High gross margins are almost the biggest reason why internet-famous ice cream attracts manufacturers to invest tirelessly, but internet-famous ice cream still needs the test of time. 40,000 ice cream bars were sold out in seconds, and the municipal party secretary's endorsement of Heihe soybeans generated 3.96 million yuan in on-site transactions. "While tasting Doudouxiao ice cream, I hope everyone will pay more attention to products labeled 'Jijing Hanyang'." On May 18, Ma Li, Secretary of the Heihe Municipal Party Committee, and Di Heng, member of the Standing Committee and Minister of Propaganda, entered the "Jijing Hanyang, Taste of Heihe" e-commerce livestream to endorse Heihe soybean products. "Affected by the epidemic, the FMCG industry encountered a black swan in 2020, with market sales plummeting, but the cold drink market saw significant growth. Consumption patterns changed; during the epidemic, home delivery business surged, and ice cream entered households as a result. Notably, distributors or brands that engaged with online business during the epidemic achieved good sales," Wang Haining, Executive President of the Beverage Branch of the China National Association of Food and Confectionery Industry, told China Business Journal. -01- "Weird" Ice Cream Everywhere: Ice Cream Moves Toward Dining Wang Leilei (pseudonym), a sales clerk at a convenience store in a community, has been particularly busy recently, catching up with the "5·20" store promotion. Besides yogurt and other drinks selling well, cold drinks also need frequent restocking. The reporter saw in the freezer at Duodian Convenience Store that, in addition to traditional brands like BaXi and Wall's, there were also new "internet-famous" products such as Yangmei Ice and German-style Big Milk Brick. "I've seen many weird ice creams on my social media feed, and I want to try them all, not knowing what they taste like," Zhu Yun, a white-collar worker in Beijing, listed many novel flavors to the reporter: Iron Pot Stew, Hunan Xuedi's Stinky Tofu ice cream, Kemiku's "Sugar-Free" series, Bobo Shubing's grilled sweet potato with hot and cold dual-eating series, and so on. In the view of industry insiders, "salty" ice cream and health-concept products seem to be particularly popular with consumers this year. Moreover, the iteration speed of ice cream and ice pop products is also accelerating. "We have noticed that this year's ice cream market and brands present the following characteristics:

  1. First, salty ice cream remains hot, and regional ice products continue to innovate, bringing novel products to the market. 2. Second, ice cream entering online channels and livestream e-commerce has become a new way to get close to young consumers. First-tier ice products are beginning to change, with cross-industry collaborations, product upgrades, and new product development. For example, Bright Dairy and White Rabbit collaborated, and Mars turned Dove chocolate and Snickers into ice cream with identical packaging," Wang Haining said. "Particularly noteworthy is this year's 'White Rabbit flying everywhere.' The most typical is the Bright Dairy and White Rabbit co-branded product, and of course, there are many follower brands. In short, rabbit-themed milk ice cream sells well, and raw chocolate-type products also sell well, like Kemiku's raw chocolate products," Zhu Baowei, Editor-in-Chief of China Ice Cream magazine, Project Director of China Ice Cream & Frozen Food Exhibition, and Deputy General Manager of Longpinxi Exhibition, told the reporter. Through visits to convenience stores and street-side shops, the reporter found that in terms of price, the market is still dominated by mid-to-high-end products this year, with 10-yuan ice cream bars being very common. However, in townships and fourth-, fifth-, and sixth-tier cities, ice cream priced at 3-5 yuan still exists. A sales manager from a "weird" ice cream manufacturer, who requested anonymity, told the reporter that the company began developing new products last year because for local small and medium-sized startup brands, only by capturing consumers with taste and packaging can they quickly become internet-famous. This is because consumers, especially young ones, always pursue "new, strange, and special" to occupy the market. "Many consumers eat ice cream not just for the cold drink itself, but to post on social media." Regarding the emergence of "weird" ice cream, Wang Haining said: "I don't think these products should be called weird; they are an innovation and extension of salty ice cream. Combining regional characteristics with ice cream is a good innovation for companies. As it stands, salty ice cream will exist for a long time, but the form and name of ice cream will continue to update with market changes. With the arrival of Generation Z, consumers no longer see ice cream as just a way to beat the heat, but more as a social snack food, so even more unique flavors will emerge in the future." Zhu Baowei also said that the