Hungry capital is eyeing functional food. In the first half of this year, functional foods received financing frequently. Among them, functional jelly brands such as Joliyoyo, Minayo, and Nelo have received tens of millions of yuan in financing.
The so-called “functional gums” belong to a category of functional foods. Merchants add certain nutrients or functional ingredients to the jelly, providing young people with more interesting options for coping with different problems such as insomnia, beauty, hair growth, and decompression. The China Business Industry Research Institute predicts that global sales of functional gummies will exceed US$8.6 billion in 2022.
Less than a year after the rise of the functional gum market in China, it has attracted a large number of young consumers to try it. I have to say that the young “health-care workers” in this session also pay attention to “empowerment” when eating soft sweets.
1 Nothing can’t be solved by a single sugar
With the improvement of living standards, young people’s work and life pressures have also increased. Staying up late, drinking alcohol, anxiety, and lack of exercise have caused some young people to “live on their bodies in their 60s and 70s when they are in their 20s and 30s.” The report “The Secret of the Post-90s’ Health and Wellness” released by Analysis shows that more than half of the “post-90s” have hair loss, hair loss, or weakened vision problems. More than 40% of people have obesity and decreased exercise capacity, and more than 30% of people have decreased immunity.
Faced with signs of declining health, more than 90% of young people are aware of health preservation. They have high expectations for health, but the number of health self-scores is significantly lower than that of other generations. They become the group most anxious about their health.
1.1 The health needs of young people are spawning a new market.
In the “2020 Young People’s Online Health Products Consumption Attitude Insights” released by the Business Data Center of China Business News, the proportion of post-90s and Gen Z consumers of online health products has continued to increase in recent years. They have become the backbone of online health care products.
The search box of the online shopping platform hits the keyword “functional jelly”, which not only has hundreds of product information but also has a wide variety of functions. A small candy can easily handle the daily needs of “beating workers”. Caffeine-containing “refreshing jelly” meets the basic needs of workers to “do not get sleepy” when going to work. Staring at the computer screen for too long hurts the eyes. There are “eye-protecting jelly” containing anthocyanins and other ingredients. The work pressure is too high, and there are “slow pressure soft candies” containing Y-aminobutyric acid and citric acid. After work, there is a wine board for entertainment, and there is “liver-protecting jelly” with ingredients such as kudzu root and turmeric. I have insomnia at night, there are “sleep aids” containing Y-aminobutyric acid…
In addition to relying on “functional candies” for work “plus”, many young people also hope that they can easily become more beautiful and healthier by “eating sugar”. Collagen peptide gums and hyaluronic acid gums are known to make the skin more supple and elastic. Biotin gummies help hair and nail care. Probiotic gums make the intestines healthier. Iron supplements can make you look better. Control calorie gums to help curb the absorption of starch, sugar, and fat. It seems that nothing can’t be solved by a single sugar.
1.2 Some functional gummies that meet the needs of young people have become best-sellers as soon as they go online.
Take BUFFX, a functional food brand that was only established in April 2020, as an example. Its Tmall store only officially opened in October 2020, and product sales have continued to rise since it went online. One month’s sales exceeded 3 million yuan; within two months, its sleeping gums sold more than 20,000 units; within three months, its 4 SKUs sold more than 20,000 units per month on average.
According to the user portrait of the BUFX backend, its main consumers are young people aged 18-30, among which Generation Z is the core user. Even to cater to young people, functional gums are much more “interesting” in terms of taste and appearance than nutritional supplements in the form of tablets and capsules. This gives consumers the impression of “unburdened” and “healthy” snacks.
Merchants not only make gummy sweets into a more attractive cat, floret, and other shapes, but also rich flavors such as white peach, blueberry, and lemon. They will even combine the texture of soft candy Q bombs and the formula of “0 sugar, 0 fat, 0 calories”.
Guo Yun, a 27-year-old girl, has tried whitening, sleep aid, and traditional Chinese medicine gummies. Before this, she had the habit of eating healthy products, having bought liver-protecting tablets, grape seed extract, and so on. However, because the product tastes bad or the tablets are too big to swallow, Guo Yun often keeps the health care products bought until they expire and have not eaten half of them. “Those tablets are bland and tasteless or even unpalatable. Unlike this kind of functional gums, they can be used as snacks in terms of taste. You will not worry about not eating them, but you will only worry about eating too much at once.”
2 “Candies” favored by capital
The variety of functions and super high value make the price of functional gummies much higher than ordinary gummies. Compared with ordinary fruit jelly that costs less than 10 yuan for 100g, the price of functional candies of the same weight is generally more than 10 times that of the former. Still taking BUFX as an example, a box of 20 “sleep aids” with a total of 60g is priced at 79 yuan on Taobao. Some consumers mentioned in the evaluation that “the sweet and sour soft candy tastes very good, and it is very similar to the Wangzai QQ candy that I ate when I was a child”. But as a comparison, a pack of 70g of QQ candy sells for less than 4 yuan on Taobao.
2.1 The extremely high price and rising sales volume have led to the rapid growth of the market for functional gummies.
According to a report by Grand View Research, the global functional food market is expected to reach US$275.77 billion in 2025. It is expected that during the forecast period, the compound annual growth rate will reach 7.9%. According to a survey conducted by the Committee on Responsible Nutrition (CRN), 49% of U.S. dietary supplement users switched from traditional dosage forms such as tablets and capsules to gummies in 2019. China Business Industry Research Institute predicts that the sales of functional gums will exceed US$8.6 billion in 2022.
Compared with the global market, China’s functional food market is developing faster, but the current penetration rate is low. Public information shows that the size of China’s functional food market in 2019 was 358.58 billion yuan. Functional sweets with nutrients such as vitamins, minerals, and dietary fiber are in great demand. According to Euromonitor data, the sales volume of China’s functional candy increased from 2.17 billion yuan to 2.87 billion yuan from 2015 to 2019, with a compound annual growth rate of 7.16%.
However, in terms of per capita consumption, compared with the 924 yuan per capita consumption in the U.S. in 2018, the per capita consumption of functional food in mainland China is only 117 yuan, which is 12.66% of that of the United States. In China, the penetration rate of functional foods is about 20%, which is far behind 60% in the United States. This has also allowed much capital that has been deployed in advance to focus on the possibility of the future development of China’s functional candy.
2.2 Driven by the needs of young people, the door to the 100-billion-level track of functional food is slowly opening.
Upstream leading companies are running to join this subdivision track. Huaxi Biology launched the functional food brand “Black Zero” in February this year; Xianle Health regards soft candy, powder, and functional beverages as the second growth curve of the group.
Some functional gummies start-up brands have also attracted large investments recently. In June of this year, JOLIYOYO received tens of millions of yuan in angel round financing. This is the second round of financing completed by the brand within one year. In March, Minayo announced the completion of a Pre-A round of financing of 10 million yuan. In January, Nelo announced the completion of tens of millions of yuan in Series A financing. BUFX, established last year, completed three rounds of 10 million yuan financing within one year…
With the rapid development of China’s functional food market, more types of new food ingredients may appear in the future, which will further promote the popularity of the functional food track. On January 7 this year, the National Health Commission issued a document approving sodium hyaluronate as a new food raw material that can be added to ordinary foods. In a short time, there have been sodium hyaluronate gums on the market.
