Having just gone through the "withdrawal symptoms" from the Olympics and adjusted their "jet lag," young people are now staying up late and suffering from insomnia due to the "hard control" of the "Black Myth: Wukong" game levels. However, occasional short-term insomnia, as an urban "epidemic," can be self-regulated by the biological clock. What is concerning is that with the fast-paced lifestyle and smart devices bringing about "polar day," 28% of the population in China are suffering from chronic sleep health issues.

Therefore, how to alleviate sleep problems has given birth to a huge sleep economy, "cooking up" a sleep market worth hundreds of billions. The latest report from Shanghai Securities points out that the size of China's sleep economy market in 2023 is as high as 495.58 billion yuan, and it is expected that by 2027, this figure is likely to further grow to 658.68 billion yuan.

Among them, sleep-aid health foods are one of the important mainstays supporting the sleep economy. Speaking of which, the Chinese are not unfamiliar with this category. A hot piece of knowledge is that the once "brainwashing" national product, Brain Platinum, is actually mainly composed of the well-known melatonin familiar to the Chinese.

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Nowadays, various health care products are constantly being updated, and the era of Brain Platinum has long passed. So, what is the market for sleep-aid health foods that were popular throughout the country more than a decade ago due to the information gap? In the era of light health maintenance, who has taken the leading position? As a category centered on trust, how can the category break through?

What is the current market for sleep-aid health foods?

At the beginning of 2023, sleep-aid health care products began to quietly become popular in the terminal market.

Many people have endured a series of symptoms such as fever, razor-sharp throat, and cement-sealed nose, and after entering the "Yang Kang" stage, they have become "night watchmen." Affected by the demand for "Yang Kang insomnia," the sales volume of sleep-aid health care products has increased significantly in the first half of 2023, and due to the pull of "special difficulty students," from the second half of 2023 to the first half of this year, the sales of sleep-aid health care products have continued to grow.

However, the continuous expansion of the market has not brought about a "rise in both quantity and price." Since the second half of last year, "price competition" has become increasingly fierce, and the price center has continued to move down. Especially in the first half of this year, the sales proportion of products with a single order of more than 500 yuan has been greatly reduced. In contrast, the sales proportion of products priced below 200 yuan has increased significantly.

Although the sales of sleep-aid health care products on the Tmall platform have become stable, there are still many trends in the industry that are emerging.Firstly, the development of children's health and support for the elderly are expected to become new growth engines for sleep aid health products. Amidst the trend of youth-oriented development in the entire health product industry, sales of sleep aid health foods for children and adolescents have seen a significant increase. In the first half of this year, sales of sleep aid health products for children and adolescents increased by 182.66% year-on-year, with most products focusing on the selling point of height management.

Furthermore, sleep disturbances such as light sleep and difficulty falling asleep, which are caused by endogenous reasons among the elderly, are increasingly receiving attention. As the aging population continues to grow, middle-aged and elderly people are becoming a high-potential consumer group for sleep aid health products. In the first half of 2024, sales of sleep aid health products for the middle-aged and elderly tripled.

Secondly, as consumer demands for sleep deepen, simply improving sleep is no longer sufficient to meet market needs. "Super species" with "direct effects + indirect effects" have become high-growth products. According to data from Magic Mirror Insights, although health products specifically aimed at improving sleep are still the mainstream, their sales declined in the first half of this year compared to the same period last year.

At the same time, as consumer demands become more specialized and personalized, compound products such as sleep aid + blood lipid and blood pressure regulation, and sleep aid + immunity enhancement have seen significant growth, with increases of 661.10% and 129.36% respectively. Consumers are looking to balance blood pressure and lipids while they sleep, as well as to enhance their "sleep immunity."

Once again, as more young people enter the "light health maintenance" market, the desire for "having one's cake and eating it too" is driving the trend of snackification in sleep aid health products. Tablets, with their high stability and portability, firmly hold the mainstream market position, contributing to more than half of the sales. However, for consumers, especially the younger ones, product forms like soft gummies, which are closer to food in terms of name, form, and taste, not only meet their taste preferences but also provide the necessary functionality, making the consumption process more enjoyable rather than a routine task. Moreover, as consumers' perception of health products becomes more professional, they have come to view health products as dietary supplements. For example, vitamin C is seen as a dietary supplement for lemons, and calcium tablets are considered supplements for milk.

Changes in demand and perception have driven a significant increase in snackified health products, with sales of sleep aid health products in gummy form increasing by 249.84% year-on-year. Powders and granules have also achieved a six-fold increase in sales year-on-year through product forms such as solid beverages and probiotic powders.

