Will ice cream growth in China continue after COVID-19?
The COVID-19 pandemic has been changing the behaviour of Chinese consumers in many different ways, from spending and lifestyle choices to the shopping channels used and media consumed. For many industries, including FMCG, the impact of the virus has been quite negative. One interesting development showing in our data though, is the growth in the purchase of ice cream to eat at home, suggesting that in this stressful time people are finding some solace in an indulgent snack.
During the first two weeks of the outbreak, in-home ice cream sales increased 18% year on year, the following fortnight this accelerated to 37%, surpassing the growth of both food as a whole and snacking. This is quite a different effect to 17 years ago when SARS hit China and ice cream sales actually lagged those of food and other snacks.
Looking ahead to the future, once the pandemic has ended, Kantar Worldpanel considers what ice cream manufacturers might be able to do to build on this unexpected upturn in consumption.
01. The emergence of In-home consumption
Compared with other countries (including neighbouring Vietnam and Indonesia), eating ice cream at home is not a common activity for Chinese people. In fact, less than 50% of Chinese families buy ice cream for in-home indulgence and family sharing every year.
In the three years from 2017-2019 the volume contribution of in-home consumption during the month of Chinese New Year was less than 25%. Yet under the impact of quarantine regulations, in 2020 this increased to 37% . Despite the rising priority for fresh food, staples and hygiene during this time, the love for ice cream is still there, and people are satisfying their need in home when it isn’t easy to go out.
The growth of ice cream in the last year was due to price rises as the category became more premiumised. However, during the first and most crucial month of COVID-19, the growth was due to more shoppers, more frequent purchases and bigger trips.
This growth clearly reflects the role that ice cream is playing when people are working from home and sharing time with their families.
Tips for manufacturers
- Although the sustainability of in-home consumption for ice cream is still to be seen, investments to explore and understand in-home occasions will pay off hugely.
- In the short term, it is essential to redistribute media support towards indoor touchpoints, especially on online platforms. Ensuring stock levels in in bricks-and-mortar stores, particularly small modern trade formats and grocery are the top priority.
- In the longer term, besides trade and marketing efforts, innovations to offer more healthy products will help maintain and grow share. Rising health concerns could be the biggest constraint to future growth.
02. The year round opportunity for consumption at home
Ice cream consumption peaks in summer when hot weather triggers the need for something cool.
In 2019, 55% of OOH and 72% of in-home annual volumes of packaged ice cream were consumed within four months, from mid-June to early-September. During the summer, consumption increased by +80% for OOH and by +133% for IH, much higher than the uplift for treats and snacks in their peak season.
This comparison demonstrates the crucial role of summer, but it also shows that the low season generates only 28% of ice cream sales over eight months. This raises the question of how much brands have tried to leverage the low season to grow the brands in home.
Tips for manufacturers
- To capture in-home ice cream occasions in low season, brands should consider the triggers of purchase at different time of the year. While taste accounts for 30% of the occasions, “refreshing” is more likely to trigger purchases during summer while “want something rich” and “to treat myself” are more appealing reasons in low season. Understanding this means that brands can customise their communications for different times of the year.
- The environment is a concern to many and there is currently a lot of plastic used in the packaging of ice cream. Working to address this would help brands stand out and could help ensure sustainable growth.
After tremendous efforts to contain the virus, China started to see a cool-down in the spread of COVID-19 towards the end of February 2020. According to experts, the epidemic is forecast to end by Q2 2020. Until then, ice cream brands should leverage this opportunity to convert and educate consumers about in-home pre-summer consumption, not only to compensate the loss of OOH in the short term but also to open a new development area for the future.
At the same time, we should be well prepared for the upcoming hot season when things hopefully get back to normal and OOH consumption revives.
Notes to Editor: Treat and Snack = Biscuit, Crispy Snack, Confectionery (Chocolate, Gum, Mint, Fruity Candy)