More Young People Are Choosing Functional Foods to Aid Sleep

The 2021 Sports and Sleep White Paper shows that there are currently more than 300 million people in China with sleep disorders, with young people born in the 1990s, 1995 and 2000s having the most prominent sleep problems. 69.3% of young people don't go to bed until after 11 pm, and 34.8% take a long time to fall asleep and have difficulty falling asleep within half an hour. Insomnia has become the norm for young people today. Most young people say, “I was very anxious when I was in Shanghai, I had serious insomnia, but I can fall asleep after taking melatonin,” “I used to rely on melatonin to sleep, but you have to be careful about the brand, many brands don't work,” and “I take a certain brand of melatonin all year round, and I feel drowsy after taking it.”

This also reveals a problem. In recent years, most young people have used over-the-counter melatonin as their first choice for insomnia.

Nowadays, as more and more young people pay attention to sleep problems, more and more brands and capital are entering the market, jointly leveraging the “sleep economy” market. According to data from Tianyancha, there are currently more than 2,500 companies in China whose names or business scope include “sleep, sleep aid, lullaby, melatonin”, and are in the state of being in business, surviving, moving in, or moving out. Seventy percent of these companies were established within the past five years, with Guangdong Province having the most, accounting for about 34%; followed by Beijing, accounting for about 15%; and Jiangsu Province ranking fourth in terms of the number of related companies. Since 2014, the annual number of registered companies related to China's “sleep economy” has been on a rapid upward trend, with an average annual growth rate of new registrations exceeding 10%. In 2018, the total number of registrations was nearly 600, and in 2021, the number of registered companies related to China's “sleep economy” will be nearly 400.

Currently, on Tmall Global, the top-selling melatonin product is Vitafusion SleepWell Melatonin Gummies. Other popular products include Noromega Melatonin Sleep Tablets from Norway, Zenflore Probiotics for Sleep from Ireland, Saffronia Heart-Shaped Gummies with Saffron Extract from Australia, and Swisse Sleep Valerian Tablets. The China Sleep Index Report shows that 62% of post-90s consumers have purchased emerging sleep-aid products such as melatonin gummies, and the “sleep economy,” with a market size of over 200 billion yuan, is quietly emerging.

“In 2021, the sales of imported sleep-aid health foods are expected to grow by double digits, and the trend of younger buyers is becoming more and more obvious.” The relevant person in charge of the health industry at Tmall Global said that the platform has been committed to incubating new product categories to meet the needs of new consumer segments and bring new opportunities to businesses.

The rapid development of the sleep-aid health market has also attracted the follow-up of international FMCG groups. Nestlé's brand Pure Encapsulations launched Ashwagandha capsules for regulating sleep and mood, which entered Tmall Global in May last year and saw a monthly sales growth of over 200%. Unilever's OLLY melatonin gummies entered the market less than a year ago and have become the TOP2 brand in the melatonin category. Data shows that in the past year, more than 100 new overseas brands have used cross-border e-commerce to develop the sleep aid supplements market. More new brands are expected to enter the market, and 10 brands with sales of tens of millions of yuan have been incubated.

In fact, it is with the support of the insomnia army and the punk health preservation group that more and more projects focusing on “sleep” have begun to attract the attention of capital. After melatonin, sleep-promoting snacks have sprung up like mushrooms after rain. It is reported that more and more functional food brands in the market have launched products that focus on the function of “sleep-promoting and stress-relieving”, such as new brands like BUFFX, KOOYO, JOLIYOYO, Hala, etc., which have been sought after by the capital market and have received financing one after the other.

In terms of sleep aid, replacing melatonin with gamma-aminobutyric acid (GABA) is one of the most important changes in ingredients. GABA was listed as a new resource food in 2009, and it is stipulated that it can be added to foods such as beverages, candy, and cocoa products. With a range of changes such as a more fruit juice-like flavor and a product shape that is either gummy or jelly-like, health care is becoming more snack-like. In daily life, you can take care of your health while snacking, which appeals more to young people than eating health food.