It is worth mentioning that the sales of sprays have also increased by 663.47% year-on-year. The driving force behind the rapid growth of this dosage form also stems from the consumer's "wanting it all" mentality. As is well-known, high doses of melatonin can cause adverse reactions such as headaches and confusion. Therefore, how to achieve good results with low doses has become a pain point for consumers. Sprays, which are absorbed through the mouth, effectively solve this problem, making them a preferred product for consumers.

Lastly, in terms of raw materials, herbal ingredients are highly recognized, with GABA and theanine showing particularly notable growth in market share. In recent years, the concept of "medicine and food being the same source" has been wildly popular among young people, making herbal ingredients highly recognized, with ingredients such as jujube seeds, poria, mulberries, valerian, licorice, and lavender increasingly being used in the formulations of health food and dietary products.

In addition, GABA remains popular. As an important inhibitory neurotransmitter in the central nervous system, the main function of GABA is to "calm" people and reduce neural excitability. Public data shows that about 30% of the central nervous system is affected by GABA. Moreover, in market promotion trends, GABA seems to be "safer" than melatonin, hence the sales of GABA-containing products increased by 93.32% in the first half of this year.

Theanine, known as a "natural tranquilizer," has also become the "new favorite" in the first half of 2024, with the fastest-growing sales. As a precursor to GABA, theanine can be automatically converted into GABA in the human body, thereby helping people feel relaxed mentally.Who will be the "Brain Gold" of the "Light Health" era?

Healthcare products have been a historically "long-standing" business in our country, with entrepreneurs like Zhong Shanshan, Zong Qinghou, and Shi Yuzhu earning their first fortune through healthcare products in their early years.

In 1997, Shi Yuzhu launched Brain Gold onto the market, which turned out to be a huge success. Media reports suggest that by 2000, Brain Gold, with melatonin as its main ingredient, achieved sales of 1.3 billion yuan nationwide and maintained its position at the top of single-item healthcare product sales until 2014.

However, today's healthcare product market is no longer dominated by Brain Gold. The sub-category of sleep-aid health foods has undergone a dramatic transformation. So, after more than a decade of development, what is the current competitive landscape of the sleep-aid health food category in the "Light Health" era?

Since 2016, the dual-track system of registration and filing has been initiated, and the healthcare industry has made significant progress in standardization and approval efficiency, with a continuous increase in the number of filing and registration certificates for healthcare products in recent years.

Sleep-aid health foods have also developed rapidly, leading to a pronounced long-tail trend in the industry and intensified competition. Data from Magic Mirror Insights shows that the market share of the top five companies (CR5) has been declining, while the market share of long-tail companies increased from 58.6% in the second half of 2022 to 60.4% in the first half of this year.

In terms of country of origin, overseas brands still hold the majority of the market share, but domestic brands are catching up. In the first half of 2024, the market share of domestic sleep-aid health food brands surged significantly, increasing from 40.0% in the second half of 2022 to 48.3%.

From a brand perspective, overall, the top two brands in terms of sales have been stable, with domestic healthcare leader Tomson Bi-jian and American healthcare brand vitafusion firmly occupying the first and second positions. The brands ranked third to tenth have seen frequent changes, with overseas brands having more advantages. At the same time, traditional Chinese medicine companies like Yiling and time-honored brands such as Jiuzhitang and Tongrentang are also frequently alternating in the rankings.

In recent years, some "new brands" have taken the opportunity to stand out with the wave of "Light Health." Taking soft candy-type sleep-aid health foods as an example, in the past, soft candy sleep-aid health products were mainly dominated by overseas brands, but now, more and more domestic brands have successfully made it to the list. Among them, buff X, established in 2020, directly shot to the top of the list in the second half of last year and remains the brand with the highest sales of soft candy-type sleep-aid health products in the second half of this year.

However, as more players enter the field, the industry still lacks a player that can break through the category mindset and stand out. Faced with the impact of an increasing number of brands, the market share of Tomson Bi-jian, as the industry leader, has shown to be relatively unstable.In general, in the fierce competition, it is not an easy task for players to become the "brain platinum" of the new era in a short period of time. How to become one is a new question that brands should ponder.

How should health food companies mine the trillion-dollar sleep economy?

All health foods are trust goods. The biggest characteristic of this category is: first, the product needs to gain consumer trust to achieve sales, and second, the effects of the product after use are often difficult to directly verify. Therefore, brands usually rely on celebrity endorsements, scientific data, expert opinions, and consumer reviews to help endorse.

However, in today's diversified information age, traditional marketing strategies have become less effective, with social media platforms like Xiaohongshu and Douyin filled with voices questioning the effectiveness of products.

Sleep-aid health foods are no exception, and it can even be said that they face more stringent "scrutiny" from consumers. Unlike the needs for calcium supplementation, blood lipid/pressure regulation, etc., sleep-aid health foods need to address consumers' immediate needs - insomnia, which often leads consumers to have higher expectations for the effectiveness of sleep-aid health foods, hoping to "quickly, accurately, and effectively" solve sleep problems.

