Caitong Securities(SH:601108) Zhi Tong Cai Jing·2025-12-17 02:11Core Insights - The Chinese nutrition and health market is experiencing continuous growth, with significant potential for per capita consumption improvement. The demand is driven by both aging populations and the younger Generation Z, evolving towards "precise segmentation" and functional foods [1][2]. Market Overview - The market size of China's nutrition and health food sector is projected to reach 260.2 billion yuan by 2024, with a CAGR of 6.3% from 2019 to 2024. Compared to countries like the US, South Korea, and Australia, there is still considerable room for per capita consumption growth [2]. - The aging population and increased health awareness are expanding the elderly health market, while social pressures and the rise of chronic diseases are making Generation Z a new consumer force in health products [2]. Channel Dynamics - Online channels dominate the market, expected to account for 60% of sales by 2024, an increase of 12 percentage points from 2021. Notably, Douyin (TikTok) is experiencing a growth rate of 53%, and cross-border channels are also seeing rapid expansion [3]. Product Categories - Traditional product categories are showing stable growth, with trends in large-scale production, innovation in dosage forms, and expansion of target demographics. The bone health market exemplifies traditional efficacy through ingredient innovation [4]. - Emerging categories are characterized by explosive growth from a small base, strong marketing attributes, and rapid iteration. Recent years have seen significant growth in oral beauty/anti-aging and probiotics, driven by star ingredients like ergothioneine and patented strains, leading to the emergence of new brands such as Feicui and Wonderlab [4]. Competitive Landscape - The downstream competitive landscape is fragmented, with many emerging functional food brands entering through online channels. Swisse maintains its leading position through targeted marketing and a comprehensive brand matrix [5]. - The expansion of industry demand and the entry of new light-asset brands present significant opportunities for midstream contract manufacturers. China's contract manufacturing rate remains lower than that of Europe and the US, with leaders like Xianle Health and Baihe Co. expected to enhance scale effects and benefit from industry growth [5]. - Recommended companies to watch include Jin Dawei, a leading supplier of health product raw materials; Jiyuan Group, focusing on muscle and joint health; Xianle Health, a global leader in nutrition and health contract manufacturing; Baihe Co., with a flexible supply chain and overseas acquisitions; H&H International Holdings, known for its strong brand and youthful positioning; and Kuntou Biological, a leading domestic probiotics company [5].