Sports nutrition products maker bets big on Chinese consumption

Having enjoyed a robust annual growth rate in China of 40 percent for three consecutive years since 2015, Glanbia Plc, a leading producer of sports nutrition products, is resolved to bulk up its business in the country with even quicker growth and a wider presence.

As a warm-up for accelerated growth, the company recently rebranded its most popular brand in China, Optimum Nutrition, which has been selling whey protein for six years in the country, with a new logo and an official Chinese translation.

"The launch of a new Chinese logo reflects our investment and commitment to the local market," said Sam Bedi, Asian regional director for Glanbia Performance Nutrition, during the annual International Health, Wellness and Fitness Expo in Shanghai.

As one of the largest fairs in the industry, the three-day expo attracted some 500 companies and brands from home and abroad this year. According to the organizer, the number of exhibitors from the sports nutrition field soared by 150 percent from last year to more than 50, making it the fastest-growing sector in the industry.

A report by market research provider Euromonitor International showed that China's sports nutrition retail market reached 1.41 billion yuan ($222 million) in 2017, up by 47 percent from the previous year. It is forecast that the annual growth rate will moderate to about 15 percent over the next five years, while the market size will exceed 3.86 billion yuan by 2022.

"What we see is a terrific opportunity in the sports nutrition market in China," said Bedi. "There are lots of reasons for us to be optimistic. In particular, we are seeing more Chinese consumers encouraged by the government through the Healthy China program adopting healthier lifestyles."

"From our point of view as a global leader, it's the right time to make significant investment in the Chinese sports nutrition market," he added.

In October 2016, President Xi Jinping announced the Healthy China program, which makes public health a focus of future economic and social development.

The program includes 29 chapters covering public health services, the medical industry, and food and drug safety, and promotes wellness and fitness as a national strategy for the country.

The goal is to increase the number of people playing sports from 360 million in 2015 to 435 million in 2020.

One of the key growth engines identified by Glanbia Performance Nutrition is the expanding number of what it calls "nonactive users", meaning those who work out frequently, but are not taking any supplements yet.

The National Health Commission of China defines sports nutrition products as processed food that can help boost energy or endurance for those who exercise at least three times a week for 30 minutes each time.

There are usually two types of products: protein and nonprotein. They are offered in powder form, bars or drinks.

In 2016, China's corn oil producer Xiwang Foodstuffs acquired Canadian supplement maker Iovate Health Sciences International Inc for $730 million, making the latter the largest player in the country since then.

Glanbia Performance Nutrition is now the fourth-biggest company in China, with a market share of 6.1 percent, according to Euromonitor International's report. In total, the top five players have a market share of 72 percent, leaving some analysts questioning whether the industry has too few players.

But for the Irish company, which started in dairy production, the goal is "not to be in China for a year or two, but to be the No 1 leader in the sports nutrition product segment for the long term", Bedi said.

To achieve the goal, the company is ready to build more sales channels including e-commerce and specialty stores, and to launch more brands in the meantime. The company sells its products at about 1,000 stores and outlets by partnering with distributors in China.

"In other countries like the United States and Australia, we see a lot more sports nutrition stores, while in China lots of markets have already skipped offline development and established online because of players such as Alibaba and JD," said Bedi. "That is unique to China and will affect the way we deliver our message."

"In traditional markets, we see our physical stores both as a point of sales and education. But when it comes to online, the style could be completely different," he said.

With three brands now available in China, the company is planning to introduce one more brand, Amazing Grass, by the end of this year.

Moreover, the company, which acquired three brands over the past three years, said when it is considering an acquisition, it always looks to see what the opportunities are for those brands in China.