
In the face of two very strict judges, children’s food products are more “delicious” and “healthy” than ordinary food consumer products. This is really difficult from the perspective of product research and development. Often our own cognition is that delicious things are unhealthy and healthy things are not delicious.
 
“Health” is an attribute that parents are most concerned about. Health here has two meanings: nutrition and safety. According to our understanding, at present, the internationally famous brands in tmall’s children’s food category occupy a very considerable market share, which is much higher than that of ordinary food, which reflects the importance parents attach to safety.
 
According to the report on nutritional knowledge and practice of school-age and preschool children in 2021, more than half of children’s parents (aged 3-5 and 6-12) choose children’s diet The first consideration in purchasing food is food safety, followed by food nutrition. The parents of children aged 3-5 are 17.6%, and the parents of children aged 6-12 are 17.3%. 11.6% of children aged 3-5 and 17.6% of parents of children aged 6-12 first consider eating habits, tastes and hobbies.
 
How to make the product have two attributes of “tasty” and “healthy” is a big problem in product development. Parents in some areas have passed the heavy oil, heavy salt and heavy sugar eating habits to their children. In addition, the common coloring agents and fragrances in traditional industrial children’s food also spoiled the children, all these factors made the children’s “tasty” threshold increasing.
 
During the exploration of “children’s food health” by American peers, some cases can provide us with some reference value.
 
According to our observation, the “healthy food for children” in the United States in recent years It can be divided into two periods. In the first stage, from 2010 to 2017, children’s food was initially healthy together with adult food, focusing on less sugar, less salt and organic green, and some food brands targeting children also appeared. In the second stage, since 2017, American children’s food has carried out extensive and in-depth health exploration in this stage, more from the perspective of children Deconstructing product logic, giants have launched children’s positioning products.
 
The well-known bar snack brand kind provides us with a “healthy food for children” In September 2017, kind launched fruit bites for children. At that time, kind had high hopes for this product, which was its first attempt outside the bar Zero food category. They injected a lot of marketing and channel resources into this product. Fruit bites hard core health was not added, and it is rare in the market (and now is) without synthetic dyes (and other additives) fruit dry snacks. However, this attempt to educate consumers proved to be a failure. In September 2019, two years after listing, kind removed fruit bits from the shelves of offline channels because of poor sales (there are still online sales) According to King’s internal opinion, this fruit dry snack without synthetic dyes is difficult to attract children who are used to fluorescent color snacks and sweet foods. Later, king called fruit bites a “retail failure” in a statement.
 
Fruit bites product map (looking at this content, there is really no desire to eat), source: Network
 
As mentioned earlier, how to make products have both “delicious” and “healthy” attributes is a big problem in product R & D. how to keep the ingredient list clean and ensure safety while delicious and nutritious puts forward high requirements for product R & D ability, but it is also the key to create product strength barrier.
 
It is gratifying that recently, we found that some children’s health foods with both “delicious” and “healthy” and high overall completion have appeared in the Chinese market.
 
Taking the “Valley Qi” children’s health cereal of little yellow elephant as a case study. From the perspective of scene, this product accurately cuts into the scene of too much refined carbon water, too little protein and calcium intake, and parents’ pursuit of convenient and fast breakfast; In terms of nutrition and health, it is based on 6 kinds of cereals. In addition to the freeze-dried fruits with instant cereal, it also adds cheese balls to adjust the taste while improving the nutritional structure of nutritional products. In addition, vitamin A, vitamin D, calcium, DHA and other nutrients are added to make functional nutritional supplements. The main products are no preservatives, no artificial flavors, and no artificial colors.
 
Xiaohuangxiang’s products, picture source: xiaohuangxiang tmall store
 
After receiving this product, we distributed it in the office. Everyone said that the simple use experience as a consumer is that the product is really delicious. On the whole, the product has good power and high completion in “both delicious and healthy”. In this survey, we also interviewed Mr. Wang Yi, founder and CEO of xiaohuangxiang. He revealed to us that xiaohuangxiang’s 30 day repurchase rate has reached 17%.
 
