Herbal/traditional Products -
Headlines
· Herbal/traditional products experienced rapid growth in 2010, realising value growth of 10% and total sales of RMB29.8 billion
· Preference for herbal/traditional products among Chinese consumers contributed to the rapid development of the market during the review period
· Herbal/traditional child-specific dietary supplements recorded the most dynamic growth in 2010
· Domestic companies have clear advantages over foreign companies in the market
· Sales are expected to maintain stable performance over the forecast period, with a CAGR of almost 7% in constant value terms over 2010-2015
Trends
· Herbal/traditional products posted robust growth during the review period. On the one hand, the sustained growth of the overall consumer health market in the past few years underpinned demand for herbal/traditional products. On the other hand, there were a number of issues regarding side effects associated with certain chemical products such as Johnson & Johnson’s recall issue with Tylenol in 2010, which, to some extent contributed to the demand for herbal/traditional products, since most Chinese consumers believe that herbal/traditional products cause less harm to the body in the short and long term. As a result, growth of herbal/traditional products in 2010 reached 10% which was slightly higher than the average for the wider consumer health industry which realised 9% growth in 2010.
· Herbal/traditional cough, cold and allergy remedies showed strong growth in 2010, with year-on-year growth exceeding 13%. The outstanding performance of leading brands such as 999 Gan Mao Ling, Shuang Huang Lian Oral Liquid and Yunnan Baiyao was regarded as the major reason for the boom in herbal/traditional products. In recent years, many local Chinese medicine manufacturers launched new products which combined chemical and herbal ingredients which made consumers feel that the products provided both efficacy through the chemical ingredients and fewer side effects through the herbal ingredients; this worked to attract Chinese consumers when they were choosing OTC remedies in parapharmacies/drugstores.
· Herbal/traditional child-specific dietary supplements showed the most rapid growth in 2010, realising value growth of almost 16%. Infinitus (China) Co Ltd, as one of the leading companies contributed to this growth. Due to China’s single child policy, typically Chinese families have only one child, which results in most young parents being very generous when spending on their only child. Hence, a number of herbal/traditional child-specific dietary supplements were popular among Chinese parents, not only because of their efficacy, but also because of their safety, compared to other products.
· Herbal/traditional dietary supplements was the largest category with value sales of RMB14.4 billion in 2010, and accounted for 48% of total value sales. Traditional herbal products such as lingzhi, ginseng and garlic are very welcomed by local consumers due to their long usage history.
· Average unit price continued to remain stable during 2010. Although most companies were faced with rising raw material prices in 2010, they were careful not to raise selling prices due to the intense competition in the market. Indeed, in China consumers are quite sensitive to price rises and significant increases typically result in the loss of consumers. Hence, a number of companies tried to adjust their selling prices through launching new products.
· The key factor contributing to the massive consumption of herbal products in China is the safety of herbal ingredients, which are seen as less harmful alternatives to Western medicine. Within dietary supplements, some of the flagship herbal products are even being used instead of vitamins. For example, adult consumers may buy herbal/traditional products such as Infinitus Zeng Jian Oral Solution, which claims to offer similar immune system-enhancing abilities as multivitamins.
· Chemists/pharmacies continued to be the major channel for herbal/traditional products in China. The channel accounted for around 51% of total value sales in 2010. These products are subject to the same regulations from the State Food and Drug Administration (SFDA) as standard consumer health products in China, and consumers feel secure buying herbal/traditional products at chemists/pharmacies.
· Direct selling has been gaining importance, particularly within herbal/traditional dietary supplements, thanks mainly to the outstanding performance of key players such as Infinitus and Amway. This channel accounted for some 32% of total herbal/traditional products value sales in 2010.
Competitive Landscape
· Infinitus (China) Co Ltd ranked first in herbal/traditional products in 2010, with a market share of just over 7%. As a leading direct selling company, the company mainly focused on herbal/traditional products across its product portfolio as its core strategy, which was in line with the market trend towards herbal products in China in recent years. As a result, the company experienced rapid expansion and consolidated its company image among local consumers during the review period.
· CR Sanjiu Medical & Pharmaceutical Co Ltd was regarded as the leading company in herbal/traditional cough, cold and allergy remedies. The company’s core brand, 999 Gan Mao Ling, was regarded as the number one brand of cough, cold and allergy product and realised total sales around RMB1 billion in 2010. The H1N1 flu outbreak in 2009 greatly boosted sales of the brand, since most Chinese consumers believe that certain herbal remedies can enhance the body’s immune system and help it combat certain strains of flu virus. Hence, the brand exploited this opportunity and promoted its ability to combat flu, which resulted in positive sales growth.
