The development of the functional food industry is rooted in the public’s growing demand for health maintenance. Such products not only respond to people’s actual needs for specific nutritional supplements or health functions but also meet people’s yearning for daily health care and health preservation. Unlike drugs, which are mainly aimed at treating diseases, functional foods are designed to improve physical health and reduce the risk of disease. At the same time, they usually do not have acute, subacute, or chronic adverse effects on human health.
1. Various links in the functional food industry chain
With the popularization of health awareness, the global market demand for functional foods has become increasingly rigid. The consumption characteristics of this industry are getting closer and closer to ordinary consumer goods. There are extremely rich product varieties on the market. Industry leaders usually have a wide range of product lines, and the number of product varieties may reach thousands, which can meet the diverse needs of different age groups and different demand groups for nutritional elements, providing consumers with a wide range of choices.
Each link in the industry chain plays a clear role in the functional food industry and has a clear professional division of labor. The upstream links of this industry are mainly composed of the following types of enterprises: production enterprises responsible for extracting animal and plant ingredients, processing enterprises that process raw materials such as agricultural products, and enterprises that produce chemical products. These companies provide key raw materials to the functional food industry, including vitamins, minerals, fish oils and probiotics.
The midstream of the industry consists of three types of functional food manufacturers: first, contract manufacturers that focus on OEM production and usually do not directly participate in the terminal sales of products; second, brand operators that focus on brand building and market sales; and finally, hybrid manufacturers, which provide OEM services and independently operate their own brands.
The downstream of the industry chain consists of various channel merchants who are responsible for delivering products to the end consumers. These channel merchants include traditional offline stores, such as supermarkets and pharmacies, as well as emerging online platforms, such as various e-commerce websites. The specialized division of labor in each link promotes the growth and development of companies with deep professional capabilities in the industry.
2. Development History of China’s Functional Food Industry
From disorder to standardization, the industry has entered a healthy growth period.
Compared with developed countries, my country’s functional food industry started late. After my country’s reform and opening up (1978), some traditional tonics became popular as early products. However, since the industry regulatory system was still in the construction stage at that time, the industry development was relatively rough, and some irregular phenomena appeared in the market. With the passage of time, my country’s laws and regulations have gradually improved, a scientific management system has been established, and dietary supplements based on modern nutrition and preventive medicine have begun to become mainstream products. At the same time, with the development of e-commerce and the growth of demand from young groups, various functional foods have emerged rapidly, and product types have become increasingly diversified, and the industry has entered a healthy growth period.
my country’s functional food industry can be divided into six major development stages:
Phase I: 1978-1986
In the early days of reform and opening up in the 1980s, with the rapid development of the economy, residents began to pay attention to health and nutrition issues after solving the problem of food and clothing. Traditional tonics represented by medicinal wine, ginseng, royal jelly, etc. became popular health foods in the early days.
The second stage: 1987-1995
1987 is known as the first year of the health care products industry. In that year, the Ministry of Health of my country promulgated the “Regulations on the Management of Traditional Chinese Medicine Health Care Products”, which defined traditional Chinese medicine health care products as medicines that have a certain degree of nourishing nutrition, health care and rehabilitation effects on the human body and are harmless to the human body when taken for a long time, and made regulations on their production materials, approval requirements, publicity systems, etc. The introduction of relevant regulations has driven the production investment of enterprises. During this period, my country’s Sun God Oral Liquid, Brain Gold, Taitai Oral Liquid, Sanzhu Oral Liquid and other products were successively launched on the market and became popular, helping the concept of “health care products” to spread and the scale of the industry to expand rapidly.
The third stage: 1996-1998
In the early stage of the industry’s high development, due to the loose supervision system, there were phenomena such as exaggerated publicity and poor quality by enterprises, which attracted the attention of relevant departments, and the state began to increase supervision. In 1995, the Ministry of Health conducted a random inspection of 212 oral liquids, and the actual qualified rate was only 30%, which greatly frustrated public confidence. In order to strengthen the supervision and management of health food and standardize the functional evaluation system, in the following years, the government successively promulgated the “Health Food Management Measures”, “Health Food Review Technical Regulations”, “Health Food Functional Evaluation Procedures and Methods”, “Health (Functional) Food General Standards” and other documents, and the industry also ushered in a round of adjustment and clearance.
