The ice cream giant Häagen-Dazs is currently facing significant challenges in the Chinese market, as revealed in the latest financial reports from General Mills, its parent company, for the second quarter of fiscal year 2025. During a recent earnings call, CEO Jeff Harmening disclosed that foot traffic in Häagen-Dazs stores across China has continued to decline at a double-digit rateTo combat this worrying trend, General Mills is strategizing to enhance the distribution of Häagen-Dazs products through retail, food service, and e-commerce channels.
The decline in customer traffic for Häagen-Dazs was not sudden; it has been a recurring concern mentioned in previous earnings callsFor instance, in the first quarter report for fiscal year 2025, which ended on August 25, 2024, Harmening noted that the company is grappling with challenges due to consumer confidence nearing historical lows, which has adversely affected the foot traffic at Häagen-Dazs stores.
Earlier reports, such as those from the third quarter of fiscal year 2024 (ending March 2024), had already indicated a drop in net sales from the Chinese market, signaling a prolonged struggle for the brand
Additional insights shared by Harmening highlighted the operational difficulties faced by Häagen-Dazs, particularly the high fixed costs of maintaining store locations juxtaposed with low-profit margins, which have cumulatively impacted profitability.
Häagen-Dazs first entered the Chinese market in 1996, positioning itself similarly to Western fast-food giants like KFC and McDonald'sAt that time, it was perceived as a symbol of high-end Western consumer goods, garnering significant market admiration and emulating a sense of exclusivityAs a luxury ice cream brand, Häagen-Dazs chose prime locations in bustling commercial districts of tier-one and tier-two cities, reinforcing its image as a premium product.
In a 2017 speech, the former President of General Mills' Greater China Region, Zhu Xi, noted that China is the market with the most Häagen-Dazs stores, second only to the United States, where Chinese sales account for 50% of global revenue, and the profits exceed that proportion as well.
Originally an American ice cream brand, Häagen-Dazs was sold to Pillsbury in 1983 and later became part of General Mills
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In 2002, Nestlé acquired the full trademark rights for Häagen-Dazs in the U.S., leading to distinct branding strategies across different marketsIn the U.S., Häagen-Dazs products are marketed as a common convenience ice cream found in supermarkets, while in China, efforts have been made to cultivate a luxurious experience around ice cream, including afternoon tea sets and even innovative offerings like ice cream fondue.
Nonetheless, over time, changing market dynamics and increased competition have led to a notable decrease in the allure of its beautifully decorated storesData from Narrow Door Insights reveals that Häagen-Dazs operated 557 stores in China in 2019; however, by December 13, the store count had plummeted to 403.
In the past year, numerous Häagen-Dazs locations in first- and second-tier cities have announced closures
Notably, consumer posts on the social platform Xiaohongshu have highlighted several stores that shut down, including the Beijing Guorui store on August 26, 2024; the Tianjin Nankai Dayuecheng location on October 9, 2024; and the Nanjing Jiangning Wanda store on December 12, 2024.
Today's consumers are increasingly not just pursuing prestigious brands; they also prioritize price-to-value ratios in their purchasing decisionsAccording to iMedia Consulting's survey on the acceptable price point for individual ice cream or popsicle purchases in China for 2023, the general acceptance ranges between 3 to 15 RMB (excluding 15 RMB).
Moreover, previously popular high-end ice creams such as Moutai ice cream and Zhong Xuegao have seen a decline in visibility, while affordable ice creams have made a significant comeback
Current pricing for Häagen-Dazs ice creams is notably higher, ranging from 43 to 118 RMB, which further discourages many potential customers.
One former Häagen-Dazs enthusiast expressed discontent to the media, lamenting, “Nowadays, several ice cream brands offer innovative flavors, yet Häagen-Dazs’ flavor ramp-up seems sluggish while the concepts feel outdated, all at exorbitant prices.”
Recently, reporters from Blue Whale News visited several shopping centers in Beijing's Chaoyang DistrictWhile many young people and couples frequented these areas, the primary customers drawn into Häagen-Dazs stores appeared to be scattered parents purchasing ice cream for their childrenThe store decor remains largely unchanged, and the classic red and white color scheme is gradually becoming a hallmark of an aging brand.
The challenges facing Häagen-Dazs extend beyond shifting consumer tastes; they also include the emergence of formidable competitors
Not only do dessert counters at KFC and McDonald's maintain competitive pricing, but new brands like MrWildman and iGELATO have gained popularity for their fresh, high-quality experiencesFurthermore, trendy tea beverage brands such as HeyTea and Bawang Tea Princess are also vying for consumers' sweet indulgencesAmidst such fierce competition, Häagen-Dazs’s market influence seems to be waning.
Thus, a transformation for Häagen-Dazs has become urgentYoung consumers represent a pivotal target in Häagen-Dazs’ potential strategic overhaulThe company has begun to explore new channels, broaden its product offerings, and frequently announce celebrity endorsements to capture attentionHowever, whether these extensive efforts will successfully revitalize the brand remains uncertain.
Despite the slowdown in store sales, both online and offline retail avenues continue to present crucial sources of income for Häagen-Dazs
According to Euromonitor International, Häagen-Dazs ranks tenth in the Chinese ice cream retail market, with a market share exceeding 2% in 2023, representing a slight year-on-year increase, and is projected to sustain this upward trend in 2024.
Qiang Su, Vice President of General Mills International and President and Managing Director for China, recently remarked in a media interview, “Häagen-Dazs adopts an omnichannel operating model, incorporating physical stores, food service channels, retail, and e-commerce platforms.”
Su emphasized, “This strategy allows Häagen-Dazs to engage directly with consumers and innovate products based on their demands across both online and offline settings, enhancing service efficiency and conversion capabilities—a feat challenging for other brands to replicate.”
He added, “Previously, Häagen-Dazs's business model primarily encouraged consumers to purchase in-store, providing a superior experience but constricted by geographical limitations