· In herbal/traditional products, domestic companies have clear advantages, due largely to local knowledge. With the limited exception of foreign companies Amway and Cadbury, most leading companies are domestic players. Those companies with a unique competitive advantage such as Yunnan Baiyao and Tibet Cheezheng enjoyed robust growth during the review period. However, many foreign companies have also indicated a strong ambition to enter this market. For example, Novartis has claimed that it plans to acquire a number of domestic companies that produce herbal products during the forecast period, to benefit from industry growth in the future.
· TV advertising and in-store promotion are still regarded as the major marketing methods in China. People in China typically prefer those products from well-known brands with lengthy histories, since most believe that well-known brands will be more effective and reliable, compared with brands from small manufacturers. Hence, development of private label products in China’s consumer health market is still at the initial stage with few private label brands.
Prospects
· Healthy and sustained growth of herbal/traditional products is expected over the forecast period, with a constant value CAGR of almost 7% over 2010-2015. The preference among Chinese consumers for herbal/traditional products and the entry of a greater number of players will be the major driving forces behind long-term growth for this category.
· Herbal/traditional child-specific dietary supplements is expected to be the sub-category with the most potential in the future in China. With improved health-consciousness among parents, purchasing herbal/traditional child-specific dietary supplements for cherished single offspring will be accepted by more and more Chinese consumers. The relatively safe image of products in this category was a key reason for its growth.
· Herbal/traditional cough, cold and allergy (hay fever) remedies is expected to register the second-fastest increase in herbal/traditional remedies. Those products that combine herbal and chemical ingredients are particularly popular and are expected to experience faster growth. A constant value CAGR of over 9% is forecast for the sub-category over 2010-2015.
· Competition in the market is expected to become increasingly intense. As more and more foreign companies have realised the huge potential of herbal/traditional products in China, they are expected to accelerate their expansion or entry plans in this market through mergers and acquisitions or providing their own herbal/traditional products.
· Average unit price will face considerable pressure over the forecast period. Although the government has introduced several strict regulations to control price rises, many manufacturers will face pressure from rapidly rising prices of raw materials. Hence, a rise in average unit selling price seems all but inevitable.
Category Data
RMB million
2005 2006 2007 2008 2009 2010
Herbal/Traditional 1,028.1 1,150.5 1,280.4 1,418.2 1,553.7 1,710.1
Analgesics
Herbal/Traditional 194.4 221.9 251.6 283.8 314.8 343.6
