Lemon Tea Chain to Revamp Haagen-Dazs in China

General Mills is selling its China Häagen-Dazs stores to Ningji Lemon Tea, aiming to adapt to China’s competitive market. The deal, expected by year-end, seeks improved profitability.

Key Points

• General Mills is selling its mainland China Haagen-Dazs stores to a local investor group led by Ningji Lemon Tea. Analysts view this as adapting to China’s competitive market. The deal should enhance profitability.

• China’s market is rapidly evolving, with local brands rising. Legacy multinational structures struggle to keep up, says Wang Shuo from LeadLeo Research Institute.

• The agreement grants the buyer exclusive rights to the Haagen-Dazs brand in ice cream stores and gifting lines. General Mills will manage retail and food services. The deal is expected to close by year-end, subject to approvals.

General Mills, the Minneapolis-based food company, is divesting its Haagen-Dazs stores in mainland China to an investor group led by local chain Ningji Lemon Tea. This strategic decision aligns with similar moves by major companies like Starbucks and Burger King, aiming to adapt to China’s rapidly changing and competitive market environment. Analysts suggest this revamp of foreign business models is necessary due to the rise of domestic brands and faster industry shifts in China, making older multinational management structures less effective.

Ningji, a burgeoning lemon tea chain with over 3,000 stores across China, will gain an exclusive license to operate Haagen-Dazs ice cream stores and gifting lines. Meanwhile, General Mills will retain control over the brand’s retail and food service operations on the mainland. The deal, expected to boost profitability, is projected to close by year-end, subject to regulatory approvals, with undisclosed financial details.

Haagen-Dazs, which ranked third among ice cream brands in China by food service transaction value last year, is facing challenges amid economic uncertainties. According to Zhu Danpeng, a food and beverage analyst, the brand struggles to maintain its market position with a mid-quality, high-price strategy as Chinese consumer confidence and spending power decline. This agreement aims to address these market dynamics and enhance operational efficiency in the region.

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