Mintel Reports Ice Cream Sales Dip in China, Though Value Rises as Consumers Trade Up
Ice cream remains a popular summertime treat for people around the world, and newly published data from the Mintel market research organization reveals interesting details about consumption of the sweet treat in the PRC. Today, almost half (49%) of urban Chinese consumers say they eat ice cream at home as a snack, compared to four in 10 (39%) who said the same in 2015. Meanwhile, 39% of urban Chinese consumers report eating ice cream as a dessert this year, compared to just over one in four (28%) who said the same two years ago.
Overall, the ice cream market in China has seen a decline in retail volume, with a compound annual growth rate (CAGR) of -1.6% between 2014 and 2016. However, the total retail market value is on the rise due to consumers trading up for new formats and flavors.
“Better-for-you” options are among the more popular premium features. Indeed, 59% of urban Chinese consumers are willing to buy ice cream products that feature a “100% natural/no additive’ claim,” especially among soft-serve ice cream users (68%). What’s more, consumers aged 30-39 say they are willing to pay more for “100% natural/no additive” products (65% compared to 59% of consumers overall).
Health is Wealth
“Urban Chinese consumers are paying more attention to their health, while still looking for opportunities for indulgence, which should not be compromised,” said Cheryl Ni, food and drink analyst at Mintel. “Given the fact that more consumers today are eating ice cream as a snack or a dessert at home compared to previous years, family-size tubs or multipack offerings will have further opportunities. Also, there is scope for ice cream to be positioned as ‘mood food,’ allowing consumers – especially the younger generations – the ability to soothe life’s stresses away as they indulge in a treat while paying a premium price for it.”
Meanwhile, declining consumption appears in both retail and non-retail channels. Mintel research indicates that the percentage of ice cream non-users has risen from 4% in 2012 to 11% in 2017. In all, net purchases at retail channels (76%) is lower than non-retail channels (93%), with the number of urban Chinese consumers who bought ice cream from supermarkets/hypermarkets declining from 85% in 2012 to 52% in 2017. Similar declines can be seen at grocery retailers, which dropped from 42% to 12% in the same time period.
Online Sales Growth
That said, the market has experienced significant growth in online channels – including online brand stores such as Tmall – increasing from 3% to 16% between 2012 and 2017. Mintel research indicates that this growth is driven by high earners [defined as those with household income RMB 16,000 or greater in tier one cities; RMB 14,000 or more in tier two and three cities], who are more likely to be fans of online channels (23%).
“Shopping for ice cream products from online retailers is usually more expensive given the cost of cold chain delivery. However, we are seeing a growing number of imported ice cream brands available in online stores, providing more premium choices for consumers with a higher spending power,” Ni noted.
More Chinese consumers in tier one cities claim to eat packaged ice cream as a snack during their leisure time, especially those residing in Shanghai (57% vs. 49% of consumers overall). On the different occasions for eating ice cream that is made on-the-spot, consumers in Shanghai show a higher interest in this format when they are hanging out (54%, compared to a total 47%) or when they are craving something sweet (41%, compared to a total 34%). When it comes to location, ice cream parlors, dessert shops and coffee shops seem to be their favorite venues for eating ice cream.
Finally, it appears that young urban Chinese consumers aged 20-24 are particularly interested in value-added features, such as “edible containers that taste good” (42%), “customized flavors/shapes” (35%) and “innovative packaging” (33%). Products with clean label claims and added nutrition will encourage trading up in this category.
“The shift in consumption occasions redefines the ice cream market which is no longer an alternative to a cold drink, but an indulgent treat that can bring a sense of enjoyment and happiness. Consumers in tier one cities prefer healthy versions of ice cream, but they don’t want to compromise on enjoyment, and this is why manufacturers should optimize recipes to achieve a balance of both,” Ni concluded.
Mintel's Ice Cream China 2017 Report is available for purchase £3,081.32. For more information, contact the London, England-headquartered company at www.mintel.com.