Nutrition companies should look to China for growth

Nutrition companies should look to China for growth

China is on path to become the biggest economy on earth, and its middle class is growing by leaps and bounds. So, too, is the country’s overall nutrition market, which grew to $44 billion in 2011. The market now represents about 14.5 percent of the world’s overall nutrition market, and is forecast to grow at double-digit rates for the foreseeable future.

The country has hit a few bumps in the road recently; consider this quote from the New York Times from an article by longtime China watcher James Fallows:

“The news out of China this year has been relentlessly bad. The political system was embarrassed in front of its own people by the Bo Xilai scandal and in front of the world by the Chen Guangcheng incident. The Chinese economy has slowed and its stock indexes have been rocked, while its neighbors have been strengthening their ties with the United States.”

But “slowing” is a relative term; the World Bank recently cut its 2012 growth forecast for China to 8.2 percent from 8.4 percent. These are growth numbers the U.S. economy hasn’t seen in more than a generation. This still-robust growth is adding middle-class consumers faster than anywhere else on earth; by 2020, it’s estimated that the Chinese middle class will outnumber the entire U.S. population.

Why your company's biggest growth may be in China

And that middle class has a hankering for Western made, and specifically U.S. made, nutritional products. It's not just North American and European consumers who are wary of the consumer goods coming out of China. The Chinese themselves are concerned. Recent scandals in the nutritional market, including the melamine debacle, have led to a push for new regulations, including a rewriting of the regulations for health food supplements. These regulations have yet to be released, but are expected before the end of 2012.

It all adds up to a push on the part of ingredient suppliers and the manufacturers of dietary supplement and functional food finished goods to enter the Chinese market. With the U.S. stumbling in its recovery and Europe teetering on the edge of a renewed recession (and the functional foods and dietary supplements business there greatly complicated by labyrinthine and draconian regulations), China and other Asian markets are where companies must look for really big growth potential.

One of the huge deals in this sphere occurred in December 2010 when Ocean Nutrition Canada (now part of DSM) announced a deal to place its MEG-3 omega-3s fish oil ingredient into cooking oil marketed by category leader Wilmar. Cooking oil is big business in China, and fortifying this food will affect the health status of millions of Chinese consumers.

Interestingly, although the Chinese cooking style is thought of as healthful by North American observers, the omega-3s content of the diet is low. In fact, ONC said at the time of the Wilmar deal that the average daily intake of EPA/DHA of Chinese residents was only 37.6 mg/day, which is less than 25 percent of the levels accepted by the United States Institute of Medicine and less than 10 percent of the intake recommended by the International Society for the Study of Fatty Acids and Lipids.

We here in the Engredea group at New Hope Natural Media take the opportunity that China presents seriously. In the China Edition of our Engredea Monograph series (click to buy your copy) we offer an in-depth look at this huge and growing market and how companies can enter that sphere.

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