The economic base truly determines the superstructure. The more chaotic the times and the poorer the people, the less they value their lives and the more ruthless they become towards themselves. Conversely, in times of peace and prosperity, the more affluent people are, the more they cherish their lives and the more they take care of themselves.

If we look at health care products, they are often more popular in more developed countries, and the same is true for health foods.

If we watch Korean dramas, it is not difficult to find that Koreans can be said to be a nation of health care enthusiasts. They often tear open a bag of powdered substance and pour it into their mouths. This powdered substance could be red ginseng powder, probiotics, vitamin C, or collagen, etc.

The director previously went to Yanji for fun, where there are a large number of South Korean imported beverages, which are truly bizarre and dazzling. However, if you take a closer look, most of them are actually health care beverages, such as kudzu water, burdock water, corn silk water, and various teas, etc.

South Korea is like this, and so is Japan. In the 1990s, the collapse of Japan's bubble economy did not stop the rapid growth of the health care/health food industry. From 1989 to 1999, the compound growth rate of Japan's health food industry reached 8%, which is two to three times the GDP growth rate at that time (2.6%).

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Even in the past decade or so, Japan's GDP growth rate has fallen to zero, but the VDS (dietary nutritional supplements, which can be directly regarded as health care products) industry is still growing at a rate of 1-3 points per year. According to Euromonitor data, the scale of Japan's VDS industry in 2023 is about 9.5 billion US dollars, which is about 70 billion yuan in RMB. It is important to note that Japan's population is less than one-tenth of our country's. In other words, if Japan had as many people as our country, the market size of the health care industry is likely to exceed 100 billion.

In the three mainstream consumer concepts of Japanese residents, health has long been at the top of the list.

Considering that our country's cultural customs are very similar to those of Japan and South Korea, it is highly likely that our country's health care industry will catch up with Japan and South Korea in the future. To say the least, there is already a trend now.Take a look at the current major trends in the domestic food and beverage industry. Nongfu Spring's zero-additive series, the Oriental Leaves, has become a hit; Yuanqi Forest recently launched new red bean and barley water, and red date and goji berry water; condiment companies such as Qianhe and Haotian are aggressively promoting their zero-additive products; probiotics have become the darling of the snack industry, with probiotic drinks, probiotic jumping candies, probiotic chocolates, and probiotic melon seeds, everything can be probioticized...

The invisible ceiling of the domestic health product industry has always been there.

On one hand, the domestic health product industry has left a bad impression on many people due to the chaos in the industry; on the other hand, it is also because the development level in China is not high enough, and although people have some spare money, their consumption concepts are not sufficient, so the overall penetration rate is not high.

Counting the development history of major health products in China, generally speaking, it takes a long time to educate consumers before they can stand out.

Typical examples include one of the current stars of Tomson Bi-jian, Jianliduo, which is a glucosamine chondroitin that has a certain health effect on joints. It was launched in 2012, and by 2016, the sales were only 130 million yuan (this data is the factory's data, not the terminal sales). However, after the sales reached 350 million yuan in 2017, the sales volume began to rise rapidly, and by 2021, it had become a major product with a revenue of over 1.4 billion yuan. However, 1.5 billion is almost the ceiling, and from 2022 to 2023, Jianliduo's growth was obviously weak, and in the first half of 2023, Tomson's Jianliduo achieved a revenue of 710 million yuan.

Looking more closely, in fact, many major products follow this rule, that is, if a product can break through the threshold of 300-500 million yuan, then there is hope for a breakthrough, and once it breaks through, it may reach a scale of 1-1.5 billion yuan in a very short time, and then it basically can't run anymore, 1-2 billion yuan is probably the ceiling of most health products in China at present.

Another typical example is Tomson Bi-jian's protein powder, which is one of the earliest products launched by Tomson, but it has only become a major product in recent years. In 2017, the scale reached 700 million yuan, and in 2019, the scale reached 1.1 billion yuan. Unfortunately, the company did not disclose the sales volume of protein powder separately afterwards, and it is estimated that the current volume is about the same as Jianliduo.

Duowei Element Tablet 21 Golden Vitamin, a former big hit, was actually launched as early as 1985. It took until 2003 to achieve a revenue of 400 million yuan, and then quickly broke through 1 billion yuan in 2005, but it didn't last long and began to decline gradually, and now it is only about 300-500 million yuan in volume.

