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China Mengniu Dairy : Ice cream's sweet story of success

08/02/2015 | 10:36pm US/Eastern

A woman buys a Turkey-flavored ice cream at a street stall in downtown Harbin, capital city of Heilongjiang province. [Photo provided to China Daily]

Lily Xia usually takes her three-year-old daughter Yoko to Vai Milano at the Indigo Shopping Center in Beijing at the weekend for an ice cream. It is a treat her daughter loves, and the taste is pure Italian.

"The textures of handmade ice cream is softer and it tastes fresher than other labels, and less sweet," Xia, who works in the e-commerce industry and has studied in Singapore as well as traveling extensively in Europe, said.

While ice cream is popular in China, many customers find certain varieties too sweet. This has opened up the market to traditional Italian ice cream makers such as Vai Milano, one of the major boutique brands based in Milan.

Specializing in sundaes, milkshakes, pastries, coffee and, of course, ice cream, the brand here is run by Vai China and headed by chief executive officer Yang Jin. All the products are made from natural ingredients, without artificial colors or preservatives, according to the company.

"We opened the first store in Solana shopping center in the Chaoyang district of Beijing in 2012," Yang said.

The Vai Milano chain now consists of five stores, which are in high-end malls in Beijing, Suzhou and Shanghai, where the parlor will open soon. "We knew when we came here, the market might not be ready for such a product," Yang said.

"Consumers at that time were blind to brands, but that has now changed, as people recognize us and are more aware of quality European products."

Today, customers are looking for healthier ice cream options when they buy quality products. Vai Milano has been quick to tap into this market by importing all these ingredients from Italy and preparing them here.

"By doing this, we feel the ice-cream stays fresher and tastes better," Yang said.

The upmarket brand has also introduced sugar-free ice cream as well as the Sobetto, a fruit and ice combination for young women looking for a healthier dessert. "This has been popular with female customers," Yang added.

The growth of Vai China, which has yet to release detailed financial figures, and its Vai Milano parlors highlights the booming ice cream market in China.

Sales here are expected to increase to 83.3 billion yuan ($13.4 billion) this year and 125.4 billion yuan by 2020, according to a report from Mintel Group Ltd, the global market research company in the United Kingdom.

About 6.3 billion liters of ice cream will probably be consumed in the country in 2015. Last year, China took over from the United States as the world largest ice cream market, the Mintel report revealed. In 2014, 5.9 billion liters of ice cream were sold here compared to 5.8 billion liters in the United States.

Between 2008 and 2014, the total market value for ice cream sales in China nearly doubled to $11.4 billion, according to Mintel. The US market grew at a much slower rate, but still increased by 15 percent to $11.2 billion during the same period.

Last year, global sales of ice cream reached a record $50 billion, Mintel reported.

"Rising incomes are driving growth in the ice cream market in China," Alex Beckett, global food analyst at Mintel, said. "But the vast array of locally produced, low-priced brands present a challenge for global ice cream giants looking to develop here," he added.

One way to increase market share is to produce healthier products that are low, or sugar free, Mintel's Global New Products Database highlighted. In 2014, there were a record number of new ice cream brands that hit the market which were low on fat as well as gluten-free.

Of the 31,000 new products from 62 countries and regions that were rolled out, 15 percent were marketed on their "healthy option" claim compared to just 7 percent in 2012.

"Handcrafted ice cream, made with a homemade style authenticity, is more likely to be embraced by consumers," Beckett said.

Still, the largest ice cream brands in China are produced by Yili Industrial Group Co Ltd, based in Inner Mongolia, China Mengniu Dairy Co Ltd, Unilever Group and Nestle SA.

One local company, Dongbei Daban, has even played the nostalgia card to promote its ice cream. Dongbei uses 1980s style packaging to wrap the same simple shaped cones designed from that era. For older customers, this brings back memories of their childhood.

"Dongbei Daban tastes just like the ice cream my grandma bought for me when I was a child," Zhao Yun, 35, a photographer in Shanghai, who has dozens in his fridge, said.

Looking ahead, companies plan to roll out new products, including vegetable flavored ice cream for adults as well as cutting back on bulky packaging.

"Repositioning indulgent treats for older customers is one option," Esther Lau, research analyst from Mintel, said. "Making them healthier has also become a growing trend in China."

(c) 2015 China Daily Information Company. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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