NEW YORK: General Mills has agreed to sell its Haagen-Dazs ice-cream shops in mainland China to a group led by fast-growing tea chain operator Ningji, the latest sale to underscore the ebbing fortunes of foreign brands in the world’s No 2 economy.
Chinese brands now develop products faster, price more aggressively and have proven more canny at adapting to social media trends than foreign competitors, taking prized market share.
General Mills, which said it was seeking to concentrate on brands and opportunities yielding more profitable growth, did not disclose financial terms.
It will continue to sell Haagen-Dazs ice creams in China through third-party retailers such as convenience stores.
The sale comes on the heels of Starbucks – another brand that was wildly popular in China in past decades – closing a deal in April to sell control of its China operations to Boyu Capital.
General Mills did not disclose the number of shops to be sold but a source with direct knowledge of the sale said the Ningji-led group will purchase around 170 Haagen-Dazs shops.
That compares with a peak of about 400 Haagen-Dazs shops in mainland China in the past, added the source who was not authorised to speak to media and declined to be identified.
Ningji Lemon Tea, a chain founded by Amanda Wang in 2020, has expanded quickly across China and South-East Asia, and now has more than 3,000 stores.
It has also started operating in the United States under the Bobobaba brand.
Ningji did not respond to a request for comment on the deal.
Inflationary pressures stemming from the Iran war have threatened to exacerbate shaky Chinese consumer sentiment, hurt by years of sluggish economic growth.
US brands, which have generally relied on a premium cachet, have suffered more as domestic brands engage in cut-throat pricing and amid tensions between Washington and Beijing.
A single scoop of ice-cream at a Haagen-Dazs store, often seen as a popular date spot, sells for around 40 yuan (US$5.90) in China, though packaged Haagen-Dazs ice creams sold at Chinese convenience stores are a bit cheaper at around 25 yuan to 39 yuan.
Even so, those items are pricey compared to Mixue Ice Cream and Tea, the world’s largest fast food chain, which sells soft serve cones from three yuan apiece from its 60,000 outlets.
Consumers interested in more high-end ice-cream also now have a plethora of boutiques to choose from that offer many flavours developed specifically for Chinese tastes.
The Mr Wild Man chain, for example, has more than 700 stores with flavours like rice and soy sauce caramel for 30 yuan per cup.
The sector is also grappling with changing dietary preferences toward healthier foods, a trend accelerated by the rapid uptake of weight-loss drugs.
Minneapolis-based General Mills, home to brands such as Cheerios and Pillsbury, said it expects to close the deal this year. — Reuters
