China Food

Functional food is difficult to “correct expectations”

“is reproduced from” new voice Pro “(WeChat official account ID:xinsheng-pro), the author: Xiao Chao, producer: Shao Le Le. At present, there is no strict regulatory definition of
functional food. The functional food in the industry usually includes all health food (with blue hat certification) and ordinary food with certain functional raw materials.
in fact, the meaning of functional raw materials is not very clear. Commercial functional raw materials mainly refer to raw materials that have been identified by the health commission as ordinary food raw materials or new resource food raw materials (the catalogue of new resource food also has strict identification, such as qiyazi, tea tree flower, ginseng, GABA, etc.), and the raw material suppliers carry out human or clinical experimental research on these raw materials and support their positive evaluation through scientific literature.
to sum up simply and rudely, the beneficial food can be called functional food.
according to incomplete statistics of public information, there were 12 financing events in functional food in 2021, which were supported by head institutions such as Sequoia, GGV Jiyuan capital and IDG capital. In the name of health, it is usually accompanied by the taste of snacks. Products such as sleep fudge, enzyme jelly strips and white kidney bean chewable tablets are introduced to the market.
but the blow also followed. Due to the overall downturn in consumption in the second half of 2021 and the lower than expected double 11 sales, many functional food brands are currently in the inventory digestion period, the pace of new products is slowing down, 50% discount promotion is common, and some people leave early. The market for functional foods did not seem to break out as expected.
the reason for this is that based on the special development process of China’s health care products industry and the inherent impression of consumers, such new brands should not only pay high market education costs and guide consumers to correct their expectations for products, but also correct their expectations for the growth of the industry under strict regulatory conditions. In addition, they need to accumulate their own product power in a longer time – the traditional mature brands have been on a long slope, The road to a new brand has just begun.
attractive track: large market and large single products, high passenger order plus high re purchase
in terms of market space, China is the second largest consumer market of health care products in the world after the United States, and the market penetration rate of health care products is less than 20%, which is twice the theoretical space compared with 55% of the United States. The characteristic of
health care products is that the strong brand mind brings high customer orders and high re purchase, which leads to the large single product effect, making health care products a very attractive track.
for example, old brands such as movefree and Swisse have purchased more than 50% or even 60% of large single products, basically occupying an absolute position in the corresponding efficacy; The large single products of domestic giant Thomson Beijian, such as aminosugar, chondroitin calcium tablets and protein powder, also have an annual sales scale of more than 1 billion yuan in the drugstore channel.
has few consumer tracks with the characteristics of “high customer order and high re purchase”, and benefits from the maturity of overseas health care products market. Domestic factories providing OEM services for overseas brands have experienced considerable accumulation in recent 20 years, forming a relatively complete and stable head pattern. Production enterprises such as Fuwei Yichao and xianle health can provide one-stop services for scientific research, design and manufacturing. The vast market and mature supply chain of
provide soil for entrepreneurs. However, entrepreneurs need to wait for new opportunities to survive in the giant health care market and compete with traditional brands with decades of development history.
a new brand that started its business in 2020 aims at new opportunities, new groups and structural changes brought about by new channels. According to the data from the prospective industry research institute, from 2013 to 2018, according to the sales channels of China’s health food industry, direct sales always accounted for about 47%, and the growth rate of e-commerce channels was the fastest, from 13.30% to 31.60%, significantly reducing the sales share from pharmacies.
the consumption habits of health care products brought back by the increase of overseas students and the rise of overseas shopping are also one of the driving factors. The report of solution consulting also shows that in 2020, the traditional e-commerce platform contributed 60% of the e-commerce sales of health food; Agent purchase accounts for 24%, mainly engaged in overseas brands; Cross border e-commerce accounts for 16%, which is a direct platform endorsed by overseas brands.
traditional brands are usually slow to respond to changes. Entrepreneurs usually have more insight into the consumption needs of new people (New white-collar workers and generation Z, etc.) and are better at traffic playing in new channels. Coupled with the unprecedented attention to health awareness brought by the epidemic, it seems not surprising that many entrepreneurs and capital have poured into this industry in the past two years.
