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 Is there room to grow for the chaga mushroom market in China?

The chaga mushroom market in China has seen a significant increase in interest from consumers since 2016. Chaga (白桦茸) is a mushroom, well known in the West, which contains a multitude of nutrients, minerals and antioxidants providing health benefits. According to our research, this trend is part of a broader focus of many Chinese consumers on healthy living. Several factors can promote the entry of the chaga mushroom into the Chinese market. In one of our previous surveys about Chinese millennials consumption habits, we found that, today, « eating better » is a high priority for many Chinese. In addition, more and more Chinese young people are avid consumers of food supplements (considered a healthcare product); in fact, 60% of Chinese consumers under 40 are interested in food supplements.

In China, there is already a multitude of traditional medicinal herbs. The Chinese have been using herbs for medicinal purposes for decades. In this article, we will see if the chaga mushroom could become more popular in the Chinese market.

Chinese consumers developing taste for the chaga mushroom (白桦茸)

The chaga in China is called the mushroom of immortality, a mushroom with exceptional properties. Similar to charcoal in both shape and colour, the chaga grows on birch trees in the cold regions of the northern hemisphere, where temperatures drop to -34°C for more than two to three months per year. The chaga mainly grows in Siberia’s virgin forests. Thus, Russia leads the world in chaga research.

Chaga mushrooms can be consumed in different ways: as a capsule to swallow, as a drink such as tea, or prepared for mixing with water. Most Chinese consumers drink chaga in tea form. One packages the mushroom into a tea bag in slices or in powder form, then soaks the tea bag in water.

Chaga tea effects on cancer patients are notable. Indeed, chaga health benefits are myriad. The chaga mushroom can:

• Reduce inflammation
• Treat diabetes
• Treata variety of cancers
• Curerelated skin problems
• Promote anti-aging of the skin
• Stimulate and regulate the immune system
• Lowerblood pressure
• Improve and prevent allergic cortex
• Solve related hepatitis, gastritis, duodenal ulcer and nephritis conditions

Chaga has piqued Chinese netizens’ interest after winning over the West

Baidu Index (百度指数) trend line for the keyword “Chaga”(白桦茸) on the Chinese Internet between 2011 and 2017.

Before 2014, the chaga was unknown to Chinese Internet users. But since 2016, Chinese have gained significant interest in the chaga mushroom. Chinese people are interested in the efficacy（功效）of the chaga, its price（价格）and its applications, as evident in the graph below.

Searches using the search terms: « how much is certified chaga product » (白桦茸正品多少钱一斤) increased because of the prevalence of low quality chaga products in the Chinese market. It is very important for people to get the authentic products to achieve their desired results; most of the products on the Chinese market are raw or semi-finished rough products. These mushrooms have little to no medicinal value and the preparation process for these inferior chaga is unrefined.

Graph of « Chaga » and related keywords from February 2017 to January 2018. Sourced from Baidu Index (百度指数) by Daxue Consulting.

Growing demand for health care products in China

Chinese consumers have begun to focus more and more on health care products. Naturally, they have also taken a greater interest in healthy food. The health food market in China is burgeoning, as evidenced by the increase in Chinese consumers’ online searches for foods with health benefits.

Chinese people have a strong preference for imported health foods

2016年4月底我国保健品细分产品数量

At the end of April 2016 the number of health care products in China

Source: Zhiyan Consulting (智研咨询)

The domestic health products market (国产保健品) is a large market for immunity (免疫力) products, with a large range of offerings, including 57 imported health products (进口保健品). This indicates that there is healthy demand for such products. The market for the vitamin sector is also experiencing high levels of demand.

Vitamins (维生素), as well as immunity (免疫力) and sleep (睡眠) improvement products are dynamic movers in the imported health products market.

Chaga, which improves people’s immunity to diseases and ailments, therefore has a strong foundation in the health products market in China. Chinese people have been using domestic health products for decades, but are still interested in discovering and importing new health products.

China already has its own superfoods

In China, healthcare products (保健品) are generally divided into two groups with health supplements (保健品), and traditional herbal products (传统中草药产品). Health supplements are not traditional or natural. However the traditional herbal products are natural products made with herbal, animal or plant extracts. Naturally derived products are central to nutrition in China and subsequently play an important role in the natural additives market in China.

