Summary of Key Points
The global food giant General Mills has sold its Hagen-Dazs offline stores (both direct-operated and franchise) as well as the gift business in China to Ningji, a brand of freshly squeezed lemon tea that originated in Changsha. General Mills will retain its retail ice cream business (sold in supermarket freezer boxes), its catering channels (used as desserts in restaurants), and its online gift business (ice cream mooncakes). This move essentially reflects General Mills' strategy of "getting rid of heavy assets (the stores) to keep the cash cows (the low-cost retail operations)." Ningji, on the other hand, hopes to use this acquisition to break through its growth bottleneck. The collaboration presents both opportunities and challenges and also illustrates the changing roles of foreign and domestic consumer brands in the Chinese market.
I. General Mills: Why Sell Hagen-Dazs Stores? – A Smart Move to Reduce Burdens
Hagen-Dazs has two business lines in China: one is a heavy asset, the other is a profitable one:
- The store business is a burden: The dessert shops located in shopping malls require substantial investment—high rent payments, employee salaries, and they face declining customer footfall. In 2019, there were more than 550 stores; by 2026, only 171 remained, representing a 70% reduction over seven years. Customer traffic has been declining for several quarters in a row, and while revenue has decreased, costs (such as rent and labor) have remained high, resulting in losses for many stores. General Mills' CEO acknowledges that the store model is characterized by high fixed costs and low profit margins.
- The retail business is profitable: The ice cream sold in supermarket freezer boxes, the small desserts served in restaurants, and the ice cream mooncakes sold online are low-cost operations that do not require the company to open its own stores. Instead, General Mills relies on its global supply chain and distribution channels (supermarkets, e-commerce, and instant retail) to sell these products, resulting in lower costs and higher profits. From June 2025 to April 2026, sales and market share in the retail channel both increased, with the offline modern channels experiencing double-digit growth.
Therefore, General Mills' approach is straightforward: it sells the unprofitable heavy asset stores to Ningji, which understands the Chinese market, while retaining the profitable low-cost retail operations, essentially getting rid of a burden and keeping the money-making machines.
II. Ningji's Acquisition: Why Expand into High-End Ice Cream? – The Ambition for New Growth
Ningji has also faced its challenges: founded in Changsha in 2021, it opened more than 3,000 stores within three years but only has 1,799 left by 2026 (far from its goal of 5,000 stores), and its financing stopped in 2022. Its single lemon tea product line has reached a ceiling. Acquiring Hagen-Dazs' stores addresses three key shortcomings:
1. Access to Prime Locations: Ningji's stores are mostly located on streets and in communities, unable to enter the first floors of shopping malls in major cities; Hagen-Dazs' 171 stores are all situated in prime locations in cities like Beijing, Shanghai, Guangzhou, and Chengdu, providing Ningji with an immediate entry into these high-profile areas.
2. Brand Upgrade: Ningji's average transaction value is between 15-25 yuan (affordable), while Hagen-Dazs' is over 50 yuan (high-end). By combining the two brands, Ningji can reach a higher-end customer base and improve its own brand image.
3. Product Portfolio Expansion: The trend is to combine tea and ice cream (as seen with brands like Hi Tea and Ba Wang Cha Ji). It would be difficult for Ningji to develop high-end ice cream products on its own, but Hagen-Dazs offers ready-made products and recipes that can quickly expand its product range.
Ningji's founder aims to build a "drink management group" (not just selling lemon tea), and acquiring Hagen-Dazs is a crucial step in this strategy.
III. Challenges in the Collaboration: Brand and Operational Issues
This deal is not a surefire win, and both parties must overcome several significant challenges:
1. Brand Compatibility: Hagen-Dazs has an image of being high-end and suitable for dates or gifts, while Ningji is known for its affordable and internet-famous products. If Ningji offers significant price cuts or collaborates with internet influencers, it may damage Hagen-Dazs' premium reputation. However, continuing with the old model will not solve the store losses.
2. Supply Chain Challenges: Most of the ingredients used in Hagen-Dazs' stores are imported. If Ningji switches to local suppliers to reduce costs, can it maintain the same quality?
3. Brand Management: General Mills retains the retail business (supermarket boxes), while Ningji manages the store operations (freshly made ice cream). With two separate teams and different approaches, how can they ensure prices do not conflict and the brand image remains consistent? For example, if a box of ice cream sells for 20 yuan in supermarkets but a cup for 50 yuan in stores, it may confuse consumers.
4. Competitive Pressure: The main growth driver in China's ice cream market is the mid-range price segment (around 3-5 yuan, accounting for about 45% of sales), while the high-end segment (over 12 yuan) has declined from 5.99% to 3.95%. Hagen-Dazs is neither as affordable as brands like Mishi Ice City nor as fresh as emerging handmade gelato brands, putting it in a vulnerable position.
IV. New Trends in the Industry: The Changing Roles of Foreign and Domestic Brands
This transaction is not an isolated case; it represents a common trend for foreign brands in China:
- In the past: Foreign brands (such as Starbucks and McDonald's) entered China with full control over all aspects, including brand, capital, and management.
- Now: Foreign brands are stepping back, focusing more on their core competencies. For example, Starbucks sold most of its Chinese business to Boyu Capital, McDonald's partnered with CITIC and KKR, and DQ sought local partners. General Mills has gone even further by opting for a "brand licensing" approach (retaining brand ownership while allowing Ningji to operate the stores), which is more flexible but requires greater trust between the two parties.
The underlying logic is that the Chinese market is changing rapidly, with domestic brands gaining a better understanding of consumers and being more adept at using digital technologies (such as delivery and social media). Foreign giants no longer want to invest in complex store operations and focus on what they do best—brand management and supply chain management. Domestic brands are moving from being followers to taking the lead, taking over large-brand stores and reoperating them in their own way.
Conclusion: Will This Deal Succeed?
Whether Ningji can revitalize Hagen-Dazs' stores depends on its ability to balance maintaining a high-end image with localized operations—for instance, by reducing store sizes, increasing takeout options, using digital tools to engage customers, and preserving Hagen-Dazs' quality. Regardless of the outcome, one thing is clear: the dominant players in the Chinese consumer market are changing, and domestic brands are gaining more influence.