Some new functional fudge brands on tmall
these entrepreneurs are generally divided into two categories. Most of them come from across borders and are good at marketing. They often come from the growth Department of large factories, are good at new brand trading and value data performance; Some entrepreneurs also start from a technical perspective and emphasize their professional background and R & D accumulation.
they tend to avoid the advantageous single products of traditional giants and aim at more subdivided consumer groups and more specific consumption scenes, such as sleeping aid before going to bed and relieving alcohol before drinking, in order to kill a blue ocean.
old problems of health products
but in China, health care products have always been a special and contradictory industry.
first of all, there is no clear legal definition of “health products” in China. It generally refers to the general name of products with health care effect on human body, which is a relatively simple and vague concept.
within the scope of legal regulation, once known as health (functional) food, is now known as health food. It is defined as food that claims to have specific health functions or for the purpose of supplementing vitamins and minerals. That is, it is suitable for specific people to eat, has the function of regulating the body, is not for the purpose of treating diseases, and does not produce any acute, subacute or chronic harm to the human body.
since the first systematic regulation of health food was introduced in 2003, the examination, approval and supervision authority of health food has experienced the transformation from the health department to the drug supervision department, and then to the State Administration of market supervision. With the revision of national standards and management measures, the introduction of various exposure drafts and trial drafts and the intersection of government functions, China’s health product market has been in the stage of “emphasizing examination and approval and neglecting supervision” for a long time.
on the one hand, China is the country with the strictest access threshold and the highest cost in the world’s health food industry. All health food enterprises need to apply for the approval number of the product before they can mark the word “Guoshi Jianzi” on the outer package of the product. This mark is also known as “blue hat” because of its appearance.
data show that the various expenses of “blue hat” submitted by some enterprises for approval exceed 10 million, and the approval cycle is as long as three to seven years.
on the other hand, from the sun god and Sanzhu in the 1990s to the Quan Jian incident in 2019, there have been many fake and shoddy products pretending to be “health food” in the name of “health products” in China, as well as health food that exaggerated the efficacy publicity after getting the blue hat approval.
direct selling also bears a reputation for this all year round. In the conference room or auditorium that accommodates dozens to hundreds of people, a lecturer made an impassioned speech on the stage and sold expensive health care products to the masses, which has become a typical sales scene of health food in the hearts of consumers.
has been on the mainstream stage since 2003. Direct selling has always been an important sales method of health food, which has contributed more than 50% of the sales of the industry all year round. By 2018, the unlimited annual sales will exceed 20 billion yuan, which can be regarded as the peak period of direct selling enterprises. Until the Quan Jian incident broke out, the whole industry ushered in a turning point.
the repeated occurrence of such bad events makes that although the total output value of the domestic health food market has exceeded 300 billion yuan in 2017, consumers go to two extremes: they either completely lose confidence in health food, blindly believe in the efficacy similar to “curing all diseases”, or even give up drug treatment.
the special development process of this kind of health care products in China and the two extremes of consumers’ general cognition of health care products also lead to the fact that health care products are a category with high user education cost in China.
user education is divided into two types: one is to promote users’ attempts (i.e. innovation and transformation), and the other is to guide users to have reasonable expectations for the achieved results after attempts: it has a certain health care effect, but it does not cure all diseases and solve problems 100% – which will be reflected in the re purchase data.
at present, education is communication, communication is marketing, and marketing is cost. We should give consideration to transformation and repurchase, and all brands should be counted as a general ledger.
air outlet in the first half of the year, cooling in the second half of the year
The difficulty of
carrying the burden of history is that if the most effective way to innovate other consumer goods is word-of-mouth communication and one-to-many grass planting, what health care products need to solve is group stigmatization and many-to-one grass pulling: not only to make buyers believe that “this is not an IQ tax”, but also to make buyers’ friends believe that “this is not an IQ tax”. This transformation path has a very high threshold.
