How the ice cream market in China became the biggest in the world

The ice cream market in China has witnessed steady growth over the past seven years. According to Chyxx, in 2021, the country’s ice cream industry was valued at 160 billion RMB, with a growth rate of 8.84%. Such market is expected to reach 40.19 USD (275.19 RMB) by 2027.

China ice cream market size and growth rate
Data Source: Chyxx, designed by Daxue Consulting. 2015-2021 China ice cream market size and growth rate

Along with the increasing demand, many ice cream-related businesses are emerging. In 2020, the number of new enterprises related to China’s ice cream industry was 3,492, and a year later, 2,798 more new companies entered this industry.

ice cream-related enterprises in China
Data Source: Chyxx, designed by Daxue Consulting. The number of new entry ice cream-related enterprises in China from 2015 to 2021

With the development of China’s economy and the widespread increase in disposable income, the ice cream market still has a lot of room for improvement. The forecast from Guanyan World Data Center shows that China’s ice cream industry will continue to grow, with a market size expected to reach 223 billion RMB in 2025. And the total profit of China’s ice cream industry from 2019 to 2025 will maintain a year-on-year growth rate of about 3%-6%.

Forecast of ice cream market in China
Data Source: Guanyan World Data Center, designed by Daxue Consulting. Forecast of ice cream market scale in China

COVID-19 impact on ice cream consumption in China

During the first two weeks since the coronavirus outbreak in China, ice-cream deliveries increased by 18%. The year-on-year rise reached 38%, surpassing all the other fast-moving consumer goods, food and snacks, indicating a different effect from 17 years ago when SARS hit China, and ice cream sales lagged behind those of other snacks.

value growth of food in China
Data Source: Kantar, designed by Daxue Consulting. YOY value growth of food in China, Jan-Feb 2020

Chinese ice cream consumers and their habits

The love for ice cream is on the rise

According to iiMedia Research, 98.9% of Chinese consumers in 2022 enjoy eating ice cream, and most of them like eating ice cream in summer. The survey data also shows that 27.3% of Chinese consumers consume ice cream daily, and 37.8% spend on ice cream every 2 or 3 days. Although ice creams used to be seasonal snacks in China, more than 70% of consumers nowadays also purchase ice creams in winter, indicating the seasonal nature of ice creams has gradually weakened. Moreover, the endless variety of ice cream flavors on the market continues to attract consumers’ attention. Apart from offering a wide range of different flavors, nostalgia marketing and co-branding initiatives also fostered ice cream consumption in China.

Female consumers are the main force of ice cream consumption, accounting for 62.8% of the total consumer group. The study from iiMedia Research also shows that consumers from the eastern and southern parts of China consume more ice creams than those from other regions, accounting for 28.1% and 18.0%, respectively, with people from northern China consuming the least. Young people between 18 and 39 years old are the primary consumers of ice creams in China, taking over 40% of the ice cream consumption in the country.

Purchasing ice cream online

Chinese food buying habits are different from Western ones. In China, ice cream used to be something you enjoy on the spot due to the late development of a reliable cold chain. However, such a phenomenon is changing rapidly because of a dramatic rise in online shopping in China. Meanwhile, due to the impact of the Covid-19 pandemic along with the development of e-commerce and live streaming, Chinese consumers tend to shop more online despite the product category. In 2021, the proportion of online sales of ice cream in China reached 20%, an increase of 15 percentage points compared to the previous year.

Major players in the fierce competition

Chinese dairy giants Yili and Mengniu, boast a solid leading position in China’s ice cream industry. They are mentioned as the top two most purchased ice cream brands in China in 2022, followed by Qiaolez, a sub-brand belonging to Yili. Haagen-Dazs ranked fifth as the most popular foreign brand with the highest price among all other ice cream brands.

ice-cream-brands-purchased-by-Chinese-consumers
Data Source: Chyxx, designed by Daxue Consulting. Ice cream brands that Chinese consumers bought in 2022

While domestic producers are superior concerning distribution channels and prices, international brands are known for higher quality and have different market approaches. Aware of the tremendous potential in a geographically close market, a Russian fresh milk ice cream brand Kopobka, also decided to get in on the action. The proportion of butter in Kopobka is approximately 15% to18%, which is healthier than most other ice cream brands, thereby making it appealing for those who want to stay fit.

Product localization to cater to Chinese novelty-loving consumers

Traditional spirit companies entered the ice cream market in China

Since 2019, many traditional Chinese spirit manufacturers have started tapping into the ice cream industry. The combination of traditional liquor “baijiu” and ice cream soon grabbed Chinese consumers’ attention. Along with the rise of Guochao and growing nostalgia marketing over the last three years, ice creams with local alcoholic flavors and old-fashioned tastes have become trendy products in China. In May 2022, Chinese liquor giant Maotai collaborated with the top domestic dairy company Mengniu to open the first Maotai ice cream flagship store at the Maotai International Hotel. On the first day of launching, the flagship store sold more than 5,000 ice creams for 200 thousand RMB within 7 hours. And by July 9th, the Maotai ice cream has expanded to nine cities and seven provinces across the country, selling more than 660 thousand cups.

