Summary of Key Points
Changsha’s popular lemon tea brand, Ningji (with prices in the teens per cup), has acquired the former “ice cream aristocrat” Häagen-Dazs’ operations in China. This move has puzzled many people: How can a low-priced tea brand take over a high-end ice cream business? It’s not that Ningji has gone crazy, nor is Häagen-Dazs completely on the decline; rather, it’s a mutually beneficial business decision. Ningji wants to use Häagen-Dazs’ brand and distribution channels to expand its product range, while Häagen-Dazs needs Ningji’s youthful consumer base and digital capabilities to revitalize its business.
I. Häagen-Dazs: Why the “Aristocrat” Has Lost Its Luster?
Häagen-Dazs was once considered the “Louis Vuitton of ice cream,” with a cup costing over 30 yuan, and its romantic marketing strategy (“If you love her, take her to Häagen-Dazs”) made it successful for 20 years. However, in recent years, it has faced challenges:
1. Loss of Price Advantage: High-end ice creams now include competitors like Zhongxuegao (10-20 yuan per piece) and Menglong (8-15 yuan per piece), while affordable options such as Mixue Ice City’s Snow King Sundae (6 yuan) and IKEA’s ice cream cones (1 yuan) are more popular. Häagen-Dazs’ price of 30 yuan no longer seems premium or cost-effective to younger consumers.
2. Lack of Innovation: The brand has stuck with classic flavors like vanilla and chocolate, failing to appeal to the trend towards “internet-famous” flavors like raw coconut, matcha, and durian, nor has it made cross-category collaborations (e.g., with bubble tea or snacks), making it seem outdated.
3. Channel Disadvantages: Häagen-Dazs mainly relies on mall outlets and a few physical stores, but younger consumers prefer ordering ice cream online or through community groups. Its slow expansion in these channels has led to a loss of market share.
4. Parent Company’s Interest Decline: Originally part of Unilever (a global consumer goods giant), Unilever has shifted its focus to more profitable businesses in recent years, and Häagen-Dazs’ growth in China has slowed, leading to the decision to sell the business.
II. Ningji: How a Popular Lemon Tea Brand Can Afford the Acquisition?
Although Ningji is a “new brand” established in 2021, it boasts significant strength:
1. Strong Financing and Stable Cash Flow: The company has received investments from giants like ByteDance, Tencent, and Shunwei Capital within two years, with a valuation of over 2 billion yuan. Its lemon tea sells for 15-20 yuan per cup, featuring low costs (lemon, tea, sugar) and high margins. With over 2,000 stores nationwide, it has a stable cash flow.
2. Appeal to Young Consumers: Ningji has gained popularity as a “Changsha internet celebrity” brand, with clever marketing strategies targeting young people (e.g., collaborations with LINE FRIENDS and Honor of Kings, limited-edition packaging, and extensive promotion on platforms like TikTok and REDnote). Its target audience (18-35 years old) overlaps significantly with Häagen-Dazs’ target market.
3. Desire for Expansion: Ningji aims to expand beyond lemon tea into a “light food brand” for young people, including ice cream and small cakes. Häagen-Dazs’ existing ice cream supply chain and physical outlets can be easily integrated, saving Ningji time and money in development.
III. The Acquisition Is Not a Random Move; It’s a Mutual Benefit
This acquisition is beneficial for both parties:
- For Ningji:
- It gains the prestigious Häagen-Dazs brand, elevating its status from a low-priced tea brand to a high-end one.
- It can use Häagen-Dazs’ outlets to sell lemon tea and ice cream combinations, attracting more customers.
- It learns ice cream production techniques to diversify its product range.
- For Häagen-Dazs:
- Ningji’s young customer base and digital capabilities can help attract younger consumers.
- Ningji’s store network can help expand into lower-tier cities.
- It no longer relies on Unilever for funding and gains new marketing and product development ideas.
IV. What Industry Trends Does This Acquisition Reflect?
1. Local Brands Overcoming International Ones: Previously, international brands acquired Chinese ones; now, local internet brands (like Ningji) are acquiring international ones, indicating the growing strength of Chinese consumer brands.
2. Cross-Category Integration: Single-category brands struggle to survive, so companies like Ningji and Mixue Ice City are expanding into new areas to offer a wider range of products.
3. Blending of High and Low-End Brands: High-end brands (like Häagen-Dazs) are trying to reach younger consumers, while low-priced brands (like Ningji) are aiming for higher-end markets. This trend may lead to more “affordable + premium” combinations in the future.
Conclusion
Ningji’s acquisition of Häagen-Dazs is not a reckless move but a strategic business strategy. By exchanging capital for brand and channels, both companies benefit significantly. It highlights that there are no eternal “aristocrats” in business; only brands that adapt to change succeed. Whether selling lemon tea or ice cream, the key is to connect with young consumers.