, especially for new brands starting from 0 to 1, in the situation of congenital lack of category trust foundation and brand trust foundation, entering the market in the name of health products usually results in low conversion rate.
in this regard, entrepreneurs with this kind of marketing background have created the definition of “functional food” and mostly use the dosage form of soft candy that has been verified abroad (rather than soft capsules and tablets, which are more common in consumer cognition). In essence, they make themselves avoid the direct mental connection with health products.
“I have been working for nearly 20 years. The biggest difference between these new brands and old brands is that the products of new brands have a certain communication and topic in the market, unlike the previous playing method. In the past, health products only talked about functions, and other experiences are secondary. Now, it is obvious that delicious and taste are an important factor.” Li Weijia, deputy general manager of Guangdong Yichao Biotechnology Co., Ltd.
for example, “buffx” describes “delicious” as the core difference of its own products. They are responsible for the research and development of delicious products. The person in charge comes from top food companies such as Mars. It is said that the team has proofed the taste dimension for more than 140 times before and after, and cooperated with different products to create different eating experiences such as soft sticky teeth, chewy rebound, micro bubbles and so on.
“according to the three dosage forms of soft candy, soft capsule and tablet, the proportion of foreign soft candy products has exceeded that of tablets in 2020, but it can not be compared in China. Our current development scenario is that most of what tablets can do should also be solved by soft candy.” Li Weijia said. In addition to the taste, the high mapping rate of packaging design style, making articles on the shape of soft candy, and cross-border joint names with other brands or industries are also one of the reasons why this part of functional food brands have attracted the attention of new people.
product form is novel enough, the brand connotation is fun and interesting, the new price of tens of yuan is not expensive, and it is easy to share. Under the precise flow push limited within a certain circle, these new brands have obtained a high initial conversion rate, handed in tens of millions of monthly sales transcripts in the early stage of opening, and it is natural to get financing.
in the first half of 2021, functional food was promoted to the wind. Kang Le, the founder of buffx, predicted to us in March 2021 that there would be more than 60 new brands in China “doing the same thing as us” by June.
but the problem these brands will soon face is that for young people, impulsive consumption accounts for a large proportion of such health-related consumption behaviors that focus on delicious and fun. Whether it can continue to form repurchase in the future will be the next important problem. A considerable number of customers of
brands come from consumers who “don’t care about functionality, but only care about the taste of soft candy”, not to mention that they will face competition from traditional candy companies moving towards health. Snacks is a natural category with low repurchase rate, which will be far from the repurchase rate of health products initially preset by the brand.
is a new brand with rough launch and rapid growth in the past year. What needs to be solved now is the resulting traffic reverse bite and improper management of consumer expectations. Functional food is subject to the old problems of the industry, and this challenge is particularly prominent.
consumer education and path separation
investment institution Xianfeng Changqing once divided health care products into four types according to their efficacy: making consumers’ “unhappy” become “cool”, making “cool” become “more cool”, making the “bad” that hasn’t happened don’t happen, and long-term health care and tonic.
Xianfeng Changqing believes that these four new brands of health products can be made, but in the initial stage of starting a business from 0 to 1, it is preferred to design products around the first two. The latter two need users to adhere to them for a long time and are difficult to achieve immediate results, so they should be expanded after consumers have formed trust in the brand.
this is indeed the case. A large number of emerging functional brands are moving closer to “Shuang” and “Shuang”. The typical representative is a large number of sleep and refreshing products launched. Of course, there are exceptions. For example, “minayo” has launched thermal control tablets, iron supplement soft candy and comprehensive vitamin soft candy focusing on blocking absorption.
on the whole, however, this represents the limitation of the new brand in the product direction, and also reflects the general demand of consumers for functional food: physical sensation and rapid effect.
as mentioned earlier, the definition of health food is “specific health function or food for the purpose of supplementing vitamins and minerals”. Obviously, consumers will not require too much for “vitamin and minerals supplementation”, but the “regulatory mechanism function” of “specific health function” on the human body will return to the long-term “two extremes” perspective as how consumers judge.
