China: the world’s biggest ice cream market

I scream, you scream, they all scream for . . . bingjiling

Ice cream is believed to have been invented in China, but it’s taken more than 2,000 years for the Asian powerhouse to warm up to the frosty dessert. Their version of ice cream was made from a soft paste of tender overcooked rice, combined with spices and milk and then packed in snow to solidify. It probably was more of a gritty ice milk and less like today’s smooth ice cream.

The Chinese word for this cold tread so loved worldwide is an interesting combination of a Chinese stem and a loan word. Bing is the Chinese word for ‘ice’. The jiling part has entered Mandarin from Cantonese, where it is pronounced something like ‘keeling’ or ‘keelam’, which is a local rendering of the English word ‘cream’.

One third of all ice cream bought globally is consumed in China, which became the largest ice cream market in the world in 2014, beating the US by a lick with USD 11.4 bn in sales compared with USD 11.2 bn.

Ice cream sales in the US are on track to catch up to USD 11.4 bn this year, by which point China will have reached USD 12.6 bn as its growing middle class enjoys higher disposable incomes while increasingly health conscious Western consumers weigh on developed markets.

Chinese people spent 54% more on ice cream in 2014 than they did five years earlier, while the US market managed a more tepid 6.6% growth. However, Americans retained their crown as the most gluttonous ice cream consumers in the world, consuming 18.4 litres of the dairy dessert per capita in a year – more than four times more than the average Chinese person’s annual intake.

Rising incomes are driving the growth in China’s ice cream market, helped by the country’s increasingly developed retail infrastructure and facilities for storing and supplying “cool cargo” such as fresh produce, frozen foods and pharmaceutical drugs.

The pace of development, coupled with the immensity of the population, is having an increasing impact on the Chinese ice cream market. However, the vast array of locally produced, low-price brands present a challenge for global ice cream giants looking to develop there. Top Chinese dairy company Mengniu recently launched China’s first yoghurt ice cream.

MnFrozYoghurt

Just two non-Chinese companies make the list of the country’s 10 most popular ice cream brands. Unilever, which owns Wall’s and Ben & Jerry’s, is the fourth biggest company in China with around 3% of the market, while Nestlé holds 1%.

Sales in China are expected to increase to RMB 83.3 billion (USD 13.4 billion) in 2015 and RMB 125.4 billion by 2020

Regional production

The following table shows the production of ice cream in China in 2014, broken down in major administrative region, with the change compared to 2013.

Region Volume

(mt)

Growth

(%)

China 3,085,700 -0.66
Jilin 393,600 8.88
Henan 383,000 0.64
Hubei 264,800 20.43
Guangxi 233,800 2.67
Sichuan 232,900 3.31
Liaoning 207,700 -23.57
Shandong 145,700 -2.32
Beijing 133,200 3.52
Inner Mongolia 126,200 -52.47
Guangdong 121,100 104.38
Hunan 105,700 5.89
Tianjin 95,300 -10.92
Zhejiang 93,900 -12.15
Jiangxi 83,100 24.18
Hebei 79,700 21.93
Guizhou 79,300 154.84
Shaanxi 71,400 78.08
Anhui 59,600 -1.49
Heilongjiang 42,700 -26.84
Shanghai 39,400 -11.53
Chongqing 26,500 26.81
Jiangsu 13,000 -26.57
Yunnan 11,700 129.37
Fujian 10,500 4.43
Xinjiang 9,600 -2.62
Gansu 2,700 2.38
Shanxi
Hainan
Tibet
Qinghai
Ningxia

It is interesting to observe that the fastest risers are the southern provinces.

As is the case with many statistics like these, it is useful to also look at the total figure of the cities Beijing and Tianjin and Hebei province, that are geographically one region. The Chinese government is currently conceiving a development plan to (re)integrate those regions. The total volume for ‘Greater Hebei’ would then be 307,800, making it China’s 3rd ice cream region.

 

Local flavours

Ice cream makers have adopted the products they market in China to the Chinese palate. Most Nestlé Ice cream has a different flavor than in its Western markets. Not as rich or sweet. For the most part at a Chinese Buffet you can find the typical frozen Ice Cream sections for scooping: chocolate, milk/vanilla, strawberry. Then you have red bean (see photo), taro, green tea, sesame seed, green bean, ginger or red date. There is a plethora of fruits in China like longan, lychee, durian, etc., which can all be used to flavour ice cream. Smaller local companies try to experiment with odd flavours, like: ‘sweet green pea’ and ‘tomato-strawberry’ popsicles, to lure consumers away from the major brands.

