Caitong Securities: Demand differentiation and channel changes jointly promote value redistribution in the nutrition and health care industry chain
The Zhitong Finance App learned that CaiTong Securities released a research report saying that the size of China's nutrition and health care market continues to grow, but there is still room for improvement in per capita consumption. Demand shows the two major driving forces of aging and youth (Gen Z), and is evolving in the direction of “accurate portioning” and functional food. Online channels dominate, and Douyin and cross-border channels are growing rapidly. Traditional categories are steady, and emerging categories (such as oral beauty and probiotics) are growing rapidly with star ingredients. The downstream brand pattern is scattered, and demand expansion brings development opportunities to midstream foundries.
The main views of Caitong Securities are as follows:
Nutrition and health care 100 billion growth track, demand segmentation drives industrial transformation
China's nutritional health food market reached 26.2 billion yuan in 2024, and the CAGR was 6.3% in 2019-2024. However, compared to countries such as the US, South Korea, Australia, etc., there is still plenty of room for increase in per capita consumption. The aging population and rising health awareness are driving the expansion of the geriatric care market, and social pressure and the rejuvenation of chronic diseases are driving Gen Z to become an emerging health care consumer. As downstream demand differentiates, population segmentation is gradually shifting from “broad population coverage” to “precise audience segmentation”. At the same time, functional food at the category level has become an important growth point for the industry.
Channel side: Online channels account for 60%, and Douyin and cross-border growth are growing rapidly
As consumer portraits become younger, industry sales channels are also undergoing changes. In 2024, e-commerce channels for nutrition and health care will account for 60% (up 12 percentage points from 2021). Among them, Douyin channels with outstanding consumer education attributes (53% growth rate in 2024) and cross-border channels that facilitate innovative ingredient efficacy have achieved rapid growth.
Category side: traditional categories are growing steadily, and emerging categories are growing fast and iterating fast
Traditional categories show trends such as large-scale, steady growth, dosage innovation, and population expansion. Among them, the skeletal health market is a typical traditional efficacy circuit for revitalizing the new year through ingredient innovation; emerging categories show trends such as small base, explosive growth, strong marketing attributes, and rapid iteration. In recent years, driven by star ingredients (such as ergothiine) and patented strains, oral beauty/anti-aging and probiotic racetracks have grown rapidly, spawning a series of emerging brands such as Feicui and Wonderlab.
Industrial chain: The downstream competition pattern is scattered, and the advantages of midstream OEM are prominent
Many emerging functional food brands have entered the market through online channels, and the overall downstream competition pattern is scattered. Among them, Swisse has stabilized its leading position as a health care brand with young positioning, accurate marketing, and the “Mega Brand” comprehensive brand matrix; at the same time, expanding industry demand and the entry of emerging brands with light assets bring broad opportunities to midstream OEM. China's nutritional health care contract rate is still at a lower level than in the European and American markets. Leading companies such as Xianle Health and Lily Co., Ltd. are expected to further enhance scale effects and enjoy industry growth dividends.
Recommended attention: Jin Dawei, a leading supplier of health product ingredients with sufficient potential for multiple business lines; Jiyuan Group, a leading global HMB enterprise focusing on muscle and joint health; Xianle Health, a leading global nutritional and health care OEM leader with sufficient increase in domestic consumption and room for overseas growth; H&H International Holdings, a leading brand with a flexible supply chain and layout of pet tracks, overseas mergers and acquisitions that bring about incremental growth, strong brand strength and youthful positioning. Keto Biotech is a leading domestic probiotic company with people's livelihood and health, capacity expansion and layout on the C-side.
Risk warning: Market competition increases risk; risk of changes in industry policy; risk of food safety incidents; risk of overseas expansion falling short of expectations, etc.