in other words, the user education of functional food for consumers will also include an important content: how to make consumers have reasonable expectations for the effect of their products. This significantly affects the repurchase data.
still takes the need for sleep assistance as an example. There are many inducing factors for sleep problems, which are due to the long-term bad habit of playing with mobile phones before going to bed, psychological anxiety and stress, or related to specific stages such as jet lag. Different causes lead to different solutions, but on the consumer side, it is obvious that the simplest and crudest solution is expected.
melatonin is a common sleep aid component. It will directly act on the central nervous system, and the sleep aid effect is ideal, but it may affect human endocrine after long-term use. Therefore, the blue hat system in China is also strict. New brands promote GABA more( γ- Aminobutyric acid), its function is to provide corresponding nutrients, which are synthesized by enzymes in the human body to indirectly form melatonin, which has the effect of helping sleep.
GABA is a natural active ingredient with little impact on human body. It can be used in ordinary food and is favored by new brands. On the other hand, due to the intermediate link of enzyme synthesis, the number of enzymes in human body varies from person to person. Therefore, there will be individual differences more differentiated than melatonin in terms of use effect.
this leads to the correct use of GABA, but the effect is not obvious due to functional reasons; Someone does not use the product correctly and simply classifies it as invalid; Some people think it is very effective. The first two groups determine the upper limit of repurchase and may leave bad comments. These negative feedback will affect the brand’s innovation efficiency and lead to a vicious circle in terms of consumers’ fragile trust in health products.
one way to solve the bad comments is that many brands have introduced the rule of “seven day free return”. If consumers feel that it is ineffective after eating for a few days, they can contact the customer service to ask for an adjustment plan. If the adjustment plan is still not improved, the products can be returned within seven days of Kaifeng.
the principle of early trial and invalid refund is essentially the additional cost paid by the brand in consumer education. Another way to break the situation of
is to use solid R & D ability to bring higher repurchase rate with stronger effect, so as to meet the desire of some precision consumers for certainty. Kooyo, which put forward the concept of “serious health care products” corresponding to functional foods, has built a team with R & D as the core under the leadership of its chief scientist and Nobel laureate Professor Thomas Robert Cech; And each product uses its artificial intelligence agent development platform synfect ® An exclusive patented formula developed.
this platform carries out molecular dynamics modeling with higher accuracy, reliability and computational efficiency, predicts the physical, chemical and biomedical properties of candidate raw materials and candidate formulas, and carries out functional bioactive substance and preparation design, solid form selection and directional design in other key aspects.
at the same time, in order to get closer to the concept of “serious health care products” and show the difference from functional foods in the same period, kooyo mostly adopts capsules rather than soft candy, which also makes it more difficult for kooyo to get close to a wider range of young groups in the transformation of innovation. The brand subdivides the target customer group into a new generation of elite families aged 30 to 40.
Kooyo is more active in high-end financial groups. The picture shows Mr. Hurun holding an exclusive customized gift box of kooyo Hurun wealth
The data test of
buffx also found that the dosage form had a significant impact on the conversion rate, but had less impact on the repurchase rate.
the path of the new brands is divided into: if high customer order, low Re purchase and high transformation lead to the IQ tax of inferior health care products, kooyo is more inclined to high customer order, high re purchase, high barrier and low transformation. The current situation of more functional food brands is low customer order, low Re purchase and high transformation – the initial sales volume is very good, but it strongly depends on the flow delivery, Especially when VC ammunition is no longer sufficient, the possibility of stall extinction increases rapidly.
“today, buffx is still trying to improve our product power. Excluding the influencing factors such as private domain, the overall natural repurchase rate of the sleep industry is not high, which is basically about 10%, and there are few more than 10%. We are only a little higher than the average level of the industry.” Kang Le commented on us like this.
