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Brand War Heats Up Ice Cream Market

As a brand war heats up among leading foreign and domestic ice cream manufacturers in China, new flavors are flooding onto the market.


With numerous products up for grabs, it is becoming harder to tell which brands are the most popular, and more difficult for manufactures to turn a profit.


But a report, which was released recently by Sinomonitor International, an independent Sino-Japanese market monitoring company, helps to lift the lid on China's extremely competitive ice cream market.


Foreign and domestic brands enjoy similar market shares, and Yili and Walls are the most competitive brands on the market, it says.


The report is based on the China Marketing and Media Study's (CMMS) database, which for the last seven years followed over 70,000 Chinese consumers in 30 major cities, who were aged between 15 and 64.


The CMMS data for 2003 shows that China has a large group of ice cream consumers. More than 73 per cent of Chinese ate ice cream last year.


At present, the per capita consumption is 2 liters a year, and the figure is expected to grow to 6 liters in 20 years, according to Liu Fan, a CMMS researcher.


"The potentially large market lures many international and domestic players like Haagen-Dazz, 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 per cent stake of the Chinese market.


Foreign giants Walls, Nestle and Meadow Gold own 30 per cent, while the two domestic brands have the other 27 per cent of the market, CMMS data shows.


During the past year, 46.1 per cent of the people surveyed had eaten Yili ice cream, 44.9 per cent had bought Walls, 33 per cent had bought Mengniu, 27.2 per cent had purchased Nestle and 20.7 per cent had consumed Meadow Gold.


Although they are the most popular, the top five do not have the highest loyalty among Chinese consumers, the report says.


"In a market with many competitors, market share is not enough to state a brand's competitiveness. Brand loyalty is also important," Liu said.


Wuyang, a Guangdong Province brand, enjoyed the highest loyalty in the fragmented market - though only 8.3 per cent of those people surveyed bought Wuyang last year.


Some 57.7 per cent of Wuyang ice cream buyers are loyal to the brand. The rate is 51.2 per cent for Yili and 47.1 per cent for Walls.


"Wuyang has high brand loyalty as it is produced in the nation's south and mainly targets consumers there," Liu said.


Another local brand, Wufeng, which is mainly sold in Zhejiang and Jiangsu provinces, also enjoys a high brand loyalty - a rate of 40.3 per cent.


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, Liu said.


"The competition, mainly concentrated in the middle and low-end ice cream market, is heating up each year forcing down profit margins," she said.


Currently, domestic brands, due to their advantages in costs and prices, compete well with foreign rivals.


Striving for a better performance and larger profit margins, domestic players should work out more specific products and market strategies, based on market research and consumer surveys, Liu suggested.


For example, the major ice cream consumers are Chinese aged between 15 and 29, who like to try new products and are not overly concerned about price.


The famous international ice cream brand Haagen-Dazz, although quite expensive, is popular among young people. Consumers are not only attracted by its flavours, but also its fashionable environment and good service.


(China Daily July 26, 2004)





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