Functional Food Development Trend & R&D Innovation

China's big health industry is a trillion-level market. According to data released by the National Bureau of Statistics, the per capita consumption expenditure of Chinese residents is RMB 19,853, of which, the per capita consumption expenditure on healthcare is RMB 1,685, accounting for 8.5%, which is equivalent to a large market of 2.4 trillion yuan per year. Moreover, per capita expenditure on health care increased by 16.1% in 2018-far exceeding the growth rate of per capita disposable income, showing consumers' high willingness to invest in their own health.

After years of health education, the Chinese public has a relatively clear understanding of a good lifestyle. According to the definition of the World Health Organization (WHO), health is not only disease-free and not weak, but also a state of perfection in the three aspects of physical, mental, and social life. According to Mintel’s 2019 survey data, almost every interviewee (98%-99%) believes that the key factors of a healthy life, including a balanced diet, are important, but at the same time there are quite a few (43%-54%). %) think that they are not doing well enough, and they need the brand to help them do better while examining their own deficiencies. Chinese consumers believe that diet not only affects their health, but also expect that diet can improve mood, make themselves more energetic, and even make their brain perform better. Among them, the expectations of Chinese consumers to maintain gut health through diet (61%) are much higher than those of consumers in other countries (34%-38% of consumers in the United States, Britain and Japan).

The outbreak of the epidemic in early 2020 has caused a significant change in the mentality and behavior of consumers. According to Accenture’s report, the outstanding changes include: 1) Prioritize health. The crisis has deeply aroused people’s concerns about health, and it has not weakened even after the epidemic subsides; 2) Trust reconstruction, recommended by familiar brands and friends Products are easier to be trusted; 3) In the virtual era, many things turn from offline to online, involving everyone's work, study, consumption, social life and other aspects. The Euromonitor International report also shows that the more prominent consumer health trends in the post-epidemic period will include digital integration and social media, more attention to (healthy) lifestyles, and preference for personalized products.

The aforementioned changes in consumer behavior will have a profound impact on China's nutritional and health food industry. Thanks to the confidence brought about by the success of China's "battle" (Nielsen survey shows that 92% of consumers are confident in the success of the Chinese battle), and consumers are increasingly concerned about nutrition and health, China's nutritional and health food industry is expected to continue the previous Growth momentum. IiMedia Consulting’s report shows that China’s healthcare product market is expected to grow from 222.7 billion yuan in 2019 to 330.7 billion yuan in 2021, an increase of nearly 50%. Euromonitor International’s survey of industry companies also shows that many sub-sectors in the big health field will receive high attention from companies in the future, including vitamins and dietary supplements, weight management and health, and herbal/traditional products.

Following the changes in a series of consumer behaviors and habits of consumers during the epidemic, industry companies have also felt profound changes in the business side. For example, a Euromonitor International survey showed that during the global COVID 19 peak period from March 2020 to May 2020, consumers were worried about the threat of infection and used e-commerce to purchase vitamins and dietary supplements at higher prices than before; at the same time; In many markets, Internet/e-commerce channels have experienced strong growth, and health specialty stores and hypermarkets/supermarkets have also increased their share to a certain extent. In contrast, smaller or unofficial retailers will lose their share due to forced closures. market share. The Nielsen report also shows that 67% of retailers said they would strengthen online and offline integration in the next 6-12 months, and 53% said they would increase their shelf share of health products.

The rise of live broadcast channels is a link that cannot be ignored. The KPMG report shows that the current live broadcast e-commerce is in full swing. With the baptism of the epidemic, the new retail format of "live broadcast + e-commerce" has accelerated, which not only affects people's consumption patterns, but also helps companies expand domestic and overseas markets. 71% of consumers are more inclined to buy products based on social media recommendations, and 89% of overseas brand companies said that the return on investment obtained from KOL (Opinion Leader) marketing is higher than other marketing channels.

During the epidemic, Amway once again firmly expressed its "China first" strategy from its global headquarters. In order to better meet the nutritional and health needs of consumers under the new situation, Amway has increased its product innovation and research and development efforts, and has rapidly achieved breakthroughs in multiple key sectors. This report will further introduce 4 sections: 1) immune health; 2) herbs; 3) healthy snacks; 4) customized nutrition.

Immune health. According to Mintel data, from the end of February to the beginning of May this year, the use of vitamins and health products by Chinese consumers has continued to increase, from 48% to 57%. At the same time, 90% of consumers surveyed said the epidemic has increased their importance for immunity. Awareness. At the critical moment of the urgency of the war, Amway developed and launched a new product to maintain immune health in just two months, licorice turmeric vitamin C drink. Among them, licorice is a plant widely used in traditional Chinese medicine and health food therapy, turmeric is a popular variety in Ayurvedic herbs and cooking plants, and vitamin C provided in acerola cherries is also one of the essential nutrients for the human body. Based on the cognition of traditional medicine and modern international research results, NUTRILITE scientists have discovered through advanced systems biology research methods that this formula helps to regulate the immune response and suppress excessive inflammation, thereby preventing cytokine storms. attack. This not only opens up new horizons for the search for nutritional and healthy food in terms of immunity, but also expands new ideas for formulating strategies for new immune-related dietary supplements.