Mr. Wang Yi talked to us that his observation in his previous entrepreneurial experience and his perception of the country’s overall strategy in recent years made him believe that children’s health food is a track with great potential. Therefore, he founded Xiaohuang elephant with his nutritional standards as a former athlete and rich supply chain resources at home and abroad precipitated in his past experience, We hope to customize healthy food solutions for Chinese children from the perspective of children and parents and driven by product innovation. He has started his own business in the field of food for three times, set up his own factory and exported to the world. He has done international food supply chain business. He is a long-term supplier to food giants such as McDonald’s and Mars.
 
He also said that Xiaohuang Xiang, together with Guangming investment and Guangming international science and innovation center, recently released the cooperation plan of “China Youth food health and nutrition research center”, which is ready to cooperate to carry out strategic cooperation such as technology cultivation, R & D and industrial innovation project incubation, so as to promote the development of the National Children’s / youth health food industry.
 

with the dual rotation of demand and supply, China’s children’s food industry is in an important time window of structural opportunities

China’s children’s food market has always been in a state of “great potential but not effectively tapped”. There are a large number of children in China and parents’ willingness to pay is very strong. However, due to the overall shallow nutritional knowledge of parents and the “one mouse excrement spoils a pot of porridge” caused by the inferior products of some children’s food companies in the past, the demand has not been fully tapped and met.
 
So why do we judge that China’s children’s food is currently in an important structural opportunity window? We can find out from the national strategic tendency, the change of consumer behavior and the structural lack of supply.
 
First of all, the national intention and strength of the strategy of “improving population quality” can be clearly perceived. A series of policies such as “double reduction” all show the strategic importance of children’s physical quality and comprehensive development, and “eating” is undoubtedly an extremely important part in the implementation of these strategies, We have also observed that the impact of this policy is extending parents’ attention to diet and nutrition. The inclination of these national strategies will eventually correct the people’s consumption behavior through various channels and map it to the revised consumer behavior.
 
Secondly, from the perspective of consumers, China has a large number of children, parents’ willingness to pay is very strong, and consumers are still in the trend of mainstream intergenerational change.
 
According to the results of the seventh national census in May 2021, the population aged 0-14 accounts for 17.95% and the total population is nearly 250 million.
 
China’s population structure, source: National Bureau of Statistics
 
Behind such a large population group is the Consumption Willingness and consumption ability of Chinese parents. Horizontal comparison with other countries, the Chinese people’s love for their children can be much higher. You can refer to the data in the figure below. In the consumption of children’s food, price is the factor that parents don’t care about most. This data result may be combined with the questionnaire form to further consider its effectiveness, but the “price insensitivity” of Chinese parents to children’s consumption is believed to be very consistent with our understanding of Chinese parents.
 
Parents’ concerns about food choices, source: nutrition knowledge and practice report of Chinese school-age and preschool children
 
According to a survey conducted by Tencent data lab, Chinese families spend nearly 20000 yuan a year on their children (accounting for about 22% of the family’s pre tax income), of which diet accounts for 24%. According to the population and the above data, we can roughly speculate that the market scale of Chinese children in “eating” is nearly trillion, which should be accurate in order of magnitude.
 
Parents’ consumption expenditure and proportion of expenditure on children, source: Tencent data laboratory, n = 1500 + family sample survey
 
The intergenerational change of consumers has also become a driving factor for the rise and iterative upgrading of children’s food categories. Mr. Huang Hai, a well-known domestic consumer investor, mentioned to us that post-90s consumers are a major buyer of healthy food at present. They pay more attention to ingredients and food health than older consumers. After they become parents, they are looking forward to the emergence of a number of professional and reliable children’s food brands in the market, and “three children” And other policies will further enhance the depth of this market.
 
Intergenerational distribution of tmall global mother and baby category consumers, source: white paper on consumption trend of imported mother and baby of tmall Global
 
Finally, the overall structural deficiency in the supply side of China’s children’s food market also gives a lot of room for entrepreneurship and innovation. As mentioned above, the main R & D idea of China’s children’s food has always been “childization of adult food”, which is difficult to give consideration to “health”, “delicious” and “fun”. Therefore, many children’s food on the market is actually not suitable for children, and many inferior products are filled in the market.
 