Calming and Sleeping
Products
Herbal/Traditional 2,865.5 3,309.1 3,741.0 4,270.3 4,955.6 5,614.1
Cough, Cold and Allergy
(Hay Fever) Remedies
Herbal/Traditional 588.5 674.4 742.7 810.3 888.5 965.4
Digestive Remedies
Herbal/Traditional 852.4 1,024.4 1,152.7 1,297.1 1,445.8 1,604.6
Medicated Skin Care
Herbal/Traditional - - - - - -
Medicinal Teas
Herbal/Traditional 366.9 388.9 414.9 445.0 479.7 514.9
Smoking Cessation Aids
Herbal/Traditional 111.1 131.1 165.2 190.1 217.0 251.0
Child-Specific Dietary
Supplements
Herbal/Traditional 9,511.2 10,677.4 11,570.9 12,513.9 13,100.3 14,351.8
Dietary Supplements
Herbal/Traditional 3,529.9 3,408.0 3,672.5 3,909.6 4,179.4 4,480.4
Tonics and Bottled
Nutritive Drinks
Herbal/Traditional 19,047.9 20,985.6 22,992.1 25,138.3 27,134.8 29,835.9
Products
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
% current value growth
2009/10 2005-10 CAGR 2005/10 TOTAL
Herbal/Traditional Analgesics 10.1 10.7 66.3
Herbal/Traditional Calming and 9.1 12.1 76.7
Sleeping Products
Herbal/Traditional Cough, Cold and 13.3 14.4 95.9
Allergy (Hay Fever) Remedies
Herbal/Traditional Digestive Remedies 8.7 10.4 64.1
Herbal/Traditional Medicated Skin Care 11.0 13.5 88.3
Herbal/Traditional Medicinal Teas - - -
Herbal/Traditional Smoking Cessation 7.3 7.0 40.3
Aids
Herbal/Traditional Child-Specific 15.7 17.7 126.0
Dietary Supplements
Herbal/Traditional Dietary Supplements 9.6 8.6 50.9
Herbal/Traditional Tonics and Bottled 7.2 4.9 26.9
Nutritive Drinks
Herbal/Traditional Products 10.0 9.4 56.6
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
% retail value rsp
Company 2006 2007 2008 2009 2010
Infinitus (China) Co Ltd - - - 6.0 7.1
CR Sanjiu Medical & - - - - 3.5
Pharmaceutical Co Ltd
Amway (China) Co Ltd 2.1 2.2 2.6 2.6 2.5
Yunnan Baiyao Group Co 1.1 1.2 1.5 1.7 1.8
Ltd
Cadbury (China) Food Co 1.6 1.5 1.5 1.5 1.5
Harbin Pharmaceutical 0.6 0.8 1.1 1.3 1.4
Group Sanjing Pharm Co
Ltd
Jilin Wutai Gankang 1.9 1.7 1.6 1.5 1.4
Pharmaceutical Co Ltd
Xiamen Jinri 1.4 1.4 1.4 1.4 1.3
Pharmaceutical Co Ltd
Tibet Cheezheng Tibetan - - - 1.3 1.2
Medicine Co Ltd
Tianjin Tianshi 1.2 1.3 1.4 1.2 1.2
Biological Development
Co Ltd
Guangdong Shunde Hong 1.4 1.2 1.0 0.9 0.8
Fu Loi Healthcare
Product Co Ltd
Guangzhou By-health 0.2 0.3 0.4 0.6 0.8
Biological Engineering
Co Ltd
Joincare Pharmaceutical 0.8 1.0 0.9 0.9 0.8
Group Industry Co Ltd
Shanghai Green Valley 1.1 1.0 1.0 0.9 0.7
Group Co Ltd
Shenzhen WanJi Pharm Co 1.0 0.9 0.9 0.8 0.7
Ltd
Henan Lingrui Pharm Co 0.7 0.7 0.6 0.7 0.7
Ltd
Jilin Aodong Pharm 0.6 0.6 0.6 0.7 0.6
Group Co Ltd
Guilin Tianhe Pharm Co 0.8 0.8 0.7 0.7 0.6
Ltd
Renhe Pharmacy Co Ltd 0.5 0.5 0.5 0.5 0.5
Jilin Xiuzheng 0.4 0.4 0.4 0.4 0.4
Pharmaceutical Co Ltd
Herbalife (China) 0.0 0.1 0.3 0.3 0.3
Health Products Ltd
Shanghai Jiao Da Onlly 0.3 0.3 0.3 0.3 0.2
Co Ltd
Shanghai Chunzhitang Co 0.2 0.2 0.2 0.2 0.2
Ltd
Xiamen Leephick Pharm 0.3 0.3 0.2 0.2 0.2
Co Ltd
Yangshengtang Co Ltd 0.2 0.2 0.2 0.2 0.2
Guangzhou Baiyunshan 0.1 0.1 0.1 0.2 0.2
Pharm Fty
Kaslyju (Tianjin) Co Ltd - 0.2 0.2 0.2 0.2
