BEIJING - Move over,
coffee shops, it's time to make room for ice-cream
cafes. An increasing number of people are paying
more than 30 yuan (nearly US$4) for a scoop as
trendy ice-cream places become a common sight in
China's big cities.
Now, eating ice cream
is about being seen, and not about cooling down
during the rising spring temperatures.
"Some of the ice-cream habits of the
Chinese today relate to the ability to pay for the
luxury at trendy cafes," said Tue Tyge Moller,
vice president of Danisco China, a Danish
ingredients producer. Danisco produces food
ingredients that end up in cone ice or
stick ice, the ones sold for
1-8 yuan (13 cents to about $1).
Experts
in the field estimate that Chinese people annually
consume 2 liters of ice cream per capita, leaving
them far behind the ice-cream-loving Americans,
who each consume 19 liters a year.
When a
mother in Shanghai gives her child an ice cream in
the hot summer months, it is produced to take the
exact same time to melt as the ice cream offered
to a child in colder Northern Europe, according to
Moller. But simply by adding the right ingredient,
such as natural seeds, the ice cream adjusts to
local temperatures for the experience of eating a
particular branded ice cream to be similar all
over the world.
"Ice cream is also
adjusted to local tastes, since people in China
have different tastes compared to the Italians or
Americans," Moller said.
Some regions of
the world prefer their ice cream with a natural
flavor, others want it strong or sweet.
Consistency varies as well.
A well-known
luxury brand is Haagen-Dazs of the US, which has
about 30 cafes in China's largest cities, 16 in
Shanghai alone.
The luxury monopoly may be
challenged by Movenpick, owned by ice-cream leader
Nestle. "People are very keen on premium ice cream
in China right now, less so on brand loyalty,"
said Frank Li, Nestle's regional general manager
for ice cream in eastern China.
Movenpick
started its mainland China launch last year by
focusing on four- and five-star hotels and
restaurants in Shanghai where the influence of
European taste was already present.
But
foreign brands fail to compete with domestic
brands in China in the low-end market.
Nestle has been forced to revise its
marketing strategy for the Chinese ice-cream
market for the second year after failing to
wrestle a sufficient market share in the
low-priced product market from domestic producers
in 2006, Monday's Economic Observer reports.
Multinational brands such as Nestle and
Walls turned to low-end products in 2006 by
switching from selling ice creams worth 2-3 yuan
to those retailing for 1-1.5 yuan in a bid to gain
a bigger market share.
However, the
foreign brands were unable to beat the major
domestic brands such as Mengniu and Yili in the
low-price range, as they had less powerful
distribution networks, failed to cater to local
people's tastes, and came up against hikes in the
prices of raw materials.
"As we don't have
an edge in low-priced products, we will turn to
develop products with a higher added value under
our global developing system," Dong Haoqin,
operation director of the ice-cream division of
Nestle Greater China, told the Economic Observer.
It's generally acknowledged in China that
low-end ice creams are priced below 1 yuan, with
mid-priced ice creams at about 2 yuan and high-end
products priced above 2 yuan. About 70-80% of the
sales in 2006 came from products priced in the
1-1.5-yuan range.
The production cost of
ice creams was pushed higher by the soaring sugar
price, which reached 5,800 yuan per ton from the
rock-bottom 2,500 yuan, and a nearly 20% increase
in the price of milk.
Yili raked in about
1.3 billion yuan from sales of ice cream in the
first half of 2006, while Mengniu earned about 1
billion yuan during the same period. The figure
for Nestle in China was not revealed.
Nestle has introduced a large number of
new ice creams priced above 2 yuan for 2007.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