For example, many children’s food products use sugar substitutes to imitate the concept of “0 sugar” in adult food, and many sugar substitutes actually have some adverse effects on children’s health.
 
Although sugar has been used in food in China in recent years, the criticism of sugar substitute in foreign academia has intensified. They claim that some sugar substitute may cause the microbial dysfunction of digestive system, cancer, nervous and immune system disorders, affect insulin sensitivity and cause potential diabetes and other side effects.
 
Possible side effects caused by some sugar substitutes, source: Vikas purohit, sundeepmishra, Department of Cardiology, AIIMS, India. Le Voyageur temps, February 15, 2018
 
Tmall, which holds a large amount of Chinese consumption big data, has also noticed the potential of children’s food. Mr. Kun Cheng, head of tmall coffee blending industry, told us that children’s food will be a potential track for tmall food in the future. It is expected that next year, the platform data and marketing resources will be integrated to build a children’s food track with major brands. According to tmall’s data, children’s food categories such as cheese sticks are growing very fast and have great market potential. At present, the market products are relatively non-standard, there are many heavy oil, salt and sugar products, and the overall product quality level is uneven. Mr. Kuncheng also mentioned that in the era of network marketing approaching saturation, children’s food, as a category with high product / brand premium, is an ideal entry category option in terms of profit structure (according to industry experience, the gross profit margin of children’s snacks is generally 15-20% higher than that of adult snacks).
 
In our conversation with Mr. Huang Hai, a well-known domestic consumer investor, he said that the entry point of children’s food is clear and the scene is clear. In contrast to the pan snack project, children’s food is a very good entry point. At present, there is a strong demand for children’s food, the product premium rate is high, and due to the sensitive demand for nutritional balance and the high viscosity of parents’ trust in the brand, This is a category with deep market and barriers.
 

how to seize this important time window? The following are our observations and Thoughts on the current entrepreneurship and innovation of children’s food in China

This chapter aims to simply share with you some of our current observations and Thoughts on the entrepreneurship and innovation of Chinese children’s food, so as to attract jade. It is intended to cause a wider and more in-depth discussion. You are welcome to exchange any topics about children’s food with us.
 
Children’s food is very complex, which can be said to be one of the most difficult directions in the food and beverage consumer goods industry. The children and parents faced by children’s food are two extremely strict consumer groups. They will take a magnifying glass and look at every link and contact of your generalized “product” repeatedly and carefully with extremely critical eyes. Due to this sensitive emotion, the details and feelings they perceive when contacting the brand and products will be further consolidated and amplified with the contact chain. In order to satisfy both product judges, they need to think and polish a lot in each link.
 
Compared with ordinary food consumer goods brands, children’s food brands need to be comprehensive, balanced and non biased in the company’s basic capabilities. Marketing, R & D, channel, supply chain management, user life cycle management and overall strategy formulation should be very good, so as to survive as a strong person in this category.
 

5.1 life cycle management of customers is a very important ability for children’s food brands

The successive admission of giants makes the path of “horizontal expansion and rapid expansion of products through accumulation and collection of homogeneous supply chain” impractical. Xiaolu Lanlan has been online for more than a year, and there are more than 40 effective SKUs, many of which have ranked first in Taobao category. It is difficult for start-ups to beat these giants by competing for marketing expenses and supply chain management capabilities. Therefore, in the early stage of entrepreneurship, it seems a more reasonable strategic path to make one or two or three single products as deep as possible.
 
For the vast majority of children’s food start-ups, it is an unavoidable strategy to expand products horizontally and expand people vertically in the process from 10 to 100.
 
Why do you say that?
 
For most children’s food start-ups, it is difficult to make very solid barriers in the supply chain. If the selection idea is tricky, it will inevitably encounter homogeneous competition on the road of expansion. A business model with proven feasibility and high profit space will be copied by other enterprises. Items with high category ceiling will soon be targeted by giants. If the category ceiling selected by enterprises is not high, they will soon face the strategic choice of horizontal and vertical expansion.
 
For increasingly crowded categories, marketing expenses and channel expenses will soon rise. Enterprises that have a solid foothold in brands and products will inevitably fall into the pull of customer acquisition cost and long-term customer value. In this pull, the way to improve the proportion of “long-term customer value: customer acquisition cost” will naturally fall into the two strategic options of horizontal product expansion and vertical population expansion. How to manage customers’ life cycle will be a very important ability of children’s food brands.
 
