---
title: "Chinese and Foreign Brands Compete for 80 Billion Yuan Ice Cream Market, China's Ice Cream Consumption Accounts for 13% of Global Total"
description: "China has become the world's largest ice cream consumer, attracting major brands to build factories and expand production. Beijing Sanyuan Foods announced a major asset acquisition of Beijing Ailaifaxifood Co., Ltd., known for its 'Baxi' ice cream, signaling a new business segment for the dairy company."
author: "New Distribution"
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published: "2015-10-21"
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# Chinese and Foreign Brands Compete for 80 Billion Yuan Ice Cream Market, China's Ice Cream Consumption Accounts for 13% of Global Total

> China has become the world's largest ice cream consumer, attracting major brands to build factories and expand production. Beijing Sanyuan Foods announced a major asset acquisition of Beijing Ailaifaxifood Co., Ltd., known for its 'Baxi' ice cream, signaling a new business segment for the dairy company.

China has become the world's largest ice cream consumer, attracting major brands to build factories and expand production.

Before the National Day holiday, Beijing Sanyuan Foods Co., Ltd. issued a suspension announcement for a major matter, indicating a possible acquisition of a food processing company's assets through cash and share issuance. It wasn't until October 9 that Sanyuan issued another announcement, revealing the food company as 'Beijing Ailaifaxifood Co., Ltd.' (referred to as Faxi), and the well-known 'Baxi' ice cream is one of Faxi's main businesses.

> **This means that Sanyuan Foods, which originally only had liquid and solid milk, will add a new business segment in the future.**

Amid intense competition in the dairy industry, ice cream is shedding its seasonal nature and moving towards leisure, high-end, and personalized directions. This segment may become a new growth engine for revenue and profit for some dairy companies.

**China's Ice Cream Consumption Accounts for 1/3 of Global Total**

Comparing Sanyuan and Faxi's performance, this acquisition is indeed a good move for Sanyuan. According to Sanyuan's 2015 interim report, the company's revenue in the first half of the year was 2.23 billion yuan, with net profit of only 49.5775 million yuan. In 2013, it lost 230 million yuan, and just turned profitable in 2014. According to reports from the food review media 'Shiwu', Faxi's annual revenue is around 1 billion yuan, but net profit reaches 100 million yuan. Clearly, if the acquisition succeeds, Faxi will greatly contribute to Sanyuan's future performance.

The profitability of ice cream business can also be seen in other listed dairy companies' financial reports. Currently, Yili's cold drinks market sales have ranked first in the industry for 22 consecutive years, with a market share of 20%.

Yili's 2015 interim report shows that as of June this year, its cold drink product revenue was 2.99 billion yuan, with a gross margin of 38.05%, up 1.11 percentage points year-on-year. This is more than 5 percentage points higher than the 32.66% gross margin of liquid milk.

Mengniu's 2015 interim report shows that as of June this year, its ice cream revenue was 1.644 billion yuan, accounting for 6.4% of total revenue. Nestlé has two ice cream brands, Nestlé and Wuyang. 'Due to company policy, we cannot disclose specific business figures. But we can share that both Nestlé and Wuyang brands are performing well, especially Wuyang in the Guangdong market,' Nestlé told Nandu reporters.

According to a report by independent market research firm Mintel, China's ice cream consumption reached $11.4 billion (approximately 70.8 billion yuan) in 2014, consuming one-third of the world's ice cream, surpassing the US to become the world's largest market. This year is expected to grow 10.53% year-on-year. Compared to 2008, China's ice cream market grew 90% in 2014. Mintel predicts that this year, China's ice cream consumption will grow 10.53% to $12.6 billion (approximately 78.2 billion yuan), still the world's largest ice cream market.

**Major Brands Build Factories and Expand Production in Guangzhou**

Not only Sanyuan is focusing on the ice cream market; other dairy companies with this business segment are also increasing their competition in this market.

Nestlé told Nandu reporters that as of June this year, Nestlé has invested over 100 million yuan to strengthen ice cream production and cold storage facilities. Its new production line at the Tianjin ice cream factory was officially put into operation in June, and the cold storage facilities at the Guangzhou factory were also launched simultaneously. The total investment for the two projects is 116 million yuan. This is another important measure for Nestlé to build a long-term sustainable ice cream business in China in recent years.

In Yili's 2015 interim report, it can be seen that Yili is currently building a cold drink project with a total amount of 1.59 billion yuan, and as of June, more than 80% of the progress has been completed.

Japan's Meiji Group's ice cream company in Guangzhou also officially opened on July 14 this year. Meiji ice cream has been sold in China for many years, but previously it was produced through Guangdong Yantang. In January this year, Meiji invested approximately 187 million yuan in a new ice cream factory in Guangzhou, which was officially put into production and will be managed by its wholly-owned Guangzhou company.

**This means that after chocolate and dairy products, Meiji is going to expand its ice cream business in China.**

It is understood that Meiji's ice cream sales in 2013 were 3 billion yen, and with the construction of the new factory, the company plans to increase annual sales of related products to 10 billion yen by 2020.

**Products Begin to Shed Seasonal Nature**

Mengniu told Nandu reporters that in the ice cream industry, consumption habits are shifting from traditional heat relief to high-end enjoyment consumption. Consumers' motivation for buying ice cream is more about treating guests, socializing, leisure at home, and rewarding themselves with a high-quality lifestyle.

'Consumers' habits are quietly changing,' said a Nestlé official. On one hand, ice cream is shifting from one-sided cooling and refreshing to leisure snacks; on the other hand, from the original pursuit of 'big and cheap' to choosing appropriate portions and better quality.

'The demand for mid-to-high-end cold drinks is further stimulated,' said a Yili official. Products with unique and innovative selling points will be more attractive to consumers. Nestlé also stated that the development trend of ice cream in China is currently moving towards high-end, health under the context of deliciousness, and safer and better quality.

In terms of sales channels, Nestlé said that impulse purchase channels such as convenience store chains, leisure and entertainment venues, and street-side shops are showing growth trends. Planned purchase channels such as modern hypermarkets have weakened. Emerging e-commerce channels are still in the trial stage.

Experiential consumption is also being tried by ice cream companies. According to Wall's, they took the lead in launching the Magnum Pleasure Store in Shanghai, where customers can DIY their favorite Magnum ice cream with different toppings.

**-END-**

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