According to Grand View Research, the global functional food market is expected to reach $275.77 billion (about 1.79 trillion yuan) by 2025, with a compound annual growth rate of 7.9%. With young people strengthening their health awareness, the demand for functional food is rising in the Chinese market. AskCI Consulting predicts the functional food market size will exceed 600 billion yuan in 2022.¹

Currently, the penetration rate of functional food in the United States is more than 50%, with over 60% of loyal users. Japan's functional food penetration rate also reaches 40%. In marked contrast, China’s functional food penetration rate is 20%, with only 10% of loyal consumers², implying huge growth prospects.

Functional food’s application in China

As the post-90s and post-00s face more life and work pressures, various health problems, such as hair loss, insomnia, visual impairment, and obesity, have plagued them. Chemlinked lists eight functional food categories grappling with their different concerns as follows:

Table 1 Ingredients and Product Form of Eight Major Functional Food Categories

How local players opt for ingredients?

Diversified healthy demands drive the emergence of local functional food startups, which seek to enhance competitiveness with a variety of specialized ingredients.

ChemLinked observed five domestic functional food startups’ product lines and found that they currently focus on solving five pressing needs from consumers. They share similarities but also show novelties in their ingredient selection for the same health issue.

Table 2 Five Domestic Functional Food Startups’ Year of Establishment

Body shaping

Table 3 A Comparison of Body Shaping Products from the Five Startups

White kidney bean is the most popular ingredient and always highlighted because of its carb control function. ChemLinked also finds some novel plant ingredients such as roselle, French cactus fruit, black ginger, and fructus piperis longi.

Image 1 Bear KoKo’s White Kidney Bean Pressed Candy

Sleep aiding

Table 4 A Comparison of Sleep Aiding Products from the Five Startups

GABA dominates the sleep-aiding ingredients supply. Since 2020, many Chinese food and beverage companies have launched GABA-added products targeting the ever-expanding sleep disorder group. See more details here.

Besides, local Chinese startups tend to opt for plant ingredients like melissa and passion flower to fortify the effect. Besides, spine date seed, a traditional Chinese medicine used for nerve soothing, draws attention from new brands.

Image 2 Wonderlab’s GABA Gummies

Eye protecting

Table 5 A Comparison of Eye Protecting Products from the Five Startups

Buffx selects the traditional eye protection ingredients, such as blueberries rich in anthocyanins and marigold lutein. Nelo uses hyaluronic acid to alleviate dry eyes and ginseng for anti-eye fatigue. Black elderberry, which has gone viral overseas, is a promising ingredient in the Chinese market for immunity enhancement.

Liver protecting

Table 6 A Comparison of Liver Protecting Products from the Five Startups

Nelo highlights liver detoxification after staying up late or excessive drinking by using cynarin. Buffx uses the combination of traditional medicines, including kudzu and hovenia dulcis thumb, to relieve alcoholism. Chemlinked also notices turmeric, which is gaining traction in the food and beverage sector for its anti-inflammatory effect.

Anti-aging

Table 7 A Comparison of Anti-aging Products from the Five Startups

At the beginning of this year, sodium hyaluronate (i.e., hyaluronic acid) was approved as a new food raw material by China’s National Health Commission and allowed to be added to ordinary foods. ChemLinked believes that with market access approval and the growing awareness of a healthy lifestyle, hyaluronic acid food is a category worthy of watching in the Chinese food industry. See more details here.

ChemLinked is also bullish on the application of astaxanthin, ceramide, and nicotinamide in the food and beverage sector.