Tech Planet (WeChat ID: tech618)
Wen | Zhai Yuanyuan
Cover source | Visual China
Xu Fei, an investor who pays attention to the consumer field, found that many functional food and beverage entrepreneurs have emerged in the market recently, and many functional food and beverage products with bright eyes and health effects have come into being, such as drinking tea drinks that can make children take off their glasses, Chinese health Ganoderma lucidum coffee, Ganoderma lucidum jelly, hyaluronic acid sparkling water, slimming coffee.
Functional food and beverage new products emerge in an endless stream, but Xu Fei is not optimistic about these products, believing that their gimmicks are greater than the efficacy, and the suspicion of cutting leeks is very large.
Xu Fei's view of functional food and beverage is a true portrayal of the dilemma of the development of the domestic functional food and beverage industry. On the one hand, this is a track that is expected to grow into a market size of 100 billion, and the industry has been in an upward trend in the past two years. On the other hand, the original sin label of "functionality" has never been able to get rid of the market question of "IQ tax".
According to the Data of the China Commercial Industry Research Institute, the scale of the functional food market will exceed 600 billion yuan in 2022. The market size of 100 billion yuan attracts many players to pour in, and tianyancha data shows that there are currently more than 9,300 enterprises in the mainland that contain "functional food" or "functional drinks", of which more than 70% of the enterprises have been established in the past five years.
Before capital bearish the consumption track, it was also very optimistic about this niche market. There were 12 financing incidents that occurred on the track in 2021, and there were many leading star institutions such as Sequoia, GGV Jiyuan Capital and IDG Capital among investment institutions. Even in 2022, when the economy is down, multiple functional food and beverage brands have also received financing.
Entrepreneurs work tirelessly to create one food concept after another, from meal replacement shakes to collagen to probiotics, from 0 sugar, 0 calories and 0 fats to 0 sucrose, but the industry has always been in an embarrassing situation of having no category and no brand.
Is the money of young people really easy to earn?
Nuggets feature food and beverage tracks
Functional foods and beverages and health foods are often confused, but the two are not the same.
From the perspective of current regulations, the listing of health food products, product publicity, product efficacy evaluation, etc. have clear industry norms, with the exclusive mark of health care products "blue hat", however, functional foods do not have clear standards.
At present, functional food and beverage track players, in addition to entrepreneurial functional food companies, there are traditional health care brands such as Amway, Tomson By-Health, Anderson, Nature's Treasure, beverage companies such as Nongfu Spring, Wahaha, Yuanqi Forest, Coca-Cola, and cross-border players such as Tongrentang and Bloomage Biology.
From the perspective of financing situation and performance, functional food and beverage brands will still maintain rapid growth in 2022. "Easy Law", "Source Research Institute", "Xiuyuan Yangzheng" and many start-up brands have obtained financing. Functional drinks have evolved from the blue ocean to the red ocean.
Hu Hao, the founder of Yuanneng Sports Drink, started his business last year, and in many market segments of functional drinks, he finally chose sports drinks as the entry point for entrepreneurship. At the beginning of the establishment of the company, it was favored by the investment institution Jingwei Venture Capital and obtained nearly 10 million yuan of angel investment.
The underlying logic of choosing a sports drink category, Hu Hao told Tech Planet, from the perspective of a horizontal and vertical structural framework, the horizontal axis is a category: bottled water, tea, carbonated acid, juice, function/sports, coffee, etc.; the vertical axis is: Coke, Pepsi, Nongfu Spring, Wahaha, Unity, Master Kang, Yuanqi Forest, Xicha, etc. In such a structural quadrant, choose the category you want to start from different categories of competition.
Sports drinks have been in double-digit growth for nearly a decade, growing better, and now it's about 20 billion plates. The head focus is relatively low, the three major brands in the United States account for about 90% of the concentration, and China is about 40% of the market share, so there is a lot of room for development.
In addition, the number of athletes has grown rapidly in the past two years, and the demographic dividend has created an excellent window period for entrepreneurs. In addition, he himself has previously served in Jiaduobao, has many years of experience in the industry, is familiar with the cognitive play of the category, and can quickly copy his previous experience to the new category, so the entrepreneurial direction is determined.
The category is determined, and the opportunity point lies in the innovation of content materials, that is, the raw material level goes in the natural direction. Hu Hao said that the emerging young people pay more and more attention to the ingredient list. Pulling the long-term axis, in the past three or four decades, there have been no new changes in the contents of sports drinks. Yuanneng to replace the previous synthetic substances in sports drinks with natural and natural ingredients, such as coconut water instead of electrolytes, juice content of more than 25%, Yuanneng benchmarking is the foreign sports drink brand BodyArmor, the latter to "natural" as a selling point, the product uses coconut water, low sodium high potassium and electrolytes, does not contain artificial colors.
