China’s leading dairy player, Mengniu is building an ice-cream factory in central China as it seeks to shorten its supply chain to meet the growing demand for quality ice cream in south-western China.
Mengniu has unveiled plan to set up a new Rmb 1.5 billion (US$216.3 million) manufacturing facility in Meishan in Sichuan Province, which will have 8 production lines with a total daily capacity of 300 tonnes of ice cream. It will also be equipped with a cold-chain warehouse.
However, no confirmation has been made on which product lines to manufacture at the new facility and when it will start construction.
Mengniu has 3.7% share of China’s ice cream market in 2023, trailing behind Yili (16%) and Unilever which commands 4.3% share each for its Magnum and Cornetto brands. Mengniu sales from ice cream reached Rmb 4.24 billion (US$615 million) in 2021, representing a substantial 61% jump from 2020.
A recent report by China Food & Nutrition Consultant Committee mentioned growing competition in China’s premium ice cream segment normally categorised as products priced between Rmb 10 (US$1.45) to Rmb 50 (US$7.25). This is a lucrative segment if compared to the mainstream products which cost only around Rmb 5 (US$0.73)
The premium segment is also being targeted by a growing number of local Chinese brands like Chicecream and Zhongjie1946. Mengniu has been diversifying its portfolio in recent years by adding new flavors like persimmon pumpkin, black chokeberry and black garlic to its premium ice cream brand Deluxe. This is on top of its premium packaging to appeal to the consumers.
At the same time, Mengniu has also partnered with traditional Chinese medicine (TCM) supplier, Tong Ren Tang to co-develop new flavours for ice cream that might tap into demand for ‘Better-For-You’ indulgent products.