The new opportunity in the probiotic industry has arrived, and the dietary supplement category is welcoming a market opportunity worth billions.

How popular are probiotics? Walk into a supermarket and see the dazzling array of products like candy, biscuits, yogurt, and other dairy products that promote probiotics, which have clearly become a new consumer trend. The People's Daily once reported that with a significant increase in consumer demand, China's probiotics have ushered in a "blowout development."

Following this, PepsiCo acquired the probiotic health drink manufacturer KeVita, hoping to gain new development space in the health drink and sports drink market.Tongrentangannounced the acquisition of the Australian probiotic brand Life-Space; and many companies such as Jiaotong University Angli and Junlebao have also joined the fray to seize the new opportunity in probiotics.

The significant increase in market demand has also driven the diversification of probiotic products. Currently, probiotics are widely used in ordinary foods, dietary supplements, and infant formula. Some analyses point out that with the enhancement of nutritional science and preventive medicine concepts, the proportion ofdietary supplementswill be greatly increased. The "DuPont Nutrition & Health China Probiotics Market Special Research 2018" shows that by 2021, the market size of probiotic supplements in China will exceed 30 billion yuan, with a compound annual growth rate of 20.6%.

Against this backdrop, consumer awareness of probiotics is gradually increasing, with some even beginning to pay attention to the types, activity, and transportation conditions of probiotics, which also raises requirements for the professionalism of brands and products. Experts point out that in the future, probiotic companies need to develop in a more specialized and segmented direction to provide consumers with new functional or high-value category choices.

The market size of probiotic supplements will exceed 30 billion.

The popularity of probiotics can be glimpsed not only from the wide range of related products in supermarkets but also from statistics from third-party organizations.

Data shows that consumer awareness and acceptance of probiotics are continuously improving. In 2017, DuPont Nutrition & Health conducted a market survey targeting consumers, and the results showed that in first, second, and third-tier cities in China, the awareness rate of probiotics reached 72%, and the awareness rate of probiotic food and beverages reached 70%. Even in the probiotic supplement field, which currently holds the smallest market share, the awareness rate has reached 20%.

In addition, market data reports indicate that the annual growth rate of China's probiotic industry has reached 17% in recent years. If this growth rate is maintained, the market size is expected to reach 142 billion yuan by 2023.

Analysis indicates that probiotic application products can be mainly divided into three categories: probiotic foods, probiotic dietary supplements, and probiotic raw materials. According to BCC Research data, the proportions of these three categories are 85.9%, 8.6%, and 5.6%, respectively. Among them, the probiotic food sector is mainly dominated by dairy products, with yogurt products accounting for as much as 46.6%, which is an important driving force for the growth of China's probiotic industry, although the growth rate in this sector has slowed in recent years.

The disparity in the proportions of the three categories is significant. On one hand, there are reasons related to entry barriers; in the early days, the lack of maturity and completeness of standards in the domestic food market led to a plethora of probiotic drinks flooding the market. On the other hand, as one of the public nutrition improvement projects, relevant departments formulated plans for adding probiotics to food as early as 2007, which also led to earlier research on probiotics in the food sector.

However, the good news is that with the drive of market demand and the gradual maturity of industry-academia-research collaboration, another major sector—the probiotic supplement field—is thriving. Data shows that the global market size for probiotic supplements is currently about $5.7 billion, while China's probiotic supplement market is about $800 million, with a compound annual growth rate of 12%. According to BCC Research's forecast, the global market value of probiotic dietary supplements is expected to reach $8.8 billion by 2020.

Some analyses are even more optimistic. The "DuPont Nutrition & Health China Probiotics Market Special Research 2018" data predicts that by 2021, the market size of probiotic supplements in China will exceed 30 billion yuan, with a compound annual growth rate of 20.6%.

The product line of probiotic supplements will be richer.

Whether it is a 20% or 12% compound growth rate, it is certain that as the most promising segment in probiotics, probiotic dietary supplements are attracting capital attention.

For example, in February 2017, i-Health, the parent company of the third-largest probiotic supplement brand Culturelle in global retail value, announced the acquisition of the probiotic brand UP4, attempting to supplement its probiotic brand and expand and accelerate its leading position in the field.