However, health products are not drugs, and it is difficult to achieve "instant cure."

Therefore, brands need to do a good job of product efficacy popularization and expectation management to avoid exaggerated claims. The emergence of more and more white-label and "bumping" sleep-aid health food brands has led to a mixed bag in the industry. In a traditional e-commerce platform promoting sleep-aid health foods, the proportion with the "little blue hat" is only 50.9%. Among them, many products clearly exaggerate their effects in promotion, and there is a suspicion of "false propaganda." "Falling asleep in 30 minutes," "deep sleep for 6 hours"... This kind of promotion that seems to solve problems immediately may lead consumers to form too high expectations before purchasing, resulting in a psychological gap between the actual effect after use and the expected effect, thus losing trust in the product, brand, and even the entire category.

Moreover, many products blur the difference between soothing emotions and sleep management in their ingredient promotion, misleading consumer cognition. Although studies have confirmed that theanine can have a calming and soothing effect, a good mood is not directly related to falling asleep. Similar to soaking feet before bed and drinking milk, many sleep-aid health foods, including pure theanine products, are more conceptual in efficacy, and may improve sleep effects through psychological suggestion.

In addition, differentiation has become the key to future competition in sleep-aid health foods, and brands need to enhance upstream control and build a barrier to cutting-edge product development. It has long been a consensus in the industry that health products are big single-product businesses, but in the environment of diversified demand and extreme competition, it is no longer possible for a product to sell for 20 years. Nowadays, consumers are gradually returning to the consideration of product quality and price ratio and differentiation, so only products with strong R&D, high quality, and scarcity and professionalism can help brands stand out in homogenized competition.

Since the implementation of the "dual-track system" for health product supervision, sleep-improving health foods have always been a high-potential category. Although there is still a big gap compared with more mature categories, the number of registered products of this kind has been stable at around 20 in recent years, such as in 2023, 20 sleep-improving products obtained registration certificates, ranking 10th among the 24 effects standardized by the Market Supervision Administration. At the same time, on the level of raw material richness, domestic products still need to break through, and the four new products registered in the first half of this year are all based on jujube seeds.In the era of "light health preservation," a more diverse range of sleep-aid functional ordinary foods are expected to become a new way out for health food companies. It is likely that everyone is aware that the Japanese functional labeling food (FFC, similar to domestic functional ordinary foods) market has developed for over thirty years, relying on complete industry standards and specifications, clear product positioning, frequent iteration speed, and strong scene innovation, and has now become stable and mature. According to data from Dongfang Fortune Securities, in 2023, the Japanese FFC food market scale is expected to reach about 600 billion yen. The industry has also formed a competitive pattern mainly dominated by food and beverage companies and pharmaceutical companies, among which Yakult Honsha and Otsuka Pharmaceutical are in the first echelon, followed by Suntory and Meiji.

Sleep aid is one of the high-growth categories in the FFC food industry. Data shows that in 2023, the growth rate of sleep-related FFC foods is about 50%, with a scale reaching about 80 billion yen, and it is expected to continue to grow at a rate of more than 10%. GABA is also very popular in Japan. According to the statistics of Food Research Association, in the first half of this year, among the functional foods declared in Japan, GABA is the raw material with the most declarations, far exceeding the second place of lutein.

Therefore, taking Japan as a reference, China and Japan have many similarities in dietary culture and population structure. For health food companies, domestic functional ordinary foods will also have a lot of potential. In terms of policy, China's National Health and Family Planning Commission has approved GABA and tea theanine as new resource foods for use in food processing in 2009 and 2014, respectively. Therefore, since the second half of 2019, the domestic sleep aid beverage market has seen a great boom, and major beverage brands have successively launched "sleep aid beverages," with an average price of about 15 yuan.

However, at that time, most products were accompanied by "false propaganda," the use of "WeChat business" sales methods, and some brands were involved in pyramid selling issues, which made the "sleep aid beverage" category subject to market "distrust." Therefore, as of today, only Sanyuan is still selling "sleep aid milk" with added melatonin in its Tmall flagship store, and the sales situation is not ideal, with only 700 orders per month. Other brands' related products have all "disappeared" on Tmall. However, CBNData believes that if the industry can solve the "trust" issue, the growth of sleep aid functional foods will inevitably make rapid progress.

In the final analysis, the market demand potential for sleep aid health foods is huge and still in the stage of wild growth. However, due to product, market education, marketing promotion, and other aspects, it is a long way for consumers to transform from "need" to "belief." Both the industry and the brand still have a long way to go. In the end, which brands can become the "Brain Platinum" of the "light health preservation" era? Consumers will vote with their feet.