The fourth stage: 1999-2008
After the wild growth stage, the health food industry ushered in a new growth period under standardized supervision. During this period, international companies such as Amway, NBTY, and GNC entered China one after another, introducing the Western dietary nutritional supplement concepts and products based on modern nutrition and preventive medicine into my country, and enriched the industry’s product categories and sales models, driving my country’s functional food industry to gradually catch up with the international standards.
The fifth stage: 2009-2017
In 2009, the “Food Safety Law” was promulgated, which clearly required the state to strictly supervise foods that claimed to have specific health functions, and for the first time raised the supervision of the nutrition and health industry to the level of law. At the same time, the listing of By-Health in 2010 marked the rise of a group of high-quality companies with international competitiveness in my country. In 2016, the “Health Food Registration and Filing Management Measures” was officially implemented, and my country’s health food industry entered the era of “registration system” and “filing system” in parallel, which accelerated the time to market and reduced the time and capital costs of enterprises. Overseas mergers and acquisitions have also become an important way for domestic enterprises to quickly deploy.
The sixth stage: 2018-present
In 2018, the “Quanjian incident” broke out and triggered a series of public opinion events, which promoted the government to increase supervision of the functional food industry and intensively issued relevant laws and regulations to further standardize the supervision of the industry. Although public opinion events have a certain impact on business operations and consumer confidence in the short term, they have also prompted the further improvement of laws and regulations, which will help the industry move towards a scientific and healthy long-term development direction. At the same time, with the rapid development of e-commerce platforms, various types of functional foods have rapidly emerged, product types have become increasingly diversified, and the industry has entered a healthy growth period.
3. Policy changes in China’s functional food industry
The focus of supervision has shifted backwards, encouraging innovation and development in the industry
In the past decade, the nutritional and health food industry has undergone a major policy shift, from the past model of focusing on approval and ignoring supervision to an ecosystem that encourages corporate innovation and strengthens supervision. In 2016, the implementation of the “Health Food Registration and Filing Management Measures” marked the beginning of the implementation of the dual management mechanism of the registration system and the filing system in China’s health food industry. The introduction of the filing system has reduced the technical approval links, simplified the document requirements, and significantly shortened the product cycle from research and development to market. This change has lowered the entry threshold and production costs of enterprises, stimulated the innovation vitality of enterprises, and significantly increased the number of products filed in the industry.
In order to further stimulate social innovation and R&D, the government encourages multiple market players including enterprises, research institutions and individuals to participate in the formulation of the health food raw material catalog. In 2019, the promulgation of the “Health Food Raw Material Catalog and Health Function Catalog Management Measures” provided any willing unit or individual with the opportunity to propose the inclusion of new raw materials in or adjustment of the existing health food raw material catalog. In 2021, the filing of the first batch of functional health food raw materials such as coenzyme Q10, melatonin, spirulina, broken wall ganoderma lucidum spore powder and fish oil was officially launched. These products quickly entered the market. By 2023, the number of registered products of these new raw materials accounted for 39.4% of the total number of registered products. In 2023, soy protein isolate and whey protein were also included in the raw material catalog, further enriching the types of products. With the continuous expansion of the raw material catalog, companies will have a wider selection of raw materials and greater room for product innovation, which will help promote the diversified development of the industry and better meet consumers’ growing demand for health.
While improving access efficiency, supervision is also being strengthened to support the long-term and healthy development of the industry. The state continues to strengthen industry supervision and continuously improve relevant laws, regulations and rules and regulations to ensure the long-term and healthy development of the industry. The Food Safety Law, revised in 2015, emphasizes the strict supervision and management of special foods such as health foods, special medical purpose formula foods and infant formula foods. After the “Quanjian incident”, the government launched a 100-day special rectification campaign to focus on problems such as false propaganda, counterfeiting and consumer fraud in the health food market. Subsequently, documents such as the “Administrative Measures for the Catalog of Health Food Ingredients and the Catalog of Health Functions”, “Guidelines for Naming Health Foods” and “Guidelines for Labeling Warning Terms for Health Foods” were successively issued, further improving the industry’s laws and regulations, expanding the scope and intensity of supervision, and helping to standardize industry management, reduce the occurrence of accidents, and promote the long-term healthy development of the industry.
