General Mills Considers Selling Haagen-Dazs China Stores Amid Declining Sales

General Mills, the food conglomerate based in Minnesota, is reportedly considering the sale of its Haagen-Dazs ice cream stores in China. This potential move comes as the company faces significant challenges in the Chinese market, where sales have been declining. The sale, which could fetch several billion dollars, is part of a broader strategy to streamline its operations and focus on more profitable segments.

The company has reportedly engaged advisors to facilitate the potential sale, with the process expected to commence this year. However, negotiations are still in the early stages, and it remains unclear whether a deal will be finalized. The sale would not include Haagen-Dazs' retail business in supermarkets and convenience stores, which continues to operate independently.

General Mills' struggles in China are part of a broader trend of declining sales in international markets. The company has reported a significant decrease in net sales and net income, primarily attributed to a drop in revenue from China. The potential sale of Haagen-Dazs' physical stores in China underscores the company's efforts to adapt to changing market conditions.

Haagen-Dazs, known for its premium ice cream, has been a staple in the Chinese market since 1996. However, recent reports indicate that foot traffic in its stores has decreased significantly, contributing to the overall decline in sales. The main reasons behind this decline include the domestic trend towards value-for-money products and the overall contraction of the ice cream market.

Domestic brands like Mango Snow Ice Cream have gained popularity due to their affordability. For instance, a basic Mango Snow Ice Cream costs only 2 yuan per stick, while a basic Haagen-Dazs ice cream costs 58.36 yuan. This price disparity has led to a significant drop in customer traffic at Haagen-Dazs stores, as consumers increasingly opt for more affordable alternatives.

Additionally, the ice cream market itself has been shrinking. Major players like Yili and Mengniu have reported significant declines in their ice cream revenues. Yili's cold beverage revenue decreased by 18.4% year-over-year to 8.72 billion yuan, while Mengniu's ice cream revenue dropped by 14.1% to 5.175 billion yuan. This market contraction has further exacerbated Haagen-Dazs' challenges in China.

Despite these challenges, the potential sale of Haagen-Dazs' stores in China could present new opportunities. Introducing a new local investor could help Haagen-Dazs better adapt to the local market. For example, after McDonald's China was acquired by China Resources, the company saw significant growth in its local operations, including a doubling of its restaurant count and increased decision-making efficiency through a more localized management structure.

Therefore, while the potential sale of Haagen-Dazs' stores in China may seem like a setback, it could also open the door to new opportunities for the brand to thrive in the local market. The company's decision to explore this option reflects its commitment to adapting to changing market conditions and consumer preferences.