Innovation helping heat up country's ice cream market

As scorching temperatures continue to grip much of China, the country's ice cream market is heating up — not just in terms of sales, but also in competition, innovation and strategic expansion.

Industry players including dairy giants and upstart digital brands are capitalizing on evolving consumer preferences, healthier lifestyles and new retail formats to reshape what was once a seasonal indulgence into a year-round, experiential category.

According to Mintel Group, a market research institute, the packaged ice cream category in China is expected to maintain steady growth in the years ahead, buoyed by the development of cold-chain logistics, increased outdoor activities and the rapid development of e-commerce channels.

However, it faces rising pressure from fresh ice cream and on-premises tea drink alternatives, and growth is increasingly being moderated by health-conscious consumers. Mintel forecasts a compound annual growth rate of 2.8 percent in sales from 2025 to 2029, with volume growing at 1.8 percent annually.

The category is finding new ways to align with consumers' values around wellness, ingredients and emotional connections.

Leading the charge is Wall's China, under The Magnum Ice Cream Company, which has doubled down on premiumization and product diversity. The brand rolled out over 30 new products in 2025, with a focus on personalization, texture innovation and indulgent experiences.

"We've observed that Chinese consumers increasingly seek out layered textures and novel forms," said Benny Xu, Asia CMO of The Magnum Ice Cream Company. "Our Cornetto multilayer sticks — featuring the brand's first-ever seven-layer ice cream — were developed in China and offer depth, crunch and a rich burst of flavor with every bite."

The company has also expanded beyond its classic chocolate bar format, launching its first frozen brownie cake dessert and the debut cone product under the Magnum brand in China. Meanwhile, in response to rising demand for plant-based and fruity products, Magnum introduced new fruit series such as "Strawberry Panna "and "Yuzu Honey", and reformulated its Cornetto sorbets with real fruit purees.

Mintel research shows that preferences among consumers are also shifting, with fruit, floral and baked goods-inspired flavors gaining consumer interest.

Wall's China's aggressive innovation strategy also extends into marketing. In March, the brand partnered with Guangling ancient town of Yangzhou, Jiangsu province, to launch a cultural creative city intellectual property ice cream, selling from over 800 locations. "We turned ice cream into an edible cultural business card," said Xu, adding that it was a "model case" of merging tourism, heritage and snacking.

To support this dynamic growth, Wall's China continues to invest in supply chain upgrades. Its facility in Taicang, Jiangsu province is the world's first "lighthouse factory" in the global ice cream sector, which enables real-time production optimization, energy efficiency and faster delivery — laying the foundation for personalized, sustainable ice cream experiences.

Having built a reputation for high-quality A2-type milk, domestic dairy player Adopt a Cow has quickly emerged as a contender in the ice cream arena. Since entering the category in March 2024, the company has launched over 10 new products, tapping into its vertically integrated supply chain and clean-label positioning to set itself apart.

Under the summer heat, Adopt a Cow's fresh milk-based offerings — including the Jing Mountain Matcha fresh milk ice cream — have seen explosive demand. The product, made from Hangzhou, Zhejiang province-grown matcha and the brand's own fresh milk, sold over 140,000 units in a week on e-commerce platforms.

Meanwhile, its Jasmine Litchi flavor — developed in partnership with Tencent's hit drama The Litchi (lychee) Road — shipped more than 1 million units within a month of launch.

Healthy indulgence and emotional storytelling are the twin pillars of our innovation strategy, said the company. Adopt a Cow also launched China's first SGS-certified clean-label children's ice cream and a six-month shelf life.

By leveraging its dairy farm network of over 100,000 cows and 10 farms, Adopt a Cow ensures raw milk quality and product traceability — providing an edge in a market where food safety and transparency are increasingly prized.

Its product differentiation strategy appears to be paying off. Since the launch of new products, the company topped Douyin mall's new product list and Tmall's best-selling list, establishing itself as a competitor to legacy brands like Yili and Mengniu.

As consumer expectations evolve, ice cream is no longer just about cooling off. It's also about comfort, self-expression and shared experiences. Nestle's ice cream unit is actively responding to these new demands through an innovation strategy built on four pillars — authentic ingredients, dessert-inspired textures, premiumization and fun.

The brand's offerings span traditional cones and sticks to novel forms like mini balls and rice dumplings. Its "colorful personality box", launched in partnership with Net-Ease Cloud Music in April, aimed to engage Gen Z consumers around themes of identity and emotional resonance.

In its most recent initiative, Nestle became the official ice cream sponsor for the 2025 Jiangsu Football City League, connecting with youth through a fast-growing cultural-sports event that blends competitive energy with city-level creativity. With its 8th power and heartfelt cone products, the brand positioned itself as the "cooling force" amid the summer heat and soccer fervor.

Despite the product push and marketing buzz, the industry still faces headwinds. Ice cream consumption remains infrequent — Mintel notes that over 50 percent of consumers eat it less than once a month.

Packaged products are favored by high-frequency users, while freshly made ice cream appeals to mid-frequency ones. First-tier cities, while showing greater interest in new formats, have seen declining high-frequency packaged consumption.

Still, brands see opportunities in deeper segmentation and regional expansion. Mintel said it sees higher penetration in smaller cities, suggesting untapped potential as affordability, flavor preference and outdoor consumption patterns evolve. Chocolate remains a top flavor but needs reinvention. "More innovative sub-flavors and layered chocolate profiles can reignite interest," Mintel said.

Over the past four decades of rapid development, China's ice cream market has entered a phase of consumer dividend growth. Demographically, the market is expanding at both ends — toward older and younger consumers alike, said Zhu Danpeng, an independence food and drink analyst.

"I believe the winning strategy is to pinch the ends and leave the middle," Zhu said. That is, low-end products are losing appeal due to health concerns, while ultra-premium offerings like Haagen-Dazs and Zhongxuegao are no longer aligned with the broader market's needs, he added.

The sweet spot lies in the 5 yuan ($0.70) to 8 yuan price range — affordable, high-quality products with strong value for money. "But price isn't everything. Success now also depends on health-conscious innovation and rapid product iteration," he said.

"Consumers crave novelty and tire quickly of old favorites. This demand is pushing the entire industry to accelerate improvements in flavor, ingredients, packaging and even business models," he added.