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)
