Nestle is reportedly considering closing down its ice cream plant in Shanghai and reassessing its strategy for China's ice cream market, a Nestle employee told Yicai.com.

Ice cream is a key part of Nestle's operations in the country and a restructuring would aim at formulating a framework for sustainable development and ratcheting up investment in this niche market, the Nestle source said.

In the Chinese ice cream market that is projected to be a ¥100 billion business by 2015, Nestle was trailing Yili (SHA: 600887), Mengniu (HKG: 2319) and Unilever (NYSE: UL) with a minute 3% market share in 2009, statistics show. Yili led the way with a 15.8% share, followed by Mengniu's 13% and Unilever's 6.9%.

Yili and Mengniu's share have grown larger rapidly over recent years, while Nestle's has remained relatively stable in comparison.

Revenue from China's ice cream market amounted to ¥30.8 billion last year, according to Euromonitor International, a world leader in strategy research for consumer markets. Per capita consumption of ice cream in China is about one liter per year, well below the 22 liters per year consumed by an average person in the United States, experts estimate.

Nestle has not commented on the news.

$1 = ¥6.33

 

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