On the one hand, horizontal extension products provide more food options for children of this age group. On the one hand, the vertical expansion group continues to serve these children well, so that they can still be brand users in the next age group; On the other hand, children’s food also provides a good entrance to the family scene for enterprises. The catering time of children, especially older children, will also define the catering of parents. Parents eat the same things as children in order to save trouble. In such a scene, how to make parents willing to eat children’s food products has become a problem worthy of thinking.
 
At present, we have seen that some pioneers of children’s food start-ups in China have been implementing the strategy of horizontal and vertical expansion.
 
As mentioned above, Mr. Wang Yi, the CEO of Xiaohuang elephant, revealed to us that Xiaohuang elephant has prepared several polished products in the product library and is ready to go online. Aiming at the vertical expansion of the population, Xiaohuang elephant plans to launch different product packages and product lines for children of different ages to meet the preferences of children of different ages. He also mentioned that according to children’s physical and psychological development, there are many dimensions and methods to divide children’s age groups. In a specific age group, children have strong self-awareness and tend to deny all choices made by parents. How to retain users in this age group is where children’s food companies need to work hard.
 

5.2. Generation alpha has their unique identity, emotional resonance and social ecosystem

As for the importance of children’s evaluation in children’s food consumption decision-making, we can look at this set of data: in a survey conducted by the center for intergenerational dynamics in 2020, they found that 90% of parents thought their children’s opinions and purchase intention were very important, and 55% of parents would buy according to their children’s wishes.
 
Tiktok, China’s “new children”, the so-called Generation Alpha (born after 2010), is very different from the growth environment of our generation. They really grew up in the Internet age. At the age of 5, they could teach their parents to download the extreme speed version of the jitter. Because of the greater amount of information they consumed, their self-awareness and mental maturity were earlier.
 
“New crowd” in the west, source: Network
 
Remember the little girl who denounced world leaders for “how dare you?” at the United Nations Climate Change Conference, and the strike wave of primary and secondary school students in the West. We don’t evaluate whether their behavior is correct or not, but we can see that generation alpha has their unique identity and emotional resonance.
 
The “new children” also pay more attention to health than our stereotype. According to a survey conducted by the center for intergenerational dynamics in 2020, they found that 69% of children can perceive whether snacks are healthy, and 55% of children are more willing to choose healthy food.
 
China’s new children are the same. They may sound “all children’s consumer goods are worth doing again” when they are about to enter junior high school (in fact, there are many examples of middle school students’ Entrepreneurship abroad, including food and beverage Entrepreneurship). The first batch of generation alpha will go to junior high school soon.
 
According to our field observation, the transmission path of children’s food among children is very interesting. For example, they will have their own small KOL, and other children are more obedient to their opinions. These little KOLs often put delicious and fun snacks into their schoolbags and take them to school to share and spread with their classmates. Tiktok Kwai tiktok, if you have a brush, you should find that many fans have been dozens of millions of children in recent years, and the middle school students have formed their own ecosystem on the shaking hands. How to seize these new contacts and make effective use of them must be an important ability of this generation of children’s food companies.
5.3 many entry points can be found from the perspective of macro nutritional elements and use scenarios
In terms of categories and scenarios, we can start from the perspective of macro nutritional elements and use scenarios.
 
Modern nutrition divides the main nutrients in food into three macro nutritional elements: protein, carbohydrate and fat. The current situation of Chinese children’s diet structure is that there are pain points in these three macro nutritional elements.
 
With the prosperity of the people after the reform and opening up, the protein of Chinese children does not increase but decreases, which is lower than the generally recommended value in the world (there are many standards, generally 60g / day at the age of 8 and 80g / day at the age of 10), and the intake of red meat is excessive (the world health organization puts red meat in the list of class 2A carcinogens), and the hormones, antibiotics and Agricultural pollution and other harmful substances are accumulated into end consumers through end products such as meat, eggs and milk, which is also one of the reasons for the high proportion of premature development of children in China.
 