RebBeanIC

Agreeing symbolism

Fonterra’s Tip Top ice cream started to be sold on trial through Tmall in June 2016. one of China’s leading e-commerce providers, operated by Alibaba Group. Distribution will be handled by specialist frozen products distributor Zhuhai Ice Technology. It is still too early to report on the launch’s success, but I expect that Chinese consumers will be attracted by the icecream shown this picture, as the tiger is a symbol of strength and energy in Chinese culture.

tiger-icecream

Artisan involvement

The Chinese ice cream market is now so developed, that it is drawing the interest of international chefs. French chef Gerard Taurin, a pastry chef from Normandy, offered his latest creation at Beijing Galeries Lafayette in June 2015. Most of his ice cream is made with unusual, but very Chinese, ingredients, such as jasmine, goji berries, ginger and Sichuan peppers. Taurin’s selection comprises 10 flavours, including black sesame, tapioca pearl, hawthorn fruit, millet, jujube, cinnamon and eucalyptus. His ingredients are inspired by his travels to Beijing, Hebei, Shanxi and Sichuan provinces. He has shared his ice cream with people on the Great Wall, in the Forbidden City and in Beijing’s hutong alleyways to see how Chinese consumers react to his creations.

Taurin

Memory lane

All these innovative products have pushed away older ice creams that used to be produced in the early days of the PRC. This has created a craving among older consumers for flavours from the good old days. I have reported on the return of old brands in previous posts. One local company in Heilongjiang province has launched Dongbei Daban ice cream,playing the nostalgia card to promote its ice cream. Dongbei uses 1980s style packaging to wrap the same simple shaped cones designed from that era. For older customers, this brings back memories of their childhood.

Dongbei

Trade fair

Ice cream is now big business in China and in particular so for the suppliers of a broad range of ingredients: flavours, sweeteners, emulsifiers, thickeners, etc. This generates a more than enough critical mass for a dedicated trade fair. CICE 2015 – The 11th China International Ice Cream Industry Exhibition will be held in Beijing, April 16-18, 2015. Here, I will only copy the ingredients part of the published scope of this exhibition: specific herbs, flavors and fragrance for ice cream, compound dairy stabilizer for ice cream, natural coloring materials, diet coloring materials, sweetening substances, lactic acid bacteria, specialized & condensed milk essence, special ice cream protein powder & bean powder, other supplements include potato powder, malt essence, fresh cream, dried cheese element, primary dairy products, dairy purification powder, natural fruit powder, chocolate plate, coffee bean, coffee powder, coco fat substitute, nuts, dried fruit.

Downs too – between all the ups

Rising rents and lower profits have forced Haagen-Dazs to close stores in second- and third-tier cities in China in 2015 and 2016 amid a slowdown in the ice-cream market mainly due to a lack of innovation and its inability to keep pace with demand from increasingly sophisticated Chinese consumers. Many Chinese consumers perceive Haagen-Dazs as overpriced. To quote one media article:

‘Two egg-size scoops of Haagen-Dazs icecream costs me RMB 60. I get more value for less by eating two eggs’

However, the brand has 380 stores in 84 cities in the country, despite the challenges at markets in second and third tier cities in the country. The company reports it still maintains strong growth in large cities. Revenues in Shanghai and Beijing grew 16% and 13% respectively in June 2016, and it opened more than 60 new stores as well in 2015. Insiders believe that the slowdown is partly due to rising rental and labour costs, which have made it become more conservative regarding expansion. Haagen-Dazs also faces intense competition from many other food service players. Many cafes and coffee shops outperformed Haagen-Dazs thanks to their sophisticated dining environment and rich product availability.

Challenging flavours for the coming year(s)

The authoritative magazine for the Chinese flavour industry ‘Domestic and Overseas Aromachemical Information (Guoneiwai Xianghua Xinxi)’ of June 2016 carries an interesting article on possible new ice cream flavours, based on ideas collected from all over the globe. I will list the flavours mentioned here.

Bacon flavour

Ice cream flavoured with a tincture of bacon, adding a little caramel, to obtain a proper salty-sweet balance.

Beer flavour

An idea from Ireland, reported best in combination with dark chocolate.

Chili flavour

Chili and chocolate already has become an accepted combination, so why not try it in ice cream? Some Mexicans in the US flavour their ice cream with Tabasco. Perhaps Laoganma can get involved in this project.

Celery flavour

The origin of the flavour is closer: Japan. The taste sensation of celery ice cream is reported to be close to that of wasabi.

Garlic ice cream

I have actually tasted this one of my favourite eateries in Amsterdam: the Garlic Queen. It is also a must-eat during the Gilroy Garlic Festival. Chinese are big garlic eaters, so garlic ice cream should have a market there.

TCM ice cream

Last but certainly not least, Tradition Chinese Medicine (TCM) includes a number of herbs that could be used in ice cream. No one would object to turning such a delicacy into a health food.

These ideas provide a rare insight in what Chinese food technologists are thinking about developing new types of ice cream. I will keep you informed about which of these flavours will be turned into a commercial product.

Eurasia Consult Food knows the Chinese food industry since 1985. Follow us on Twitter.

Eurasia Consult Consulting can help you embed your business in Chinese society.

Peter Peverelli is active in and with China since 1975.

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2 thoughts on “China: the world’s biggest ice cream market

  1. Pingback: New dairy ads reflects cultural change in China | Peverelli on Chinese food and culture

  2. Pingback: The rise of China’s new coffee culture | Peverelli on Chinese food and culture

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