For example, among the SKUs already launched by BUFX, there is a product series called BUFF X SLEEP (stress relief and sleep aid), which classifies insomnia into mild, moderate and severe. Depending on the severity, the product will add a small amount of melatonin, but mainly GABA. Its product form is mainly gummies. JOLIYOYO has currently launched the GABA sleep series, GABA stress relief series, lactic acid bacteria enzyme jelly and other products . The sleep series also mainly consists of gummies; while Hala's products are oral sprays that do not focus on freshening breath, but rather on health and beauty needs such as improving immunity. One of these is a good night bottle with added GABA to help with sleep. Release U, which just completed a multi-million-dollar seed round of financing in November last year, has even determined from the beginning of its establishment that the brand will focus on the scenario of “staying up late” to expand its product offerings.

Changes in consumers are giving rise to new market demands, and the same is true for the “sleep economy”. In the “2021 China ‘Sleep Economy’ Industry Research Report”, iiMedia Research pointed out that the “sleep economy” refers to the demand economy created by people with sleep disorders such as poor sleep quality or insomnia. The sleep disorders here do not refer to those strictly defined by psychiatry, but rather refer to sleep problems such as insomnia, waking up easily with dreams, difficulty falling asleep, and poor sleep quality. The reason why most consumers today have sleep disorders is not due to “physical factors”, but mostly due to “psychological factors” caused by social pressure. According to statistics, 57.05% of Internet users suffer from insomnia due to life stress, 55.92% due to work stress, and 47.33% due to emotional factors.

China Galaxy Securities pointed out in its research report on the sleep health industry that sleep problems will become more common during the process of economic development and modernization, and that increased health awareness will significantly drive demand for sleep aids. Sleep problems are an epidemic in modern society, and with the modernization of society, they will affect more and more people. At the same time, as society develops and people's health awareness continues to increase, more people will pay attention to the quality of sleep and seek solutions. The development of sleep-aiding health food products is just beginning to take shape, and there is still much room for growth in the future. However, existing sleep products are far from being able to meet domestic demand, and more innovative sleep-aiding products or services are still in the incubation stage.

According to an analysis by China Galaxy Securities, “sleep economy” products are mainly divided into three types of products or service models: home hardware, pharmaceutical healthcare, and sleep-aiding apps. However, they are still mainly low-level consumer goods such as household items, and the penetration rate of higher-level sleep consumption such as health food is still very low. At present, consumers still need to be cultivated to develop the habit of consuming sleep-aiding health food.

It is worth noting that consumers are generally more willing to accept sleep-aiding functional foods at affordable prices. According to a survey by iiMedia Research, 44.5% of Chinese Internet users in 2021 are willing to pay less than 100 yuan for sleep-aid health food; 32.1% are willing to pay 100–300 yuan; and 15.7% are willing to pay 300–500 yuan. In contrast, only 7.7% of Internet users are willing to pay more than 500 yuan for sleep-aid health food. Overall, consumers prefer sleep health food products in the affordable price range.

Sleep health food products are generally less expensive than other health food products. Most domestic sleep health food products retail for less than 100 yuan per bottle. Take melatonin products sold on Taobao as an example. As of December 2019, the retail prices of the top five melatonin sleep health products on the Taobao platform did not exceed 100 yuan.

The best-selling products are By-Health Melatonin Ampoule, Golden Partner Melatonin Vitamin B Ampoule, Vitality Melatonin Ampoule, American Vitafusion Melatonin Ampoule, and Dr. Wo Melatonin Vitamin B6 Tablets, with corresponding sales of 17,000, 17,000, 12,000, 9,991, and 8,375 bottles. Melatonin sleep functional products with a retail price of more than 100 yuan but no more than 300 yuan per bottle have low sales. Best-selling products include Nature's Bounty Melatonin Gummies, Vitafusion Melatonin Chewable Gummies, Comvita Melatonin Tablets, and American Health Ruby Sleep Gummies. The sales of these products do not exceed 8,000 bottles. As for melatonin products priced above 300 yuan, Taobao sales are even lower than 2,000 bottles. The above data shows that for functional foods with the same main ingredients, consumers pay more attention to price than to brand, so domestic brands of sleep-aid health food can rely on price advantages to capture more market share.

In addition, China Galaxy Securities pointed out in its report that the scientific basis for the use of sleep-aid health food products should be improved. On the one hand, efforts should be made to train more sleep experts to provide customers with scientific advice when selling health food products; on the other hand, sleep-aid health food products should be developed in a targeted manner to address sleep disorders caused by different factors.

Industry insiders predict that the “sleep economy” will continue to have potential for some time to come and will attract a large number of entrepreneurs, businesses and capital.