In October of the same year, Irish nutrition and food ingredient giant Kerry Group announced that it had completed the acquisition of the American probiotic biotech company Ganeden, which has an annual revenue of over $25 million and is a leader in the field of new probiotic research.

Domestically, in August 2018, Tongrentang, a leading global dietary supplement company, completed the acquisition of the Australian probiotic company Life-Space Group Pty Ltd, which is one of the largest companies in the Australian probiotic market, with its main brand being Life-Space, whose probiotic supplement products cover all age groups.

Tongrentang, which has been deeply involved in the dietary supplement field for many years, has stated that the probiotic supplement category has maintained a growth rate that exceeds the industry average in recent years, "it is a good track."

Data shows that in 2017, the top three sales of this category on the Taobao platform were Australia's Life-Space, America's Swanson, and Japan's enzyme Reperfe, accounting for 65% of the overall scale.

It is worth noting that the top-ranked Life-Space entered the Chinese market in 2014 through "cross-border e-commerce" and under these "difficult" conditions, its products have still maintained rapid growth while enjoying high visibility and a good reputation, leading the market in the probiotic industry. Since the beginning of this year, Life-Space has started to distribute its products in offline pharmacies, maternal and child stores, and supermarkets, gradually launching national brand resource investments that have garnered significant market attention and performed well overall.

At the same time, with the rise of domestic probiotic supplements, it is expected that in the future, the gap in awareness of probiotics between domestic and international markets will gradually narrow, and the previously less focused areas of probiotic supplements for adults, pregnant women, and the elderly will also receive attention.

In fact, in the international market, competition in these segmented markets has long been fierce.

For example, the professional brand Life-Space, which has been deeply rooted in the Australian market for many years, began expanding its product line years ago, including about 30 probiotic products, mainly in the form of probiotic powders and capsules, providing multi-strain probiotic products for all age groups, including pregnant women, infants, children, teenagers, adults, and the elderly.

Foodaily also reported that at the 2016 Natural Products Expo West in the United States, the American technology innovation probiotic company Ganeden showcased 60 new products containing the GanedenBC30 probiotic strain. At the 2017 expo, Ganeden showcased 125 new products, doubling the number.

Currently, there is also a trend of 'probiotics for everyone' in the domestic market. A survey titled 'Workplace Health Research' launched by MaiMai in collaboration with a well-known medical health media pointed out that probiotics have emerged strongly in recent years, surpassing grape seeds, protein powder, collagen, and other products, gaining popularity among working professionals, especially those aged 20 to 40, who have a relatively higher preference for probiotics.

Industry insiders have stated that in the next five years, the probiotic industry will enter a mature phase, with a large number of companies entering the market, and the capacity of the probiotic market will further explode, releasing more dividends from the health industry.

The probiotic market will become more standardized and professional.

In fact, looking globally, the sales and circulation of probiotic-related products have maintained a good momentum, with most probiotic products forming a relatively mature market in developed countries. The Chinese market started relatively late but is gradually catching up with the 'rhythm'.

While thriving, the survival of the fittest industry development law will further standardize the probiotic market, and only more professional and higher quality probiotic products can gain market favor.

In the initial stage, many businesses in the probiotic market only shout slogans about probiotics without clearly labeling the types and active quantities of probiotics. 'Consumers do not know whether they have been added, what has been added, or how much has been added.'

According to a report by First Financial, after visiting the 19th China Pregnancy, Infant, and Child Expo, it was found that there are differences in the descriptions of added probiotics in the ingredient lists of different products; most droplet and powder formulations clearly label the strain names and quantities, but the labeling of probiotics in baby food, candy snacks, and beverages is inconsistent... Some consumers are not clear about these differences.

In fact, the types and quantities of strains are key to the effectiveness of probiotic products. Different strains have different effects; for example, products containing the BB536 strain can be used to alleviate symptoms of acclimatization; products containing lactobacillus and bacillus can relieve irritable bowel syndrome...

For major brands like PepsiCo and By-Health entering the probiotic field, acquiring probiotic brands is just the beginning of 'drawing swords'. Leveraging brand and channel advantages, continuously improving product and service quality, and providing more high-quality and professional health value to more Chinese consumers is the future of the probiotic market.