Analysis of protein intake of Chinese residents, source: Luo Jiexia, Xu Shiwei
 
With the substantial increase in the time proportion of sports scenes and the improvement of nutritional knowledge, Chinese parents’ demand for protein products will increase day by day, and high-quality protein will be a key entrepreneurial and innovative direction. Because of the high biological value effect of animal protein, the “healthy food for children” of meat, egg and milk is a solution R & D idea, such as chicken breast meat food and whey protein food for children, which will not be further developed here. In addition, alternative protein is also a key potential direction, which will be described in detail later.
Chinese children also have a lot of room to optimize carbohydrates. Refined carbon water plays a very important role in China’s traditional diet, but this kind of food with high carbon and GI is easy to rise blood sugar and sleepy. We can hear that many women around us are already talking about the concept of “anti sugar”. They will have a good cognitive foundation on “children’s high-quality carbon water food”.
 
Some high-quality carbon aquatic products abroad, source: Network
 
Oat product is a proven high-quality carbon aquatic product. In addition, high-quality carbon aquatic rice flour products will also have great potential in China. In the past two years, some high-quality carbon water rice flour products have emerged abroad. Most of these products use high-quality plants as raw materials, such as chickpeas, lentils, peas and so on. Take rightrice’s product introduction as the typical product portrait of this category – “twice as much protein and five times as much fiber as white rice, but only 40% of net carbohydrates”.
 
Too little high-quality fat intake is also a big pain point in the diet structure of Chinese children. Specifically, excessive intake of saturated fatty acids (rich in animal fat and processed foods) and insufficient intake of unsaturated fatty acids (rich in some vegetables, fruits, seafood, nuts and other foods).
 
There are two potential directions in the research and development of high-quality fat products for children. The first is to directly and simply make high-quality fat supplements, and the second is light processed products with high-quality fat rich ingredients as raw materials, such as avocado seaweed snacks, salmon dried fish snacks, etc. (these products sell very well abroad).
 
Some best-selling high-quality fat products, source: Network
 
In addition, some trace elements also play an important role in children’s brain and body development. The best solution for this demand is compound tonic products. Here we will not discuss the effectiveness of these tonic products, which is a very big academic problem. At present, there are very few children’s nutritional functional foods with high completion on the market. If wonderlabs have the opportunity, then the nutritional functional products for children also have the opportunity.
 
From the perspective of the scene, the school dinner scene, sports scene and family dinner scene, in our opinion, the comprehensive opportunities are relatively good at present.
 
Dr. Chen Shanquan, head of nutrition and food safety course of CUHK (Shenzhen), told us that the state attaches great importance to students’ catering, and at present, the school dinner has room for further optimization in terms of safety, nutrition and taste. We believe that in the school dinner scene, there are good opportunities for fresh supply, prefabricated dishes and prefabricated meals. Of course, the feasibility of the opportunity should be further judged in combination with the company’s government and educational resources.
 
Children’s sports scene is also a rising food consumption scene. A series of policies such as “double reduction” and “sports power” have lengthened the sports scene in the time dimension, which will give birth to a very large demand for children’s health food / sports nutrition products. From the school sports scene, at present, primary and middle school students have physical education every day, and the concept of “eat less and eat more” is infiltrating. The supply after physical education is a potential scene. The same is true for sports scenes outside school. There is a lack of professional products for children on the market.
 
The demand for sports scenes is also divided into ordinary food and professional sports food. Here we focus on professional sports food. The supply of sports scenes should be convenient, fast and high nutritional density. Rod products, milkshake products and beverage products will be more coupled with this scene.
 
The family dinner scene can be opened from the two dimensions of nutrition and convenience. Products combining high-quality macro nutritional elements and convenient and fast attributes are the correct answer to the product R & D idea of this scene. Takeout has concerns such as heavy oil, salt and sanitation. Prefabricated dishes and prefabricated meal products will have great potential here.
 

5.4 agricultural technology and alternative protein technology also bring different imagination space for children’s health food entrepreneurship and innovation

Finally, from the perspective of agricultural and animal husbandry system, we also found some more in-depth ideas of venture capital in food supply system.
 
One idea is the alternative protein mentioned earlier.
 