Xiamen Dongfeng Pharm 0.5 0.4 0.3 0.3 0.2
Co Ltd
Jamieson Laboratories 0.1 0.1 0.1 0.2 0.2
Nin Jiom Medicine Mfy 0.1 0.1 0.1 0.1 0.1
(Hong Kong) Ltd
Guangzhou Wanglaoji 0.1 0.1 0.1 0.1 0.1
Pharmaceutical Co Ltd
Avon (China) Co Ltd 0.1 0.1 0.2 0.1 0.1
Guangzhou Pan Gao Shou 0.1 0.1 0.1 0.1 0.1
Pharm Co Ltd
Xiamen Tiger Balm 0.1 0.1 0.1 0.1 0.1
Pharmaceutical Co Ltd
Hoe Hin Pak Fah Yeow 0.1 0.1 0.1 0.1 0.1
Manufacturing Ltd
Shanghai K-Max Health 0.1 0.1 0.1 0.1 0.1
Products Co Ltd
Leung Kai Fook Medical Co 0.1 0.1 0.1 0.1 0.1
Lofthouse of Fleetwood 0.1 0.1 0.1 0.1 0.1
Ltd
Guangxi Yulin Pharm Fty 0.1 0.1 0.1 0.1 0.1
Nanfang Lee Kum Kee Co 4.1 4.8 5.1 - -
Ltd
Sanjiu Enterprise Group 2.1 2.4 2.5 3.2 -
Tibet Linzhi Qizheng 1.4 1.3 1.3 - -
Tibetan Medicine Fty
Perfetti Van Melle 0.0 0.0 - - -
Confectionery (China)
Co Ltd
Leaf Confectionery 0.0 0.0 - - -
(Shanghai) Co Ltd
Health Food Enterprise - - - - -
Ltd
Hi-Yeah International - - - - -
Enterprise Group
Shenzhen Taitai - - - - -
Pharmaceutical Co Ltd
Sunrider International - - - - -
Inc
Warner-Lambert - - - - -
Guangzhou Ltd
Others 72.2 70.6 69.9 68.2 67.3
Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
% retail value rsp
Brand Company 2007 2008 2009 2010
Infinitus Infinitus (China) Co Ltd - - 6.0 7.1
999 CR Sanjiu Medical & - - - 3.5
Pharmaceutical Co Ltd
Nutrilite Amway (China) Co Ltd 2.2 2.6 2.6 2.5
Yunnan Baiyao Yunnan Baiyao Group Co Ltd 1.2 1.5 1.7 1.8
Halls Cadbury (China) Food Co 1.5 1.5 1.5 1.5
Shuang Huang Lian Harbin Pharmaceutical 0.8 1.1 1.3 1.4
Oral Liquid Group Sanjing Pharm Co Ltd
Gan Kang Jilin Wutai Gankang 1.7 1.6 1.5 1.4
Pharmaceutical Co Ltd
Jin Ri Xiamen Jinri 1.4 1.4 1.4 1.3
Pharmaceutical Co Ltd
Cheezheng Tibet Cheezheng Tibetan - - 1.3 1.2
Medicine Co Ltd
Hong Fu Loi Guangdong Shunde Hong 1.2 1.0 0.9 0.8
Fu Loi Healthcare
Product Co Ltd
By-Health Guangzhou By-health 0.3 0.4 0.6 0.8
Biological Engineering
Co Ltd
Tiens Tianjin Tianshi 0.8 0.8 0.8 0.8
Biological Development
Co Ltd
Lingzhi Shanghai Green Valley 1.0 1.0 0.9 0.7
Group Co Ltd
Wan Ji Shenzhen WanJi Pharm Co 0.9 0.9 0.8 0.7
Ltd
Shangshi Pain Henan Lingrui Pharm Co 0.7 0.6 0.7 0.7
Reliving Plaster Ltd
An Shen Bu Nao Jilin Aodong Pharm 0.6 0.6 0.7 0.6
Group Co Ltd
Tianhe Gutong tiegao Guilin Tianhe Pharm Co Ltd 0.8 0.7 0.7 0.6
Renhe Renhe Pharmacy Co Ltd 0.5 0.5 0.5 0.5
Eagle American Joincare Pharmaceutical 0.7 0.6 0.7 0.5
Ginseng Group Industry Co Ltd
Xiuzheng Jilin Xiuzheng 0.4 0.4 0.4 0.4
Pharmaceutical Co Ltd
Herbalife Herbalife (China) 0.1 0.3 0.3 0.3
Health Products Ltd
Chun Zhi Tang Shanghai Chunzhitang Co 0.2 0.2 0.2 0.2
Ltd
Leephick Xiamen Leephick Pharm 0.3 0.2 0.2 0.2
Co Ltd
Qingzui Yangshengtang Co Ltd 0.2 0.2 0.2 0.2
Qing Kai Ling Guangzhou Baiyunshan 0.1 0.1 0.2 0.2
Pharm Fty
Kasly Kaslyju (Tianjin) Co Ltd 0.2 0.2 0.2 0.2
ONLLY Shanghai Jiao Da Onlly 0.3 0.2 0.2 0.2
Co Ltd
Eagle Joincare Pharmaceutical 0.2 0.2 0.2 0.2
Group Industry Co Ltd
Suan Tong Ling Xiamen Dongfeng Pharm 0.4 0.3 0.3 0.2
Co Ltd
Jamieson Jamieson Laboratories 0.1 0.1 0.2 0.2
Nin Jiom Nin Jiom Medicine Mfy 0.1 0.1 0.1 0.1
