The dietary supplements market in China

 

This article will analyze a booming market in China: the dietary supplements market.

New update 2017 Health Supplement in China & Vitamin

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Status quo:

 

The Chinese market of dietary supplements will represent a $ 10 billion market within 2012. China is already the second largest consumer of dietary supplements after the USA.

The Chinese market specificity is its very strong segmentation with a lot of very small manufacturers. The 50 largest producers occupy only 1/3 of the market.

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Many manufacturers

 

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The average turnover dedicated to R & D is only 1.67%. This means that there is very little innovation and that manufacturers will all merely market copies of existing products. On average 6.6% of sales are invested in advertising.  So marketing  and communication play a key role in this industry.

Nevertheless if many retailers have websites in Chinese most of them don’t have any integrated digital strategy. Most of them have no Weibo account.

But Chinese people buy products because their friends or opinion leaders recommend the product. The purchase of vitamins and food supplements is often the consequence of a recommendation made by friends or family members in China.

Consumers aged under 40 represent 62% of total buyers of food supplements. Indeed  this age group is relatively young and ready to accept new concepts. They often buy food supplements for themselves as well as their parents, grandparents and children as gifts.

Dietary supplements are expensive and often associated with luxury products despite their lack of glamorous 😉 In terms of marketing one should keep in mind the emerging concept of “healthy gift”.

Consumers over 60 age are a group which represent a significant and an ideal target for manufacturers, but unfortunately this group is hard to target with e-marketing promotion tools as they remain very traditional and reluctant to lifestyle changes. They appreciate the Chinese traditional medicine, conveying images of ancestral health, magic,esoterism and so on … But we don’t have to loose faith as these concepts which were exported to the USA (ginseng, goji, reishi, …). We should also convince old chineses to consume western dietary supplements with an appropriate marketing strategy. Old chineses are very superstitious. Brand communication for dietary supplements should ride this soteric wave and promote the products as being healthy and spiritual.

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Ginseng:

 

ginseng biological

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Goji:

.goji-berry

 

 

reishi:

 .BioReishi

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This is both a threat and an opportunity. Threat as dietary supplements pharmaceutical products face competition from so-called “traditional natural medicine.” Opportunity because China’s population is more and more aware than the western population of the link between diet and health.

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Regulation when it comes to dietary supplements in China

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Differences between France and China:

 

In France, the official definition of “nutritional supplements” appeared in  1996 in the Official Journal: the aim of a “nutritional supplement” is to overcome a deficiency … Then vitamins, minerals, proteins (except creatine), and some plants  are designated as “nutritional supplements”.

 

In China, the official definition of “nutritional supplements” appeared in June 1997. To be recognized as a dietary supplement by the Chinese administration, the product must meet the following 3 criteria:

 

(1) Being ingested orally

 

(2) Having at least one out of the 22 preventive functions recognized by the Ministry of Health

 

(3) Do not be a curative drug.

 

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All supplements sold in China must be tested and approved by the State Food and Drug Administration (SFDA). Complicated and non-transparent standards  and regulations in China have created unnecessary hesitation of many foreign companies to sell their products there.

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SFDA logo

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Nowadays regulations in China are in the verge of an harmonization.

 

Communication

 

Communication is the key factor of success in this industry. Curiously, the first communication channel in China for food supplements is the TV. Many advertisements are placed on television. But we can wonder if it will last because chinese are more and more suspicious with the institutional TV programs. Internet is the first source of information for those consumers who are looking for acurate informations. But regarding nutrional supplement TV spot remains for now the main media channel of communication.

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But no doubt that things are going to change in favor of digital integrated campaigns.

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Imported food supplements

 

Chinese have a growing taste for imported food supplements. Food supplements companies should target the Chinese capitalizing on concern over food security as the Chinese middle class consumers increasingly conscious about health issue rush to food supplements.

 

Just pay attention to the rich Chinese tourists visiting New York City and you will probably see bags from GNC or Vitamin Shoppe among those from brands like Chanel, Bergdorf-Goodman or Barney.

 

 gnc_logo

 

 

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The additional cost that Chinese consumers are willing to concede to their health – and the population of China is huge – is synonymous potential windfall for major producers and retailers of dietary supplement in the United States and Europe. As noted in the China Daily:

“It is estimated that sales of vitamins and dietary supplements as food additives and nutritional supplements in China will reach 95.2 billion dollars by 2015.”

The increasing solvent demand awareness regarding health issues , the worsening health problems  due to environmental destruction and the aging population are the three main reasons that explain such a trend.

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Old chinese sport

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Average spending of Chinese consumers on health products in 2011 accounted for 0.1 percent of total expenditures. In comparison in developed countries, people have spent only 0.03 percent of their expenditures to food supplements. That means that chinese clearly pay more attention to health issues.

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The leadership of American groups

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63% of all these supplements came from the United States.

Among major American brands in China there are Amway (who, despite marginalization in its domestic market, holds 16 % of market share in China), NBTY based in New York and Pennsylvania-based GNC. Despite a strong market presence in Hong Kong – where it gained popularity thanks to the Chinese diaspora tourists visiting their country of origin – CNG is relatively new in mainland China, having only launched in Shanghai, Guangzhou and Shenzhen in August.

But despite significant barriers to market access and the difficulty in order to obtain compliance with SFDA  the 30 percents of annual growth rate of the health care products  market in China will attract a growing number of other international manufacturers.

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The children segment of market

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Although sales of vitamins and other health products for adults are booming in China, it is especially true when it comes to the segment of food supplements for children. In recent years, Chinese parents were willing to spend relatively large amounts of money on the health of their children in relation to family income. This is a result of the contaminated milk scandal in 2008.

 

In 2009,  English brand Biostime represented 85.4 % of market share in retail sales of probiotics for children in China.

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 Biostime probiotics

 

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Chinese women: a specific target

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cosmetofood

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Chinese women also consume a lot of beauty supplements and / or diet (jojoba, aloe vera, or citrus pills …). Women represent 49% of the total urban population. This population of urban women spend 46 billion RMB for purchases of nutritional and beauty supplements. This is the fashion tendance of cosmetofood !

 

French manufacturers of vitamins and food supplements:

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  • DSM
  • BASF
  • Rock
  • Adisseo

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Chinese laboratories:

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  • Zhejiang Medicine Co., Ltd..
  • Zhejiang NHU Company Ltd.
  • Northeast Pharmaceutical Group Co
  • CSPC Weisheng Pharmaceutical Co

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Implementation strategy (Joint venture)

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Sanofi-Aventis in 2011 attacked the Chinese market with a partnership with Minsheng laboratory. They created a joint venture, where Sanofi prevails. The advantage of this kind of strategy is to benefit for local brands already well known by Chinese.

 

In this case Sanofi ‘s partner Minsheng is already well established with its flagship brand “21 Super Vita”.

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21 Super Vita

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Conclusion: The dietary supplements market in China is booming. European manufacturers (especially French) as well as retail chains specializing in organic food should invest in this market by demonstrating marketing innovations (using my services for example ;-)) if they do not want to be completely defeated by their American competitors.

 

 

What is the future for Manufacturers of nutritional supplements … ?

 

 

 

 

Olivier

Marketing China