Summer is the season for ice cream and consumers have never been
looked after so well.
As a brand war heats up among leading foreign and domestic
manufacturers in China, new flavors are flooding the market.
With so many products available, it is becoming harder to tell
which brands are the most popular, and more difficult for ice cream
makers to churn out profits.
But a recently released report by Sinomonitor International, an
independent Sino-Japanese market monitoring company, helps to lift
the lid on China's extremely competitive ice cream market.
The report is based on the China Marketing and Media Study's
(CMMS's) database, which for the past seven years has followed over
70,000 consumers, aged 15 to 64, in 30 major cities.
The CMMS data for 2003 shows that China has a large group of ice
cream consumers: more than 73 percent ate ice cream last year.
At present, per capita consumption is two liters a year, and the
figure is expected to triple in 20 years, according to Liu Fan, a
CMMS researcher.
"The potentially large market lures many international and
domestic players like H?agen-Dazs, Walls, Bud's, Mengniu and Yili,"
she said.
The top five brands in terms of market share -- Yili, Walls,
Mengniu, Nestle and Meadow Gold -- hold a 57 percent stake of the
market. Foreign giants Walls, Nestle and Meadow Gold claim 30
percent, while Yili and Mengniu share the other 27 percent.
During the past year, 46.1 percent of the people surveyed had
eaten Yili ice cream, 44.9 percent had bought Walls, 33 percent had
bought Mengniu, 27.2 percent had purchased Nestle and 20.7 percent
had consumed Meadow Gold.
Although they are the most popular, none of the top five can
claim the highest loyalty among consumers.
"In a market with many competitors, market share is not enough
to show a brand's competitiveness. Brand loyalty is also
important," Liu said.
Wuyang, a Guangdong
Province brand, enjoys the highest loyalty in the fragmented
market, even though only 8.3 percent of those surveyed bought
Wuyang last year.
Some 57.7 percent of Wuyang ice cream buyers are loyal to the
brand. The rate is 51.2 percent for Yili and 47.1 percent for
Walls.
"Wuyang has high brand loyalty as it is produced in the nation's
south and mainly targets consumers there," Liu said. Some brands
are competitive in specific markets, but they cannot compete at a
national level with groups such as Yili and Walls, the top-tier
brands.
Another local brand, Wufeng, which is mainly sold in Zhejiang
and Jiangsu
provinces, also enjoys a high brand loyalty rate of 40.3
percent.
"The competition, mainly concentrated in the middle and low-end
ice cream market, is growing hotter each year, forcing down profit
margins," she said.
Currently, domestic brands, owing to their cost and price
advantages, compete well with foreign rivals.
Striving for better performance and larger profit margins,
domestic players should develop more specific products and
strategies based on market research and consumer surveys, Liu
suggested.
For example, the main ice cream consumers here are Chinese aged
between 15 and 29, who like to try new products and are not overly
concerned about price.
The famous international brand H?agen-Dazs, although quite
expensive, is popular among young people. Consumers are not only
attracted by its flavor, but also by atmosphere and good service at
store outlets.
(China Daily July 26, 2004)