(Hong Kong) Ltd
Wang Lao Ji Guangzhou Wanglaoji 0.1 0.1 0.1 0.1
Pharmaceutical Co Ltd
Avon Avon (China) Co Ltd 0.1 0.2 0.1 0.1
Pan Gao Shou Guangzhou Pan Gao Shou 0.1 0.1 0.1 0.1
Pharm Co Ltd
Tiger Balm Xiamen Tiger Balm 0.1 0.1 0.1 0.1
Pharmaceutical Co Ltd
White Flower Hoe Hin Pak Fah Yeow 0.1 0.1 0.1 0.1
Embrocation Manufacturing Ltd
K-Max Shanghai K-Max Health 0.1 0.1 0.1 0.1
Products Co Ltd
Axe Brand Leung Kai Fook Medical Co 0.1 0.1 0.1 0.1
Fisherman's Friend Lofthouse of Fleetwood Ltd 0.1 0.1 0.1 0.1
Yulin Zheng Gu Shui Guangxi Yulin Pharm Fty 0.1 0.1 0.1 0.1
Hi-Yeah Ginseng Joincare Pharmaceutical 0.1 0.1 0.1 0.1
Group Industry Co Ltd
Infinitus Nanfang Lee Kum Kee Co Ltd 4.8 5.1 - -
999 Sanjiu Enterprise Group 2.4 2.5 3.2 -
Cheezheng Tibet Linzhi Qizheng 1.3 1.3 - -
Tibetan Medicine Fty
Golia Perfetti Van Melle 0.0 - - -
Confectionery (China)
Co Ltd
Eagle Shenzhen Taitai - - - -
Pharmaceutical Co Ltd
Eagle American Health Food Enterprise - - - -
Ginseng Ltd
Eagle American Shenzhen Taitai - - - -
Ginseng Pharmaceutical Co Ltd
Halls Warner-Lambert - - - -
Guangzhou Ltd
Hi-Yeah Ginseng Hi-Yeah International - - - -
Enterprise Group
Läkerol Leaf Confectionery - - - -
(Shanghai) Co Ltd
Sunrider Sunrider International Inc - - - -
Others 71.2 70.5 68.8 67.9
Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
RMB million
2010 2011 2012 2013 2014 2015
Herbal/Traditional 1,710.1 1,873.5 2,042.2 2,216.0 2,389.9 2,567.8
Analgesics
Herbal/Traditional 343.6 371.5 397.7 423.8 449.4 475.4
Calming and Sleeping
Products
Herbal/Traditional 5,614.1 6,236.1 6,865.8 7,484.9 8,122.9 8,775.0
Cough, Cold and Allergy
(Hay Fever) Remedies
Herbal/Traditional 965.4 1,042.6 1,121.9 1,203.3 1,286.6 1,371.3
Digestive Remedies
Herbal/Traditional 1,604.6 1,769.7 1,942.6 2,118.3 2,294.8 2,474.7
Medicated Skin Care
Herbal/Traditional - - - - - -
Medicinal Teas
Herbal/Traditional 514.9 551.0 587.5 624.9 662.7 700.8
Smoking Cessation Aids
Herbal/Traditional 251.0 279.9 310.1 341.8 374.9 409.8
Child-Specific Dietary
Supplements
Herbal/Traditional 14,351.8 15,334.8 16,347.6 17,288.6 18,185.0 19,030.3
Dietary Supplements
Herbal/Traditional 4,480.4 4,749.0 5,024.4 5,290.8 5,560.6 5,827.6
Tonics and Bottled
Nutritive Drinks
Herbal/Traditional 29,835.9 32,208.1 34,639.9 36,992.3 39,326.8 41,632.6
Products
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
% constant value growth
2010-15 CAGR 2010/15 TOTAL
Herbal/Traditional Analgesics 8.5 50.2
Herbal/Traditional Calming and Sleeping Products 6.7 38.4
Herbal/Traditional Cough, Cold and Allergy (Hay 9.3 56.3
Fever) Remedies
Herbal/Traditional Digestive Remedies 7.3 42.0
Herbal/Traditional Medicated Skin Care 9.1 54.2
Herbal/Traditional Medicinal Teas - -
Herbal/Traditional Smoking Cessation Aids 6.4 36.1
Herbal/Traditional Child-Specific Dietary 10.3 63.2
Supplements
Herbal/Traditional Dietary Supplements 5.8 32.6
Herbal/Traditional Tonics and Bottled Nutritive 5.4 30.1
Drinks
Herbal/Traditional Products 6.9 39.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
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