Rising demand from consumers drives move toward health products industry

Hangzhou Wahaha Group, one of China's largest beverage companies, is seeking an industrial upgrade by shifting its focus to its nutrition and health products and investing in high-tech industries, founder and chairman Zong Qinghou said on Wednesday.

"Wahaha will ramp up efforts on health products for the increasing number of Chinese customers with metabolic disorder such as diabetes," Zong said. "And as more Chinese, especially the younger generation, are facing health problems such as insomnia, we are planning more products to help improve the situation."

In addition, the group has also invested in a probiotics production line.

Wahaha will also produce a meal replacement in the near future. The product, which is made up of dietary fiber and necessary nutrition, will mainly target the growing number of Chinese dieters, especially women, as the group tends to have stricter weight control, Zong said.

"China is undergoing an economic transformation and upgrading at present. Therefore, the development of high-end manufacturing and smart equipment has become a buzzword. But as a matter of fact, traditional industries, which are closely related to people's daily lives, should also undergo upgrading and there will be room for their development," he said.

According to the China Nutrition and Health Food Association, the market size of the country's health products reached 400 billion yuan ($63.7 billion) in 2017, with more than 16,000 products registered and approved for production.

Industry leaders in the sector also reported positive performance last year. Beijing-based Be Sun Yen Holdings had an annual turnover of 543 million yuan in 2017, up 5.5 percent year-on-year. Zhuhaibased By-Health reported even stronger annual growth of 34.7 percent with sales revenue of 3.1 billion yuan last year.

Zhu Danpeng, a researcher at the China Brand Research Institute, said that a growing number of companies are entering the health products industry, providing more products and catering to the rising demand from consumers.

As some traditional industries are going through a difficult time, health products present a new opportunity for transformation, attracting more companies to divert their focus in the near future.

Meanwhile, Wahaha plans to invest in some high-tech and advanced manufacturing companies in the future, according to Zong. Instead of looking for targets on its own, Wahaha will team up with experienced industry leaders to ensure the success of the investments.

The firm now has set up more than 80 production bases and 180 subsidiaries all over China, and registered an annual turnover of 40 billion yuan in 2017.