Hu Hao said that the profit margin of Yuanneng sports drinks is about 50%-60%.
Sports drinks are just one of many segments of functional drinks, which also include energy drinks, sports drinks, nutrient drinks, and other types of beverages.
The development momentum of the entire functional beverage in the past two years has been extremely rapid. In 2021, the domestic functional beverage brand "Dongpeng Special Drink" was listed, and the first financial report since the listing of Dongpeng Special Drink showed that the total revenue of Dongpeng Beverage in 2021 was about 6.978 billion yuan, an increase of 40.72% year-on-year, and the net profit was 1.193 billion yuan, an increase of 46.9% year-on-year. In terms of sales volume, Dongpeng Special Beverage surpassed Red Bull and successfully won the first position in the energy beverage industry (one of the main segments of functional beverages).
Coca-Cola acquired body beverage brand BodyArmor for US$5.6 billion (about 36 billion yuan), the largest brand acquisition since the company was founded 129 years ago.
Nongfu Spring, which started with water, has now successfully developed functional beverages into a new growth curve for the company. According to the financial report released by Nongfu Spring on March 28, the total income of Nongfu Spring in 2021 was 29.696 billion yuan, of which the revenue of functional beverages was 3.695 billion yuan, an increase of 32.3% over 2020.
Over-marketing plays with concepts, and product investment accounts for only 30%.
Unlike functional drinks, functional food users are more expensive to educate and are one of the most controversial categories of IQ tax.
Chen Xiao makes products in a functional food company and has rich practical experience in supply chain. Chen Xiao said that at the supply chain end, many businesses like to do functional skin care products with a more mature supply chain, and after a category of business matures, it needs to expand the category horizontally, and most of them are more inclined to cut into the functional food category.
The supply chain is relatively open, the degree of realization is high, and there are no barriers. In addition to individual manufacturers with exclusive raw materials and patents, there is almost no differentiation in the entire industry. Functional food companies such as melatonin gummies, collagen gummies, refreshing bubble lozenges, and probiotic enzyme jelly that appear on the market are mostly processed on behalf of other companies.
The industry's quasi-person threshold is not high, generally invest 100,000 yuan can entrust the factory to reproduce and produce a relatively hot product on the market. A foundry owner told Tech Planet that from the R & D and production capacity, they can produce wonderlab, ffit8, Yuanqi Forest, body control water and other functional products. Product development and customization can be carried out, and the product forms include powders, liquids, tablets, dairy products, etc.
In the early days, functional food and beverages were mainly the world of micro-business groups, and after the market was educated for a few years, some new consumer brands rose, such as BuffX blocking candy, melatonin gummies, NELO probiotic chewing beans, wonderlab meal replacement shakes, etc.
In order to highlight differentiation, new consumer brands like to purchase customized raw materials, or use patented materials with competitive barriers, and cooperate with raw material manufacturers to develop unique raw materials.
In Chen Xiao's view, the so-called functional food is the new resource food, the core advantage of this industry is the "raw materials", generally a product that uses raw materials is relatively new is more likely to stand out, because the market saturation is not high, the competition is not sufficient. Like last year, hyaluronic acid raw materials were included in the scope of food applications, and a number of hyaluronic acid foods represented by Bloomage Biology were born on the market.
The functional food and beverage industry as a whole is in an upward trend, and the development prospects of the industry are good, but Chen Xiao also admitted that not all products can achieve the special effects it claims to be "deserved". Players among them inevitably have the situation of excessive publicity, products that play with concepts abound, and some product functions need to be marked with a question mark.
A number of functional food practitioners said that a product wants to open up the market, creating the necessary volume and gimmicks is a matter of reproach, "do not easily put a hat on functional food to harvest IQ tax."
But many times, functional foods tend to fall into the trap of overmarketing. There are no big brands in this track, only Internet celebrity brands, and many brands are built by marketing and advertising. The factory owner said that if you start from scratch to do functional food brands, to invest 1 million to calculate, of which the product needs to invest 300,000, planning packaging 100,000, store deposit 50,000, operating costs of 30,000, marketing expenses of 520,000.