For example, Diqiao Calcium, a product represented by Baiyang Pharmaceutical, which the director's mother has been taking for a long time, entered China in 2000 and began to cooperate with Baiyang in 2005. In 2022, the annual revenue was 1.628 billion yuan. Although it is still growing, it is almost close to the ceiling.Think carefully, why is there a curse of 1-2 billion?

In the previous text, we were talking about products with a terminal price of 100-300 yuan, with a production scale of 1-2 billion, taking the median, it corresponds to about 15 million consumer visits (please note that the terminal price and the factory price are not the same thing, there are also layers of distributors eating the difference in the middle, the manufacturer's sales are the income obtained by selling at the factory price), accounting for 1% of the total population in the country. In other words, the people in the country who are capable and willing to consume health care products are probably that 1%. If you have a good product, after years of consumer education, some of them will be interested, and you can quickly break through the circle and capture all of this 1%, but the remaining 99% will be a bit difficult to convert.

The ceiling is expected to be broken

However, in recent years, this ceiling is expected to be broken. For example, the probiotics of Tomson's Life-space, which was acquired in 2018, had a revenue of 320 million yuan at home and abroad, 690 million yuan in 2020, 1.1 billion yuan in 2022, and 815 million yuan in the first half of 2023 (the growth rate at home and abroad is more than 40%), exceeding the 710 million yuan of Jianliduo, and it should not be a problem to break through 2 billion in the future.

Moreover, the current probiotics do have a bit of a sense of breaking through the circle, everything is probiotic, during the New Year's Day, the younger brother took a bag of jumping candy to the director, it even has probiotics... hhh

Wonderlab's small blue bottle probiotics, in the first half of 2023, the sales on the Douyin platform alone exceeded 600 million yuan, so it seems that the annual sales of more than 2 billion yuan on the whole platform in the future is not a difficult thing.

Tomson's LSG, Wonderlab's small blue bottle, Jiangzhong's probiotics, and even South Korea's Zhonggeng Hall and so on, the current sales in the country are not bad, just a few of their sales volume, the penetration rate in the domestic population has definitely exceeded 1%, and it may have exceeded 3%. If you add the additional addition of probiotics from other brands and various foods, the penetration rate may have already exceeded 10%, and it is a national-level explosive product. Relevant institutions predict that by 2026, the domestic probiotics market (terminal) scale is expected to reach 138.5 billion yuan.Of course, the reason why probiotics have become so popular is not without some underlying causes. For instance, the vast majority of people have already been educated through yogurt and recognize that these products are effective.

Secondly, the three-year pandemic has greatly increased people's awareness of health. When the pandemic was relaxed in the first quarter of 2023, the performance of various health product companies saw a significant improvement. During the Spring Festival of 2023, health products were commonly received as gifts, such as protein powder and probiotics, all aimed at enhancing immunity.

Thirdly, unlike other health products, probiotics have become snackified. For example, the taste of products like the "Little Blue Bottle" and "Zhonggeng Tang" from South Korea is very good, which is completely different from the capsules of other health products (I haven't tried LSG, so I won't comment on it, but I have tried the Little Blue Bottle and Zhonggeng Tang). Not to mention probiotics plus, the plus products are all snacks, so in addition to the core audience of middle-aged and elderly people, they have also won the hearts of a large number of young people.

Fourthly, compared to ten years ago, China today is indeed much richer and cannot be compared with the past. The consumption power of first-tier and some second-tier cities can even be comparable to overseas developed countries. With economic growth, the growth of the health product industry is almost inevitable.

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Although probiotics are the only ones that have become popular now, it is inevitable that more and more health substances will become popular in the future. Many domestic health products have started to learn from probiotics and have become snackified, such as the collagen gummies from Tomson Bijian, and the konjac jelly/sugar control pills from Huaxi Biology...

...or, we may not even call these things health products anymore, but functional foods.

The key is that young people really buy into it. You can often see young people's reviews of functional foods on Xiaohongshu, and health products are becoming younger in China.

With the growth of the economy, the penetration rate of health products among people will gradually increase. For example, in neighboring Japan, the per capita consumption of health products in 2022 has reached 10,382.4 yen (about 623 yuan). Therefore, with the growth of the economy, there is no need to worry about the gradual rise of our country's health product industry. The three-year pandemic has greatly enhanced people's awareness of health, and the recent heat of functional foods has greatly strengthened the consumer education of related functional substances. Therefore, I believe that the domestic health product industry is expected to usher in a larger expansion in the future.

Which companies are worth paying attention to, we will see you in tomorrow's article.