Dialogue with GOOD GOÛT: Opportunities in Organic Kids’ Snacks Segment

Food & Beverage Innovation Forum 2020 (FBIF2020 ^[1]), themed as “Technology·Revolution,” was held at Hangzhou International Expo Center from July 8th to 10th. 130+ global speakers and 5500+ decision-makers from 700+ leading companies gathered at this forum. During the forum, Lulu Yan, the General Manager of Baby Food Division of H&H Group, introduced the status quo of kids’ (refer to the children ranged from 3 to 12 years old) snacks market in China and also H&H group’s product layout in the organic segmentation.

Photo: FBIF 2020

Data Analysis: Opportunity in Kids Snacks

Lulu pointed out in her speech that, for the time being, there are 50 million infants (refers to babies under three years old) in China. While the population of kids from 3 to 12 years old totals to 159 million. “Compared to the market size of complementary baby food for infants under 3 years old (around 9 billion yuan, excluding the consumption of infant formula milk powder), the whole market size of kids’ snacks is estimated to be over 100 billion yuan at present,” Yan expressed.

Moreover, according to a survey conducted by H&H group, the consumption of kids’ snacks per capita in first and second-tier cities reached over 2000 yuan per year. The market is rising quicky with a huge potential.

Health Trend and Consumption Upgrade: H&H’s Strategy Layout on Organic Kids’ Snacks

Going with the health trend in China ^[2], “natural/healthy/additive-free” also becomes the most crucial factor to mums during the snack purchase, as revealed by the H&H group survey.

However, different from the baby foods market, no giant brand has occurred yet in this segment. Although many snacks will label themselves “kids’ snacks,” the recipes of which are still the same as those for adults and may still be high in sodium, fat and sugar. (*To regulate the industry chaos, on May 17, China released the first association standard for Children snack food ^[3].) Therefore, H&H Group considers it a great opportunity to build a professional and healthy snack brand especially for kids. Besides the health trend, the growing income and consumption upgrade also makes parents in China willing to pay a premium for high-end products for their children. Driven by these two trends, the market positioning of organic kids’ snacks come forth naturally.

• Why organic: natural/safe, top quality and huge market potential

From the perspective of food safety and quality, undoubtedly, organic food ranks first place at the food quality pyramid rather than green food, etc., at present. (For more compliance consultation on organic certificate in China, please email contact@chemlinked.com.)

Lulu further clarified that, in 2017, China was the world’s fourth-largest ^[4] organic food consumption country with the consumption amount of over 60 billion yuan, right behind the U.S., Germany and France. Due to the huge market size of China’s food products, the consumption amount of organic food only took up 3% of the whole food market in China, but it maintained a double-digit growth rate.

Source: The World of Organic Agriculture Statistics &Emerging Trends 2019, FiBL and IFOAM-OI ^[4]

 Moreover, the concept of “organic food” is also highly recognized by parents, especially in the first and second-tier cities. Unveiled by Childrens’ Health Diet Survey 2020 ^[5], over 84% parents hold the opinion that natural ingredient (organic one would be better) is the foremost criterion for them to select kids’ healthy snacks. And 92.3% of mums prefer to choose organic snacks for kids among all healthy snacks.

• Strategy layout: the purchase of a French organic kids’ snack brand, GOOD GOÛT

Aiming to build a healthy and high-end kids’ snack brand, H&H Group purchased GOOD GOÛTin 2018, which is dedicated to providing organic snacks for kids. Its products were all granted AB certification (organic certification in France) and EU organic certification in the European market. In May 2019, GOOD GOÛT first entered China’s market and started to sell its products on E-commerce platforms like Tmall and JD.com as well as general trade. Currently, the product type covers organic nut bar, cookies, rice crackers, cereal crisps, etc.

Product Display

Photo: FBIF 2020

Interview with GOOD GOÛT

During the FBIF 2020, ChemLinked, together with other media, interviewed Lulu Yan. Main contents are selected as below:

Q1: What are the key drivers of organic kids’ snack growth?

A1: There are mainly two drivers, I believe, the most important. First, the category of kids’ snacks shall be set and further promoted on E-commerce platforms. When we first decided to enter China’s market, we were surprised to find there’s not a segment called “kids’ snack” on platforms like Tmall. Without a specific tag or category, consumers may only turn to choose products like yogurt for their kids. By taking good advantage of these giant platforms, it will be quite effective and efficient to educate parents in China that kids’ snacks are different from those for adults. Once consumers are aware of the differences, it would be much easier to conduct the promotions afterward.

Second, the product power. It is crucial to find a balance between good taste and health. At present, most parents of kids under 12 years old are post-80s and 90s. Compared to the previous generations, they are willing to buy kids snacks, but “health” is still what they care most. Take GOOD GOÛT as an example. We will replace artificial food additives with natural ones, although the latter one is at a higher cost. Moreover, we also emphasize the taste of our products through the product name, which means good taste.

Q2: How do you localize your product?

A2: Concerns of consumers in different countries are often different. For example, when we speak of plant-based food, European consumers may first think of environmental protection and sustainability. But in China, although some consumers may choose plant-based food because of environmental sustainability, most consumers still pay more attention to health and natural quality.

To us, when we sell organic kids’ snacks to Chinese consumers, we will promote features like healthy, safe, high quality and pollution-free. While in the European market, we will mainly emphasize good taste. It is because European consumers have already known the concept “organic” very well. As for the changes in products, we will develop more flavors that are favored by Chinese consumers.

Q3: How does GOOD GOÛT control the overall quality of supply chain management?

A3: First of all, our ingredients are all from Europe with organic certification. And then the supply chain and management system are quite mature in our group. At last, when we apply for the organic certificate in China, the ingredient of some products met with a higher regulatory requirement in China. Thus, we have to spend quite a lot of time looking for certified raw materials, ingredients and processing manufacturers, etc. It means, to some of the products, we have to start from zero.

Q4: How does GOOD GOÛT lay out the sales channel at present?

A4: At this stage, GOOD GOÛT mainly targets consumers from the first and second-tier cities out of our market positioning. So our products are mainly available in E-commerce platforms like Tmall and JD.com and also high-end supermarkets like Ole’. The reason why we focus on E-commerce platforms rather than offline maternal stores is, it is quite effective and efficient for us to raise consumers’ consciousness on organic kids’ snacks by cooperating with Tmall and JD.com. For example, we have worked with them and built some consumption festivals, especially for organic products, to promote the concept.

Another reason is due to the short shelf life (10-12 months). We have to ensure the products consumers received are as fresh as possible. So currently offline stores in low-tier cities are not our first choice. But it is for sure GOOD GOÛT will keep expanding the market. Hope our products will be rolled out in more cities in the near future.