The product inner volume is also very serious. For example, in the recently popular "everything can be probiotics" field, everyone will make a big fuss about the number of live bacteria and compete for live bacteria parameters. One side claims 60 billion live bacteria, and another player must claim 100 billion. Chen Xiao sighed, do consumers really have so much demand for probiotics? Many products can reach 100 billion CFU/3g of live bacteria. Do the volume product parameters make sense, and can consumers perceive them?
In fact, according to the advice of nutrition experts, 10 billion probiotics per day can be consumed, and it is not advisable to consume too much at one time or for a long time, so as not to cause intestinal flora disorders.
Sell "looks, figure, health anxiety" and harvest young people
Functional food and beverage industry has never lacked with gimmicky internet red products, meal replacement shakes, collagen drinks, hyaluronic acid sparkling water, probiotic tablets, the industry can always form a cyclical outlet, each outlet can always successfully harvest a wave of young people.
WonderLab used to be the entrepreneurial ceiling for functional foods.
In 2019, it started from the "meal replacement" subdivision category, and in the first year of its establishment, it received three rounds of financing, and the product sales were once as high as 60 million, and it was rated by Tmall as the top 1 most popular bottled meal replacement shake brand for women.
In 2020, social platforms such as Circle of Friends, Douyin, Weibo, and Xiaohongshu are almost full of AdvertiserLab ads, and WonderLab has maintained rapid development in the controversy, receiving 6 rounds of financing in three years.
However, WonderLab, which started as a meal replacement product, has recently begun to turn around and turn around and put into the hotter probiotic food market. Meal replacement shakes, whether in terms of volume or discussion, are difficult to compare with the popularity of 2020, and they have become an ancient food abandoned by young people. Probiotic foods are constantly being introduced, and in April this year, WonderLab launched many probiotic products, such as children's probiotics, probiotic tablets candy.
From shakes to probiotics, the transformation doesn't just mean entrepreneurs switching from a small category to a larger market. It is true that the meal replacement shake itself is not a high-growth and high-repurchase category, user consumption is limited, consumers have a greater demand for probiotics, and intestinal discomfort can be solved with probiotic functions, which can truly solve some pain points of consumers.
However, the key to forcing the transformation of enterprises is whether the meal replacement shakes, which focus on weight loss, really work? A Little Red Book blogger shared notes that last year's double eleven hoarded a lot, determined to lose weight, but less than half of the drink, it was piled aside. Recently, I wanted to continue drinking on a whim, and found that the meal replacement had all expired. The blogger said that meal replacement shakes have no effect on weight loss, and you may be able to lose weight if you eat two meals a day, but you should also be hungry and thin.
Young people's appearance anxiety, body anxiety, health anxiety has spawned functional foods related to health, weight loss and other concepts on the market, sugar-free, low-calorie, plant-based, organic, health has become the wealth code of the food and beverage industry.
From the perspective of sales volume, there are not a few people who are willing to pay for functional foods. The owner of the foundry sent Tech Planet a Douyin platform sales data showing that a blueberry lutein tablet candy, 0.6 grams * 60 pieces, priced at 59.9 yuan, monthly sales of 3.6 million. Aminobutyric acid jujube kernel poria lily tablets candy, 0.6 grams * 60 tablets 59.9 yuan monthly sales of 4.8 million. By-Health yep collagen solid beverage, 30 bags/can unit price 178, monthly sales of 3.5 million.
However, there is a huge gap between demand and efficacy. While young people take the initiative to pay for functional foods and punk health, they constantly question in their hearts. A netizen who purchased functional food said that healthy food is the Red Sea, and now it is the development trend of everything + probiotics. He himself bought a lot of probiotic products because of intestinal problems, and as for the effect, the other party said that it felt a little effective, or that the psychological effect was very good.
Functional products cannot be scientifically and effectively self-proofed in terms of efficacy, and in the end, they can only be reduced to "sellers sell comfort, buyers buy peace of mind".
Product function greatly affects the life cycle of functional foods. An industry consensus is that the life and death line of the functional food industry is 3 months, and there is no need to insist on 3 months if it can't be done. The owner of the foundry told Tech Planet that functional food needs to spend money to buy some news, buy some through trains, brush orders, 3 months, and give up if you can't do it.
Another functional food trader also claimed that functional food must be harvested quickly, and strive for product repurchase, and the more repurchases in a short period of time, the better.
The product cycle of fast-life and rapid death is doomed, and some products will only be harvest-oriented, which also leads to the fact that the entire functional food and beverage industry has not been able to get rid of the stigma of IQ tax, and the development of functional food branding has a long way to go.
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