In China, Haagen Dasz continues to innovate
Haagen-Dazs, the worldwide famous ice-cream brand founded in 1961 by Reuben Mattus and his wife Rose was bought 70 million dollars by the British group Philsburry, now the property of General Mills. The brand, n°1 in the US since 2007, settled in China in the late 90s, and is now enjoying unexpected success! But in a more and more competitive market, it won’t rest on its laurels.
Now targeting the coffee market
Haagen Dazs recently decided to launch a brand new range of coffee-based products in its Chinese stores in order to capture shares of this growing market. The launching of the “rainbow latte”, a mix of Haagen-Dazs ice cream with Illy coffee, served in specially designed blown glass cup mugs, is the result of years of planning. The brand is also planning to open Haagen-Dasz cafes in order to diversify beyond the ice cream market.
A strategic choice
This decision Haagen Dasz made to launch the “rainbow latte” as its first coffee offer is a key step in the brand’s strategy in China, which goal is to attract young customers in their late 20s. Even though the group qualifies itself as the Rolls Royce of the ice cream market, readjusted its strategy to reunite with the Chinese youth and its taste for unique experiences, which is the reflection of a sophisticated market.
The Chinese coffee market
The consumption of coffee is on the rise
In 2012, the average consumption of coffee per capita in China was about 47,6 grams, far lower than the South Korean and Japanese ones, respectively at 2,1kg and 3,4kg per capita per year. Even if the global coffee market is supposed to grow by 2% per year, in China it is expected to grow by 15% per year!
Competition pressure
Even though the average consumption of coffee in china is for the moment at only one cup per person and per day, up to 5 cups per person and per day in urban areas, it is a more and more profitable market and from now on, Haagen Dasz will have to deal with serious competitors; Starbucks owns more than 1500 stores in China, the British group Costa more than 300 and the Korean brand Maan Coffee about a hundred.
The key to success: a well-rounded marketing strategy!
The settlement of the famous ice cream brand in China was a real challenge since Chinese people are very price-sensitive consumers and traditionally don’t eat many dairy products. But despite those obstacles, Haagen Dasz got famous pretty fast in the empire of the middle.
- Research and understand the Chinese market
Before launching in China, Haagen Dasz conducted market research on the national market. If ice cream is not a very popular product in China, the brand understood that a demand exists in the empire of the middle for expensive luxury western products. The brand though decided to target the wealthy consumers first, and the growing middle class looking more and more for luxury experiences.
On another hand, if western people would enjoy eating their ice cream quietly at home, Chinese would prefer to enjoy it in a fancy cafe.
- Repositioning the brand
After this market research, Haagen Dasz proceeded to re-positioning the brand to adapt to the Chinese market, working on the image of a luxury brand. The group has been opening fancy café in hype districts where Vuitton, Cartier, and Chanel shops line up. In these cafes, the products upgraded with the “Made in France” logo are sold on average 5 times their American price.
And if in the USA, the commercials are based on sensuality, they are adapted in China to the local sensibility and are more oriented on luxury and romanticism. Though, the slogan here is: “If you love her, bring her to Haagen Dasz.”
Haagen Dazs also hit strongly by including its Chinese commercial strategy celebrities among which the worldwide famous Chinese model and singer, Fan Bing Bing, a symbol of glamorous and very influence in her country.
- Innovation:
In China, Haagen Dasz innovated, creating new products according to the tastes of Chinese customers. The brand developed a dedicated ice cream range, with tea-flavored ice cream and perfume bottle-shaped biscuits filled with ice cream for Valentine’s day.
They also had that very smart idea in 1997 to create their own version of the Moon Cake, a traditional cake Chinese people offer to their friends and family in autumn. This product alone represents today 28% of the brand’s annual benefit on the Chinese territory.
While the brand had to reinvent itself for China market, it did so very successfully to enter the Chinese market.
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You can also read our Strategic Guide to Export Food Brands in China