The following chart shows the top 10 herbs by market sales value in the Chinese market in 2016.

Source : Reproduced by Daxue Consulting with data from Herbs Market Analysis Report 2016 (2016年草药市场分析报告) and State Administration for Market Regulation (中国国家市场监督管理总局)

China is a major player for herbal medicine products (中草药产品). Indeed, the country has a strong background as Chinese people have been using medicinal herbs for decades.

These traditional herbal medicine have been present in China for 5000 years and have been used to treat different types of diseases as we had developed in one of our previous articles on Herbal medicine in China. Traditional Chinese Medicine (TCM) (传统中药) is used more and more around the world. The Chinese herbal medicine are classified in «medicinal products» in Europe, and in « dietary supplement » (膳食补充剂) in the United States.

In TCM, herbs are often in the form of teas, capsules, liquid extracts, granules, or powders.

Can chaga seduce the health food market in China?

Price analysis

According to our analysis with data sourced from the largest e-commerce platforms in China, the chaga mushroom is sold at a price between 350 rmb ($55) and 450 rmb ($70) for 500 grams. The chaga mushroom is sold online at a higher price than the three most popular TCM herbs on the Chinese market : notoginseng (三七), pilose antler (鹿茸) and the lyceum fruit (枸杞).

Despite its higher price, the chaga has a great potential due to the willingness of Chinese consumers to pay premium for imported healthy food products and the increasing demand for food supplements.

In China, the Internet is the main distribution channel for chaga

Produced by Daxue Consulting using data from Maijia (卖家).

According to this graph, over the period of 2017, healthcare products saw an online sales volume of over 20 million.

According to a previous study about China’s health supplement market and its major distribution channels, consumers generally buy their health care products via the following retail channels:

• Pharmacies are a common distribution channel, like Dashenlin (大参林) and GuoDa (国大药房) very well known in China, with a considerable market size.
• Hypermarkets like Carrefour (家乐福), Walmart (沃尔玛).
• Direct sellers, one of the most famous of which is Amway (安利).
• E-tail; companies open a flagship store on online retailing platforms such as Tmall (天猫) or JD.com (京东).

Because it is a nascent market, chaga is not distributed everywhere in China. According to our research on the chaga mushroom market in China, chaga is not available in pharmacies or hypermarkets. Chaga mushrooms are mainly sold:

• On Taobao (淘宝网) through daigou (代购), a person located outside of China who purchases goods, list the products on an e-commerce platform from abroad and sells them to customers in mainland The high demand for this gray market service is linked to Chinese consumers’ concern over counterfeit products.
• On Tmall (天猫) in official stores such as “Yushenfang” (御参坊), “Qindingtai” (秦鼎泰) and “Sanjingtang” (三京堂).
• Direct selling through the company Beijing Siberia white birch antler R & D Co. LTD (北京西伯利亚白桦茸研发研发限有限公司), a representative company of the Sino-Russian chaga (白桦茸) trade; Zdorov Company (滋得洛夫), an official manufacturer and supplier of natural health and beauty products; and Shandong Promix Food Co. Ltd. (山东博罗米克食品有限公司). Direct selling allows consumers to purchase natural products without the risk of counterfeit products. Thus, we can conclude that the chaga maintains a large presence on Chinese online retail platforms.

According to our analysis, a producer of chaga can open a shop in China and market his or her product’s quality and authenticity. Daxue recommends this mode of distribution for potential market entrants to the Chinese chaga market.

Daxue provides market sizing and supply chain analysis for the chaga mushroom market in China:

Daxue Consulting has a robust background in the food supplements industry in China. Our market research team has carried out projects for different clients overseas seeking to enter the Chinese healthcare products market.

At Daxue Consulting, we conduct research methodologies such as analysis and assessment of the market in China, supply chain and distribution analysis. From this perspective, we are disposed to support your entry in the chaga mushroom market in China. Daxue can optimize your market entry, analyze your industry, benchmark your competition in China, define your distribution and provide guidance about the consumer preferences and purchase habits. Our analyses provide a complete overview of the market.

If you have any question or inquiry, you can send us an email at dx@daxueconsulting.com.

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