Chinese chain Yeah Gelato has secured its first external investment since its founding 15 years ago, as the fast-growing brand seeks to accelerate expansion, strengthen its supply chain and capture rising demand in the country's top-end ice cream market.
The Beijing-based company announced on Friday that it had entered into a strategic partnership with BA Capital, marking its maiden funding round. Financial terms were not disclosed.
The company said the investment will be used to upgrade its supply chain, enhance brand operations, expand its store network and explore overseas markets.
"We wanted a partner who truly understands who we are and what we stand for," said Yeah Gelato founder Cui Jianwei in a statement. "BA Capital has deep experience in consumer investing and shares our philosophy on products and brand building, which is the foundation of this partnership."
Founded in Beijing in 2011, Yeah Gelato has grown into one of China's largest freshly made ice cream chains, operating more than 1,800 stores as of Friday. Earlier this year, the company unveiled its "Oriental Gelato" strategy, aiming to differentiate itself by incorporating Chinese ingredients and flavors into traditional Italian-style ice cream.
According to restaurant data platform Canyan Data, Yeah Gelato is China's second-largest freshly made ice cream chain by store count, trailing only Dairy Queen (DQ), which operates more than 2,000 outlets in the country.
DQ's China operator, CFB Group, said earlier this year it expects the brand's store network to exceed 3,000 locations in the country by 2031.
In June, General Mills Inc sold its Haagen-Dazs retail store business in the market to an investor group that includes Ningji, a fast-growing Chinese beverage chain.
The investments also reflect growing investor interest in the country's branded consumer businesses.
BA Capital has backed several of China's best-known consumer brands, including Pop Mart, Heytea and Laopu Gold.
He Yu, managing partner of BA Capital, said the firm believes gelato remains a low-penetration category with significant long-term growth potential both in China and overseas.
Industry data suggest the broader market continues to expand, even as consumer preferences evolve.
According to iiMedia Research, China's ice cream market reached 183.5 billion yuan ($27.6 billion) in 2024 and is expected to grow to 233.4 billion yuan by 2030. The research firm said demand is increasingly shifting from traditional seasonal treats toward premium, healthier and more personalized products, supported by product innovation and wider retail availability.
Analysts found that the ice cream market is transitioning from a simple "summer refreshment" category into one spanning leisure snacks and healthier indulgence, with consumers placing greater emphasis on ingredient quality, differentiated flavors and consumption occasions.
The category continues to provide new opportunities in channels despite near-term challenges.
The Magnum Ice Cream Co, formerly Unilever's ice cream business, reported 12.1 percent revenue growth to 2.5 billion euros ($2.8 billion) in the third quarter, driven by innovation and strong performances across many international markets. However, CEO Peter ter Kulve said China remained affected by unfavorable weather and shifting retail channels.
Speaking during the company's earnings call last week, the CEO said the country's traditional convenience stores and hypermarkets — long the company's core sales channels — are facing pressure as rapidly expanding snack retail chains reshape consumer purchasing habits.
"There were none three years ago. There are now around 70,000," he said of specialty snack stores, adding that the company is adapting its product portfolio and channel strategy to capture growth in lower-tier cities.
According to iiMedia Research, offline channels still account for about 74.6 percent of the country's ice cream sales. Analysts said brands will need to strengthen offline execution while expanding digital channels and new consumption scenarios to reduce seasonality and sustain long-term growth.
wangzhuoqiong@chinadaily.com.cn
