China Ice Cream Market Cooling Down: Shift Toward Affordable Options as Premium Brands Struggle
Source: The DairyNews
As the ice cream industry enters its peak sales season amid an exceptionally hot summer, the market is experiencing a notable shift, according to a recent analysis by Times Weekly. Veteran industry insider Lu Longqi, with over two decades of experience, has observed unprecedented high inventory levels among distributors in South China, signaling a cooling trend in what was once a hot market.
Lu Longqi's distribution network, which primarily supplies regional chain supermarkets, convenience stores, and major e-commerce platforms, has seen significant fluctuations in sales. From nearly reaching 200 million yuan during peak periods, his forecast for this year predicts a steep 30% decline in sales. This downturn is largely attributed to an oversupply in the market and a growing consumer preference for more cost-effective products.
The market dynamics are particularly unfavorable for premium, internet-famous ice cream brands like Zhong Xue Gao, which are currently facing business crises. The industry seems to be reverting to more modestly priced offerings, reminiscent of the "5 yuan era," a time when ice cream was more widely affordable. Major players such as Yili, Mengniu, and global giants like Nestlé are likely to emerge stronger due to a consolidation effect that favors well-established brands.
Adding to the challenges for high-end ice cream sales is the poor weather, including continuous rain over two months that has dampened consumer enthusiasm in key regions like South China. The start of 2023 has seen weaker ice cream sales compared to the previous year, with increased discounting strategies such as "buy one get one free" and "5 sticks for 10 yuan" becoming more common to attract customers.
This shift towards value-oriented products amidst overproduction issues and unfavorable weather conditions illustrates the changing landscape of the ice cream market. Brands that can adapt to these conditions by offering quality at competitive prices are likely to withstand the pressures of this evolving market.
The market dynamics are particularly unfavorable for premium, internet-famous ice cream brands like Zhong Xue Gao, which are currently facing business crises. The industry seems to be reverting to more modestly priced offerings, reminiscent of the "5 yuan era," a time when ice cream was more widely affordable. Major players such as Yili, Mengniu, and global giants like Nestlé are likely to emerge stronger due to a consolidation effect that favors well-established brands.
Adding to the challenges for high-end ice cream sales is the poor weather, including continuous rain over two months that has dampened consumer enthusiasm in key regions like South China. The start of 2023 has seen weaker ice cream sales compared to the previous year, with increased discounting strategies such as "buy one get one free" and "5 sticks for 10 yuan" becoming more common to attract customers.
This shift towards value-oriented products amidst overproduction issues and unfavorable weather conditions illustrates the changing landscape of the ice cream market. Brands that can adapt to these conditions by offering quality at competitive prices are likely to withstand the pressures of this evolving market.
