Ice cream industry in China shows stable growth
In 2018, the scale of ice cream industry in China reached 124.3 billion yuan, up 11.98% year-on-year. The sales volume was approximately 1.234 million tons, up 3.52% year-on-year.
[Data Source: Guanyan World Data Center, ‘Market size of ice cream industry in China’]
The market size distribution of ice cream industry was dominated by East China in 2018. It accounts for 28.2%. Market size in Central China was 9.5%, in South China 23.9%, in North China 18.9%, in Northeast China 6.9%, and in West China 12.8%.
[Data Source: Guanyan World Data Center, ‘Regional distribution of ice cream industry in China in 2018’]
With the development of China’s economy, the income of residents will continue to increase. Therefore, the ice cream market still has a lot of room for improvement. Forecast shows that the market size of the ice cream industry in China will reach 223 billion yuan in 2025.
[Data Source: Guanyan World Data Center, ‘Market scale of ice-cream industry in China, forecast’]
With the continuous expansion of the industry’s market space, the industry’s total profit will continue to increase. The industry’s total profit in 2019-2025 will maintain a year-on-year growth rate of about 3% -6%.
Ice-cream shop market shows is growing
Ice cream shops market in China grew 14% to reach an estimated 41 billion yuan in retail sales value in 2018. Forecast predicts that the ice cream shops market will grow further at a CAGR (compound annual growth rate) of 11.9%. It will reach 71 billion yuan in the five years to 2023.
COVID-19 impact the ice cream consumption in China
During the first two weeks of the coronavirus outbreak in China, in-home ice cream sales increased 18% year on year. The following fortnight this accelerated to 38%, surpassing the growth of both food as a whole and snacking. This is quite a different effect to 17 years ago when SARS hit China and ice cream sales lagged those of food and other snacks.
[Data Source: Kantar, ‘YOY value growth of food in China, Jan-Feb 2020’]
Chinese consumption habit is different
Chinese food buying habits are different from Western ones. In China, ice cream is something you enjoy on the spot where you buy it. This is partly due to the late development of a reliable cold chain in China. Currently this is changing due to dramatic increase of online shopping in China.
Despite the growth, ice cream has the lowest penetration rate among Chinese respondents when compared with Chinese and Western desserts. According to Mintel, 22% of Chinese respondents haven’t had ice cream in the last 12 months in 2018. Just 12% have not had Western desserts and a mere 8% have not had Chinese desserts. Moreover, over a tenth (12%) of Chinese respondents say they eat both Chinese and Western desserts. Just 3% claimed that they contribute ice cream very often.
New ingredients attract Chinese consumers
Almost two-thirds (64%) of dessert consumers would like to try ice cream that incorporates seasonal fruits (e.g. pomegranate, grapefruit). Mintel research also reveals that 43% of dessert consumers in China would like to try ice cream with superfoods (e.g. chia and avocado).
The use of natural ingredients is becoming more important in the food and drink industry overall, including the dessert category. In fact, consumers are willing to pay more for options with natural ingredients.
In past few years, China has surpassed the US to become the largest ice cream market in the world. At Daxue Consulting, we observed in a previous article that this explosive growth has given rise to both international and domestic powerhouses. In 2015, the ice cream production volume in China was 3.06 million tons, and total sales value yielded over CNY 40.8 billion (USD 6.04 billion). Through a combination of forces is driving increased consumption, one of the chief proponents is rising middle-income stratum in China. With more disposable income and a proclivity for goods enjoyed in the West, ice cream consumption has never been higher in China.
Still, Chinese have yet to surpass the West in terms of per capita consumption. According to Mintel, US citizens were still the largest ice cream consumers in 2014, as they consumed on average 18.4 liters of ice cream per capita. Contrast with Chinese consumers, who ate less than four times that amount on average. The latest data from Mintel shows that Chinese ice cream sales value climbed to CNY 96 billion (USD 14.21 billion) in 2016, which was 20% higher than last year. In addition, the consumption volume in China reached 4.3 billion liters in 2016.
[ctt template=”4″ link=”P3eMi” via=”yes” ]Chinese ice cream sales value climbed to CNY 96 billion (USD 14.21 billion) in 2016.[/ctt]
As higher leisure spending increasingly contributes to the growth of the ice cream industry in China, emerging consumer tastes and interests are changing how Chinese consumers are taking their ice cream. All things considered, this trend of growing consumption and new preferences is likely to continue for the foreseeable future.
Source：daxueconsulting
