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Updated: 2007-06-15 11:30

With deeper market penetration and growing consumer awareness, the health and wellness (HW) packaged food industry has experienced strong growth rates across the board, including organic, fortified and functional products.

According to Euromonitor International, the retailing industry in China has developed rapidly over the last five years, boosting sales of HW packaged foods to $4,682.7 million in 2006, achieving a compound annual growth rate of 17 percent over 2002 to 2006.

Modern retailing channels, including supermarkets and hypermarkets, have experienced robust progress and expansion in the review period, Euromonitor said.

These trends have been instrumental in enhancing the retail presence of a wide variety of HW products in China, as key players are able to leverage their broad product range to include HW variants alongside standard packaged foods.

Trade sources indicated that due to logistical difficulties of distributing to smaller retail outlets scattered in different regions, companies will usually just distribute their best selling brands or products.

However, since modern retail channels penetrated second and third-tier cities, manufacturers are able to have larger display areas and will typically push distribution of their full product range, including HW variants.

Euromonitor's survey showed that in 2006 fortified and functional products accounted for 4.5 percent of total packaged food sales.

It is mainly because Chinese consumers are paying more attention to food products' ingredients and they tend to purchase healthy and functional products, Euromonitor said.

For example, high calcium and high fiber biscuits can be found in retailing channels, and demand for such products has increased over the previous five years.

Boiled sweets with added vitamin C were a popular marketing tool in diverting consumers from standard conventional sweets to healthier alternatives.

In 2003, because of Severe Acute Respiratory Syndrome (SARS), Chinese people's awareness of the function and importance of vitamins increased. Vitamin fortified products became popular and welcomed by local consumers who noticed the benefits of vitamins.

Vitamin fortified products can be discovered in many sectors, including confectionery, bakery, dairy, oils and fats.

Knowledge of calcium among Chinese consumers comes from government education. Hangzhou Wahaha Group and Guangzhou Robust achieved huge success in the sales of vitamin A, D and calcium fortified milk drinks over the last half decade.

Fortified and functional gum was another important driver in stimulating growth of overall fortified and functional confectionery. The added ingredient of xylitol in gum helps prevent tooth decay, and consumers purchase it to maintain oral hygiene.

Euromonitor predicted that HW packaged foods will continue to have robust growth over the next five years, fuelled by steady demand for dominant HW categories such as fortified and functional and naturally healthy.

The demand for HW packaged food is expected to make great progress into consumers' daily diets since they can afford higher-priced products due to the disposable income hike and increasing awareness of the health benefits of HW packaged food.

Continuous education from both the government and manufacturers helps consumers increase product knowledge of HW food and health awareness.

Manufacturers are also expected to continue research and development investment on more HW products to compete more effectively, and meet consumers' demands.