“we have been very restrained in launching. Now we can’t reach the repurchase rate of 50% and 60%, but I think at least 30% repurchase is a basic requirement. Only when we exceed this figure will we step on the accelerator more aggressively.”
enters the adjustment period and waits for the new variable
Under the
tuyere, capital overflow inevitably leads to the deformation of the actions of entrepreneurs in some industries. Some new brands quickly launch their products in a month, quickly burn money, invest and sell to the first place in a month, quickly leave after finding that the limelight is wrong, and even can’t last for a complete sales cycle of 90 days.
Li Weijia also said to us, “not only consumers but also entrepreneurs need to correct their expectations for health care products. Some entrepreneurs we see still have a strong sense of utilitarianism. When making products, they think that I want to make an explosive product today and another explosive product tomorrow. The explosive thinking is right, but there are not so many explosive products in this industry.”
dancing in shackles is still the main tone of domestic functional food brands. According to Li Weijia, as a OEM providing product solutions to brands, Fuwei Yichao can provide hundreds of landing solutions to overseas brands, but only dozens of domestic brands can be used due to restrictions of laws and regulations. The strict restrictions on the raw materials and dosage of health food from the state will inevitably lead to the emergence of product homogenization. Another reason for the homogenization of
products is that there is still too little precipitation of new brands. On the basis of the general-purpose solutions provided by the OEM, the relatively excellent new brands will combine their own R & D demonstration and proceed from the market demand, and carry out scheme adjustment and secondary landing according to the subdivided population and subdivided scenes, so as to complete the transformation from products to commodities. There are also brands with lack of R & D ability, which will directly list the OEM scheme with the doctrine.
and although better understanding of consumer demand and faster product iteration are the general advantages of new brands, compared with traditional brands with decades of development history, accumulating dozens of hundreds of patents every year and having a certain volume and foundation, the shortcomings of new brands in R & D are still very obvious.
Fuweiyichao soft candy production line
therefore, after the whole industry entered the adjustment period in the second half of 2021, many brands are also actively adjusting the previously slightly single DTC development strategy. Kang Lehe and the team are glad that buffx has been vigorously laying offline channels such as HEMA, KKV and convenience stores since March last year. Now the online and offline revenue has been basically flat. Buffx still hasn’t given up its continuous research and development on sleep solutions. It has retained a small team of all in sleep internally to do a long-term battle between large items and strong mind. The rest of the
buffx team turned to products with more sales certainty, such as high calcium fudge. According to Kang Le, buffx is still planning to launch sub brands related to traditional Chinese medicine. The blessing in these directions will bring buffx considerable income that has increased several times compared with last year.
kooyo not only continues to operate the brand, but also puts forward the ecological chain development strategy of B + C + D. After the completion and operation of its own plant in January this year, kooyo will focus on the b-end, open its own synthetic raw materials and patented technology to partners, and provide scientific research services to the d-end to promote the double spiral development of its biotechnology and consumer business. It is reported that kooyo has reached in-depth cooperation with the cutting-edge functional food brand of a local head pharmaceutical enterprise.
new variables are also brewing. On the one hand, in June 2021, the soft candy filing system was liberalized, the approval process of wearing a blue hat was further simplified, and the application cycle was shortened to about half a year, which was an important benefit for the industry. On the other hand, although traditional overseas brands have been slow to respond to the domestic market, they have also seen the rapid development of this market in the past year. It is expected that relevant products will be launched as soon as the end of this year.
by then, the probability of domestic brands can also go out of the adjustment period, and the market may become lively again. It is a turning point for China’s health care industry to cooperate with each other in order to promote the development of the industry. However, it is necessary to make concerted efforts to improve the penetration rate of the industry Kooyo said, “we maintain a realistic and open attitude, open our factories and technologies to ecological partners, and firmly look forward to this broad and subdivided track.”
“we still think it is possible to have a Tesla like magic item in the demand for sleep assistance, so we are still working very hard to promote research and development. We still need to believe in the power of time.” Kang Le said.
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original title: functional food is difficult to “correct expectations” | category singularity reprint authorization and media business cooperation: Amy (wechat: 13701559246);
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