4. Future Trends in Functional Foods
Product Diversity
The functional food market offers a wide variety of products that can cater to the diverse needs of different age groups and different demand groups, thus providing consumers with a wide range of choices.
Industrial Chain Specialization
The functional food industry has a clear division of labor in the upstream, midstream and downstream links, and the professional industrial chain layout has promoted the growth and development of companies with deep professional capabilities in the industry.
Regulatory and Policy Support
The policy changes in the past decade show that the industry has shifted from focusing on approval to encouraging innovation and strengthening supervision, especially the implementation of the “Administrative Measures for Registration and Filing of Health Foods”, which has simplified the product listing process, lowered the entry threshold, and stimulated the innovation vitality of enterprises.
Expansion of raw material catalog
The government encourages innovative research and development, and through policies such as the “Management Measures for the Catalog of Health Food Raw Materials and the Catalog of Health Functions”, provides companies with greater raw material selection and product innovation space, promoting the diversified development of the industry.
Strengthened supervision
The state has ensured the healthy and orderly development of the industry and reduced market chaos by strengthening supervision and improving laws and regulations, such as the revision of the “Food Safety Law” and special rectification actions.
5. International market recognition of Chinese functional foods
Chinese functional foods are gradually emerging in the international market and are recognized and welcomed by more and more countries and regions. In recent years, with the continuous standardization and development of China’s functional food industry, its product quality and variety have been significantly improved. Many international customers have commented on Chinese functional foods as follows:
- High-quality standards: Chinese functional food manufacturers strictly follow international quality standards, including FDA, NSF, HACCP, ISO, and other certifications to ensure the safety and effectiveness of products.
- Diversified products: Chinese functional foods are rich in variety and can meet the needs of different markets and consumers. Whether it is vitamins, mineral supplements, or functional gummies and seaweed gels, they have been widely recognized.
- Innovation ability: Chinese companies have invested a lot of resources in product research and development and innovation, and continue to launch new products that meet the needs of the international market, such as plant-based, sugar-free, gluten-free, organic, and non-GMO label products.
- Competitive price: Thanks to large-scale production and efficient supply chain management, Chinese functional foods have significant advantages in price and can provide international customers with cost-effective options.
These advantages have made Chinese functional foods increasingly competitive in the global market and become the first choice for more and more international customers.
Summary
In summary, China’s functional food industry has demonstrated strong competitiveness in product diversity, industrial chain specialization, regulatory and policy support, raw material catalog expansion, and strengthened supervision. Advantages of Nutreebio
In the global functional food industry, Nutreebio has won the trust of many international customers with its excellent product quality and professional services. The advantages of our company include:
- Cost-effective products: We cooperate with a number of suitable suppliers (factories) to control costs within a reasonable range and help customers save costs.
- Reliable quality: We select safe and effective raw materials and strictly control quality in each production process. All products are provided with COA reports issued by the factory or a third party.
- Global logistics network: We have a strong global logistics network to ensure that the products are delivered to customers on time and safely. We cooperate with a number of international logistics companies and provide a variety of transportation methods to meet the needs of different customers.
- Customized service: We provide one-stop customized services from product formula, and packaging design to label production, which can be customized according to the specific needs of customers to help customers create a unique brand image.
- Market insight: We closely follow the latest trends and dynamics of the global functional food market, and can provide customers with forward-looking market analysis and suggestions to help customers seize market opportunities.
- Compliance guarantee: We are familiar with the product registration and regulatory requirements of various countries, and can provide customers with comprehensive compliance support to ensure that products can enter the target market smoothly.
- After-sales support: We provide comprehensive after-sales services, including technical support, product training, and customer feedback processing, to ensure that customers get the best experience in the process of using our products.
- Quick response: Our team is responsive and can respond to customer needs as quickly as possible, providing a pleasant communication and purchasing experience.
- Expertise: Our sales staff have rich industry experience and knowledge, and can guide customers to choose products and formulate marketing strategies. Not only provide products but also provide high-quality formulas and communication services.
- Flexible service: We support a minimum order quantity of 800 bottles, which is suitable for e-commerce, live broadcasting, start-ups, and urgent replenishment needs.
Nutreebio is not only a supplier of products, but also a strategic partner of customers in the functional food industry. We are committed to helping customers succeed in the market through high-quality products and services. We look forward to working with more global customers to move towards the future of the functional food industry.
