Mintel says there is potential in after-meal occasions.
No longer just a summer treat, ice cream in China is now seen as an indulgent treat that can be eaten year round.
Latest research from market intelligence agency Mintel revealed that more than half (56%) of urban Chinese respondents who are consumers of ice cream eat “to treat or indulge themselves.”
Ice cream shops market in China grew 14% to reach an estimated RMB41bn (approx. US$5.8bn) in retail sales value in 2018. Mintel predicts the Chinese ice cream shops market to grow further at a CAGR (compound annual growth rate) of 11.9% to reach RMB71bn (US$10bn) in the five years to 2023.
Despite the forecasted growth, ice cream has the lowest penetration rate amongst Chinese respondents when comparing the segment with Chinese and Western desserts.
Surveying 3,300 urban Chinese internet users aged 18-49 last February, 22% of them say they have not consumed ice cream in the last 12 months, whilst 12% have not had Western desserts and 8% have not had Chinese desserts.
Over a tenth (12%) of Chinese respondents say they have Chinese and Western desserts at least once a week or more whilst 3% say this for the ice cream category.
Overall, China’s dessert shops market - categorised by Mintel as ice cream and desserts shops and excludes tea shops, coffee houses and bakery shops - grew 12.9% in 2018, reaching RMB228bn in value, slower than the category’s 18.5% growth in 2017.
Mintel forecasts that the Chinese dessert shop market will grow at a 10.8% CAGR in the next five years, to reach RMB379 billion in 2023.
“Ice cream brands are altering their business strategies to encourage more sales, from targeting younger consumers to introducing low-calorie ice cream...Western and Chinese desserts are still more popular among Chinese consumers. In this light, ice cream stores should add more variations to their mix, like adding Western desserts, to encourage consumers to visit,” Mintel associate food and drink analyst Belle Wang explained.
“On the whole, the overall dessert shop market in China will continue to be impacted by other types of businesses in the foodservice market, like coffee houses and tea shops. These companies are leveraging their advantages, including the fact that tea shop and coffee drinks pair well with desserts—thereby encouraging them to introduce desserts to their menus.”
Potential in after-meal occasions
In order to compete with other foodservice businesses, Mintel says dessert shops in China can focus on the after-meal occasion and develop more after-meal desserts. Mintel research indicated that almost half (49%) of the respondents who consume desserts say that they have desserts after meals. Moreover, females are more likely than males to have after-meal desserts (51% of females vs 47% of males), particularly females aged 18-24 (59%).
Of all respondents who have desserts after a meal, three in five claim they have desserts after having meals in order to try new flavours (62%) and treat or indulge themselves (61%).
“Leveraging the popularity of the after-meal occasion, dessert shops could also consider expanding their menus to include meal options instead of just desserts. With this, dessert shop brands would be tapping into more consumption occasions, driving sales as a result.” Wang continued.
Towards healthier dessert
Mintel also suggested that brands can look into developing healthier dessert options, with 61% of dessert consumers in China are willing to pay more for desserts that are all-natural or free-from additives, whilst 54% are willing to pay more for desserts that are high in nutrition.
Meanwhile, almost two-thirds (64%) of consumers are interested in trying ice cream that incorporates seasonal fruits, such as pomegranate or grapefruit, and 56% are keen on trying cake desserts with seasonal fruits. 43% of dessert consumers in China are interested in trying ice cream as well as cake desserts with superfoods like chia, hempseed and avocado
“With health and wellness mainstreaming in urban China today, dessert shop brands can look into using more natural ingredients like seasonal fruits and superfoods. As well, they can consider developing more offerings that are high in protein, or even probiotics seeing as Chinese consumers like having desserts after their meals.” Wang concluded.
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