China’s ice cream brands outpace inflation with price hikes

As the sweltering summer heat creeps into Chinese cities, its residents have made a frightening discovery: soaring prices for ice cream.

Akira Kao, an event planner in his twenties from eastern Jiangsu Province, decided to treat himself after a hard day’s work to eat ice cream, known as “Hermes of Ice Cream”, popular with the sweet-toothed Generation Z. .

“I know Chicecream is pricey, but I wasn’t ready for the price tag,” he said. Akira paid 128 renminbi ($19) for the ice cream treat, more than six times the prefecture’s minimum hourly wage. He later took to social media to “thank the kind-hearted thief who left me with ice cream.”

The rise in ice cream prices in China comes with rising food cost inflation around the world, after bad weather, the coronavirus epidemic and Russia’s invasion of Ukraine caused chaos in the global food supply chain.

Alison Malmstein, a consumer analyst at Daxue Consulting, said expenses for ice cream makers have surged after lower soy and corn yields pushed up livestock costs, a price pressure exacerbated by higher freight transportation prices in and around China during the pandemic.

But she added that price increases for some brands, including Chicecream, have outpaced inflation. “They are trying to create a luxurious image and pricing accordingly,” she said.

Chinese demand for frozen desserts is booming, especially among young people. Consumers, especially those under the age of 30, spent $24 billion on ice cream in 2021, according to a report published by research house China Green Food Association. By contrast, the United States spent $7.6 billion on ice cream in the same year, according to Chicago-based market research firm IRI.

Ice cream prices have risen in tandem with an increase in appetite in the country and local brands, including Chicecream, are taking a larger share of the high-end market once dominated by Häagen-Dazs with flavors ranging from dark chocolate to sea salt and coconut.

An insider on the ice cream industry said that venture capital firms began investing in local companies five years ago to attract growing enthusiasm for “made in China” goods.

The popularity of short video platforms such as Douyin and Kuaishou has given newcomers space to market directly to young consumers.

People in China spend money on smaller portions of ice cream compared to those in the United States. © Liu Junfeng / Costfoto / Sipa USA / Alamy

The changing dynamics in the ice cream industry reflect broader consumer market trends, with foreign brands such as Adidas and Nike challenged by Chinese competitors Anta and Li-Ning.

“Häagen-Dazs has been great at localizing in China, but is being challenged by the emergence of local brands that make delicious and elegant ice cream,” said the industry expert.

Chinese consumers spend more money on smaller portions of ice cream than they do in the United States, where per capita consumption of ice cream is 10 times higher than in China.

Daxue’s Malmsten said local ice cream makers have “filled a void,” offering “Chinese flavors that Western brands lack,” noting the popularity of Chicecream’s dumpling-flavored ice cream lollipop.

But with increasing prices from premium brands, consumers have complained that even low-quality brands are getting too expensive. Nevis Yang, a university student in Sichuan, was shocked that a small tub of ice cream in her local store that cost RMB2 when she was a child had gone up to RMB9.

“I couldn’t believe it,” she said, “but I was too embarrassed to return the ice cream so I had to buy it.”

Ice cream has become a reliable cash cow for dairy conglomerates in China. Mengniu, one of the world’s largest dairy producers, sold 4.2 billion yuan worth of ice cream last year, up more than 60 percent from the previous year.

But analysts question whether popular brands like Chicecream will be able to continue raising prices or risk losing customers.

As Yang said, the unexpectedly high price left a bitter taste in her mouth. “I couldn’t enjoy the taste of my ice cream. Ice cream spreads are ridiculous these days.”

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