Maotai ice cream contains over 38% of high-quality fresh milk and 20% cream, thereby positioning itself in the high-end segment, unlike the average ice cream in China. Furthermore, the brand uses a unique technology that closely combines Moutai liquor with milk fat to ensure the stability of ice cream molding for the final taste. As Maotai and Yili are big brands with high reputation in China, and innovative combinations of different products are very attractive to young consumers, Maotai ice cream gained tremendous popularity, making the competition in China’s ice cream industry fiercer.

Maotai-ice-cream
Source: Baidu, Maotai ice cream

Less sugar and healthy ingredients

As Chinese consumers pay more attention to health, many ice cream brands work hard to eliminate the “unhealthy food” label. Ice creams made of natural ingredients containing less sugar and cholesterol and without dairy ingredients have become trendy. Almost every Chinese domestic brand like Mengniu, Bright Youbei, Yili Xujinhuan, and Zhong Xuegao has launched its sub-brands in line with such trend.

Along with the success of non-sugar added snacks in other food industries, such as zero-sugar coke and sugar-free cakes, no-sugar has become a new trend attracting Chinese consumers’ attention. According to iiMedia Research, nearly 80% of Chinese consumers are willing to purchase ice creams that contain no added sugar, and 39.3% said they are very excited to buy such products. Especially after the pandemic, as more and more people pay attention to their health and start to consume so-called healthy foods, natural and high quality ingredients with high nutritional levels have become the most determinant purchasing drivers other than the price for ice creams in China.

For example, Zhong Xuegao launched the “Junior” series in cooperation with the National Olympic Sports Center, introducing three types of low-sugar, low-fat, and protein-containing ice cream with five different flavors. The sugar content of the “low-sugar ice cream series” is only 5g out of 100g, whereas the “low-fat ice cream series” contains only 3g of fat out of 100g, which is 80% lower than the component of the average ice cream.

Meanwhile, in 2021, Chinese dairy giant Mengniu launched its sub-brand “green mood” with ice cream made of beans and herbs to highlight its natural and healthy features. Such strategy helped the brand differentiate itself from its competitors and win over the market successfully.

mengniu herbal ice cream
Source: Baidu, Mengniu “green mood” herbal ice cream

The importance of aesthetics in the ice cream market in China

In China, ice cream is no longer a snack to consume in hot summer but is becoming something to share with others and exchange emotions. Many ice cream companies keep putting effort into enhancing the design of the ice cream to attract Chinese consumers. Among all the different kinds of ice creams, designs with traditional aesthetics are the most popular ones. In March 2022, Chinese dairy giant Yili developed the “3D traditional fan ice cream” containing 3.8 times more protein milk with conventional patterns and poetic names to differentiate from its competitors.

Yili ice cream
Source: Baidu, Yili ice cream with traditional design

Ice creams with beautiful designs are called “good-looking ice creams” online, and such a topic has accumulated 280 million views on the most popular social media among Chinese Gen-Z, Xiaohongshu. Chinese online consumers love spontaneously uploading and sharing their ice-cream purchasing experience online, thereby creating hype on the topic and accelerating innovation in the ice cream market. As a result, more and more dairy and other snack manufacturers seek to promote products with unique designs and healthy ingredients to meet Chinese consumers’ needs.

good-looking ice creams on Xiaohongshu
Source: Xiaohongshu, “good-looking ice creams” on Xiaohongshu

What you need to know about the ice cream market in China

  • The ice cream industry in China has witnessed steady growth over the past seven years, and this market is expected to reach 40.19 billion USD by 2027. Along with the increasing demand, many ice cream-related businesses are emerging.
  • The take-home ice cream sales increased by 18% during the Covid-19 pandemic, and the year-on-year growth of the ice cream market surpassed that of other fast-moving consumer goods and food and snacks categories, indicating a different effect from 17 years ago when SARS hit China.
  • Due to the pandemic’s impact and the development of e-commerce and live streaming, Chinese consumers tend to purchase more ice cream online.
  • 98.9% of Chinese consumers buy ice cream regularly. Among them, 27.3% consume ice cream daily, and 37.8% purchase it every 2 or 3 days. The seasonal nature of ice cream has gradually weakened in China.
  • Female consumers are the main force of ice cream consumption, accounting for 62.8% of the total consumer group. Consumers from the East and South of China consume more ice cream than those from other regions. Young consumers between 18 and 39 years old are the primary consumers, taking over 40% of the ice cream consumption in the country.
  • The top three ice cream brands in China in 2022 were domestic brands, Yili, Mengniu, and Qiaolez, a sub-brand belonging to Yili. Haagen-Dazs ranked fifth as the most popular foreign brand with the highest price among all other ice cream brands.
  • Ice creams with Chinese traditional alcoholic drinks flavors and old-fashioned tastes have become the hottest products in China. The baijiu ice cream created by the Chinese liquor giant Maotai and the dairy company Mengniu achieved tremendous traffic and massive success in 2022. As Chinese consumers pay more attention to health, ice creams made of natural ingredients containing less sugar and cholesterol and without dairy ingredients has become a rising trend.
  • Nowadays in China, ice cream is no longer a snack to consume in summer but is becoming something to share with others and exchange emotions. The design of the ice cream is turning into a key feature for attracting Chinese consumers, especially those drawing from Chinese culture.