As ice cream’s popularity grows among urban Chinese consumers, Mintel advises transforming the tasty treat into a ‘mood food.’ The good vibe move is especially appealing to young consumers, who can indulge while “soothing life’s stresses away,” states new research from Mintel.
Given the fact that more consumers today are eating ice cream as a snack or a dessert at home compared to previous years, family-size tubs or multipack offerings will have further opportunities. Also, there is scope for ice cream to be positioned as ‘mood food.’ This allows consumers the ability to soothe life’s stresses away as they indulge in a treat while paying a premium price for it.
Mintel’s Ice Cream China 2017 Report shows consumption of the sweet indulgence is on the rise in China. Today, half (49%) of the country’s urban consumers say they eat ice cream at home as a snack, compared to four in 10 (39%) who said the same in 2015. Meanwhile, 39% of urban Chinese consumers report eating ice cream as a dessert this year, compared to just over one in four (28%) who said the same two years ago.
Overall, the ice cream market in China has seen a decline in retail volume, with a CAGR (Compound Annual Growth Rate) of -1.6% between 2014 and 2016. However, the total retail market value is on the rise due to consumers trading up for new formats and flavors.
Better-for-you options are among the more popular premium features; 59% of urban Chinese consumers are willing to buy ice cream products that feature a 100% natural/no additive’ claim, especially among soft-serve ice cream users (68%). What’s more, consumers aged 30-39 say they are willing to pay more for ‘100% natural/no additive’ products (65% compared to 59% of consumers overall), according to Mintel.
Soothing away stress
“Urban Chinese consumers are paying more attention to their health, while still looking for opportunities for indulgence, which should not be compromised,” says Cheryl Ni, food and drink analyst at Mintel.
Given the fact that more consumers today are eating ice cream as a snack or a dessert at home compared to previous years, family-size tubs or multipack offerings will have further opportunities, Ni adds.
“Also, there is scope for ice cream to be positioned as ‘mood food,’ allowing consumers—especially the younger generations—the ability to soothe life’s stresses away as they indulge in a treat while paying a premium price for it,” she says.
Appealing to big spenders
Meanwhile, declining consumption appears in both retail and non-retail channels. Mintel research indicates that the percentage of ice cream non-users has risen from 4% in 2012 to 11% in 2017. In all, purchases at retail channels (net) (76%) are lower than non-retail channels (net) (93%), with the number of urban Chinese consumers who bought ice cream from supermarkets/hypermarkets declining from 85% in 2012 to 52% in 2017. Similar declines can be seen at grocery retailers, which dropped from 42% to 12% in the same time period, according to Mintel.
The market has experienced significant growth in online channels, including online brand stores (e.g. official store in Tmall), increasing from 3% to 16% between 2012 and 2017. Mintel research indicates that this growth is driven by high earners who are more likely to be fans of online channels (23%).
“Shopping for ice cream products from online retailers is usually more expensive given the cost of cold chain delivery,” Ni says. “However, we are seeing a growing number of imported ice cream brands available in online stores, providing more premium choices for consumers with a higher spending power.”
Creating innovative packaging
According to Mintel, more Chinese consumers in tier one cities claim to eat packaged ice cream as a snack during their leisure time, especially those located in Shanghai (57% vs. 49% of consumers overall).
On the different occasions for eating ice cream that is made on-the-spot, consumers in Shanghai show a higher interest in this format when they are hanging out (54%, compared to a total 47%) or when they are craving something sweet (41%, compared to a total 34%). When it comes to location, ice cream parlors, dessert shops and coffee shops seem to be their favorite spots for eating ice cream.
It appears that young urban Chinese consumers aged 20-24 are particularly interested in value-added features, such as ‘edible containers that taste good’ (42%), ‘customised flavors/shapes’ (35%) and ‘innovative packaging’ (33%). Products with clean label claims and added nutrition will encourage trading up in this category. In the meantime, healthier versions should not compromise indulgence, especially for tier one Chinese consumers.
“The shift in consumption occasions redefines the ice cream market which is no longer an alternative to a cooling drink, but an indulgent treat that can bring a sense of enjoyment and happiness, “Ni explains.
Consumers in tier one cities prefer healthy versions of ice cream, but they don’t want to compromise on enjoyment, and this is why manufacturers should optimize recipes to achieve a balance of both, she says.