At present, there are three mainstream technologies in the field of alternative protein, plant-based, microbial fermentation and cell culture. Last month, we held a track insight meeting on alternative milk, in which we speculated that alternative milk products will be launched in China after 2025, and alternative milk can account for nearly 40% of the market share by 2035.
 
Market scale forecast of China’s alternative dairy products (RMB 100 million), source: foodplus
 
A very important research and development direction of alternative milk is the research and development of breast milk products. From the perspective of natural selection, human milk has evolved with humans for 3 million years. From the perspective of nutrition, it is the gold standard. It has unique sugar, amino acid type sequence and lipids, and plays a key role in children’s immunity, brain and physical development.
 
Compared with traditional animal milk, alternative milk technology has many advantages, such as no need to worry about the accumulation of antibiotics and hormones, higher biological price efficiency (microbial fermented milk), cheaper (in the long run), etc. alternative milk also has full potential in the application of children’s food scene.
 
In this survey, we also interviewed Guangming investment, which just released the cooperation plan of “China Youth food health and nutrition research center” with Xiao Huang Xiang. Mr. Ji Jie, vice president of Guangming international food industry fund, also mentioned some agricultural perspectives to us.
 
Mr. Ji Jie mentioned that according to statistical research, it has been found that obesity and rickets in children in the United States are common in recent years. The reason is that the content of trace elements in children’s food is seriously lacking from the perspective of nutrition. After the 1940s, modern agriculture used pesticides and chemical fertilizers to quickly catalyze the growth of crops, but at the same time, it also overdraw the nutrition of the soil. At present, the nutrition of the crops we eat is actually far from that of traditional planting. Most children did not take in the corresponding trace elements while taking in a large amount of fat, carbon and water. In addition, industrialized animal breeding has also caused some problems. For example, cattle in the United States are raised with corn. As a herbivore, grain feeding will seriously affect the digestion of cattle rumen, and even cause cattle hepatitis and gastritis, resulting in the need for a large number of antibiotics; On the other hand, the content of omega-6 in meat is high in grain feed, which has something to do with the prevalence of cardiovascular and cerebrovascular diseases in Americans. These are also important factors affecting children’s health. From these perspectives, some innovations and optimization made in the upstream agricultural supply chain can affect the nutritional structure of children’s food. At the same time, the high premium rate of children’s food can well carry high-cost agricultural planting, such as organic planting and feeding food raw materials. Mr. Ji Jie also mentioned that Guangming investment pays close attention to food science and technology / agricultural science and technology projects in the agricultural supply chain. In addition, children’s food is also their focus.
The catalysis brought by a series of policies such as “double reduction” to the scene of children’s health food can be clearly perceived, which is giving birth to a very large demand for children’s health food. Due to the change of consumer behavior, structural lack of supply and severe dietary problems, China’s children’s health food industry is in an important structural opportunity window. We are well aware of the complexity and difficulty of children’s health food innovation and entrepreneurship. This research aims to simply share some of our current observations and Thoughts on China’s children’s health food with you, so as to lead to a wider and deeper discussion, and also hope to do something valuable for the next generation of Chinese people with you.
Note:
1. This article is sponsored and released by xiaohuangxiang, a brand of children’s health food;
2. “Double reduction” refers to the opinions on further reducing students’ homework burden and after-school training burden at the stage of compulsory education issued by the general office of the CPC Central Committee and the general office of the State Council;
3. References on side effects of sugar substitutes:
[1]Jotham Suez, Tal Korem, et al. Gut Microbes, Volume 6, 2015 – Issue 2, Pages 149-155;
[2]Vikas Purohit, SundeepMishra, Department of Cardiology, AIIMS, India. Le Voyageur Temps, February 15 2018;
[3]Gardner C, Wylie-Rosett J, et al. Nonnutritive sweeteners: current use and health perspectives a scientific statement from the American Heart Association and the American Diabetes Association. Diabetes care 2012; 35:1798-808;
[4] Zhao Hui, Wang Xinxuan. Artificial sweeteners and human health risks, Journal of food science and technology, 10.3969/j.issn.2095-6002.2018.06.003.
Author: Turow; Source: foodplushub (ID: foodplushub), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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