In China, there is a large group of people who believe in the health benefits of herbs and diet therapy. The Chinese herbal medicine health care product market in my country is booming. In the health care product market in 2019, Chinese herbal medicine accounted for more than a quarter of the market share, which is a blue ocean that brands in the big health field hope to seize. According to big data forecasts, the Chinese herbal medicine market will continue to show a good trend with a compound annual growth rate of more than 10% in the next few years. Therefore, NUTRILITE also draws on 85 years of scientific accumulation, adopts the inheritance of Hanfang, and uses its own high-standard scientific planting and plant extraction methods to launch the Nutrilite Chinese herbal medicine series-Hanben Extract, which will make a big step forward for NUTRILITE in China. For example, our newly launched Qingrun Drinks, with ginseng lily and Poria cocos extracts as the core ingredients, showed protective effects on the cardiopulmonary system in a randomized controlled trial of healthy adults conducted by scientists, including reducing the level of inflammatory indicators and improving Antioxidant index levels, etc., so as to reduce the damage of subjects exposed to PM2.5 environment. In addition, NUTRILITE scientists are also actively using modern research methods such as mass spectrometry and systemic pharmacology to conduct research on health foods with traditional "drug pair" prescriptions. The results showed that the combination of white peony and licorice can protect the liver through complementary and synergistic mechanisms. It provides innovative ideas and research approaches for the application of traditional Chinese medicine theories to health food research and development. The special sub-projects of the national key research and development plan "Research on Modernization of Traditional Chinese Medicine", which Amway participated in, are currently published with research results, including journals such as "Am J Clin Nutr." Top academic journals in the field of nutrition.

Healthy snacks. China has a trillion-level snack market, and this market is escalating in the direction of health. According to the Snacks Industry Development Report of the Ministry of Commerce, the total output value of China's snack industry will maintain a compound annual growth rate of ~18%, and is expected to reach a scale of about 3 trillion yuan in 2020. Amway is also actively participating in the new format of social e-commerce with marketers around the world. Among them, the snack nutritious food under the NUTRILITE brand has already met with you in June. In addition to meeting the health demands of young people, there are also good The taste of food, the high-value packaging, and the very competitive starting price. At the same time, it also takes advantage of the social attributes of music. Scan the code on the package and you can listen to the "guess your mood" music. In order to maintain the attractiveness of the products, Amway's small n series will basically expand the product category at the pace of new products every quarter, bringing more surprises to the market.

Custom nutrition. This is a promising emerging field. According to a report by Research And Markets, a research organization, the global market for personalized nutrition reached US$6.21 billion in 2018 and is expected to reach US$25.53 billion by 2027, with a compound annual growth rate of 17.0%. The factors driving market growth include: increased health awareness, the increase in the incidence of certain infectious diseases, and the resulting changes in consumer preferences. According to the 2020-2030 strategic plan released by the National Center for Health Research, precision nutrition has become the core direction of the organization's nutrition research in the next 10 years. Amway is also actively deploying and participating in the field of customized nutrition. In the Chinese market, we have launched a series of customized nutritional products in the first half of the year, including Nutrilite Men’s Vitality Combo, Ladies Vitality Combo, Golden Nutrition Combo, etc. This customized nutritional combination is produced by Amway in the United States. The Belgian tablets are used to supplement daily vitamins, minerals, and phytonutrients, and fish oil capsules provide unsaturated fatty acids. On this basis, customized nutrition is also provided for the nutritional needs of different groups of people. Among them, the Nutrilite Men's Vitality Combo chose milk thistle tablets, based on Western theory, which can help protect liver health; the Nutrilite Vigor Combo chose evening primrose oil capsules, which contain gamma linolenic acid, which helps to improve premenstrual discomfort and skin Healthy, and the deep-sea fish oil capsule in this combination uses a smaller soft gel design, which is more convenient for women to eat; and the NUTRILITE Golden Nutrition Combination chooses Jianluo essence, which contains glucosamine, which helps maintain and improve joint health. It is worth mentioning that there have been ground-breaking trials of customized nutrition regulations in Korea. Amway (South Korea) became the first batch of pilot companies. According to the pilot program, the company’s expert consultants can combine the specific nutritional and physiological requirements of consumers, including their own physical conditions, eating habits, and even genetic testing, and recommend combinations of different types of health functional foods, and formulate them into targeted The consumer's individual packaging is convenient for consumers to purchase.

In summary, China's big health industry is a trillion-level market, and consumers have a high willingness to invest in their own health. After years of health education, the Chinese public has a relatively clear understanding of a good lifestyle. The outbreak of the epidemic in 2020 will have a profound impact on consumers' consumption habits and the entire nutrition and health food industry, including more emphasis on health, and more new channels such as online and direct sales to purchase products. This requires industry companies to quickly make adjustments, carry out product innovation in many aspects, and increase R&D investment and efforts. Combining its own advantages, Amway launched brand new products in multiple sectors in the first half of 2020, including immune health, herbs, healthy snacks, customized nutrition, etc. The new products in each sector are supported by detailed data such as scientific research and consumer surveys. At the same time, Amway also hopes to find an effective path for the innovation and breakthrough of China's nutritional and health food industry, and grow together with the industry.