emergence of ice creams like Northeast Iron Pot Stew and Stinky Tofu reflects the trend of ice cream moving toward dining. Not only ice cream but the entire frozen food market is doing the same. Young consumers pursue these novel products because they have talking points, are easy to spread, and are more likely to go viral online. -02- Quiet Changes in Channels Through visits and surveys, the reporter found that at the retail end, a freezer can hold at most about ten categories of ice cream products. Classic products like Wall's Cornetto and Magnum, and BaXi's BaXi Bar and tub BaXi still occupy prime positions in convenience stores and street-side shops, while internet-famous brands are indispensable in freezers. But there is a big difference between large chain convenience stores and street-side shops. "In large chain convenience store channels, even when choosing internet-famous products, they basically choose new products from 'big brands,' while street-side shops are more inclined to 'weird' new products, " an industry insider said. In fact, many new products are vying for channels with demonstration effects. "Products like 'Xujinhuan' with relatively high prices are also going offline because online volume is still limited, and they must be sold in packs; otherwise, dry ice and logistics costs cannot be absorbed. On the other hand, convenience store channels are favored by young people, and convenience stores are becoming a bellwether for many retail systems. Lawson, 7-Eleven, etc., are channels with demonstration and promotional effects," as Zhu Baowei said. Chain convenience store channels are now not only a shortcut for many ice cream products to become internet-famous but also a barometer of ice cream trends. Han Zheng, head of non-daily supply at Duodian Dmall Convenience Store, introduced that the current BEST-selling ice cream products are internet-famous, high-milk-content ice cream recommended by key opinion leaders, and refreshing fruit-ice products for summer. Currently, the ice cream category accounts for 10% of total sales and will continue to rise during the summer peak. It is worth noting that with the arrival of summer, many convenience stores place cold drink cabinets on both sides of the entrance to reduce customers' search time and facilitate selection. In terms of product placement, to make it easier for customers to grab items, products with topical or internet-famous appeal are placed on the side closest to customers for display and sale. Industry insiders say that large chain convenience stores are certainly the first choice for internet-famous ice creams because terminals have many touchpoints with consumers, but for most small and medium-sized internet-famous products, the route is still through street-side shops and second- and third-tier markets. In addition, livestream e-commerce with influencers is also a highlight in this year's channel competition among cold drink manufacturers. "The so-called livestream sales mostly use the concept of 'lowest price on the whole network' to gain more online orders. No matter how large the volume of this fast sales model becomes, I think its significance for brand promotion and online customer acquisition seems greater," Zhu Baowei said. Wang Haining expressed the same view: "Online channels are growing rapidly now, and the continuous emergence of internet-famous ice cream is key to accelerating the online channel for ice cream. For example, brands like Zhong Xue Gao, Orange Planet, and Peach Blossom Sign. In addition to e-commerce channels, livestream sales and community group buying have also become new channels for ice cream. Of course, the most intense competition remains offline, with competition among regional brands and between regional and first- and second-tier brands. Innovative ice cream has occupied the freezers of chain convenience stores, while first- and second-tier ice products still mainly rely on traditional supermarkets, mom-and-pop stores, and community supermarkets." -03- Disappearing Internet-Famous Ice Cream "A friend once recommended an ice cream to me that was particularly delicious, with all sorts of strange flavors, like chili, sesame, salty... I wanted to buy it again this year, but the company went bankrupt," Zhu Yun showed the reporter her order from last year for an ice cream brand called VIVIDoice, which has since disappeared. In fact, many internet-famous ice cream brands that emerged in 2018 and 2019 have already vanished by this year. "Being popular for a while but not forever is almost the fate of many internet-famous ice creams. So some products are developed from the start to sell 'freshness,' while others aim to become classics, but industry insiders know that how long they can stay 'hot' is unpredictable," the sales manager of the aforementioned internet-famous brand told the reporter. Some internet-famous ice cream brands do not have their own factories; they just think of getting a good concept and raising some funds. The foundation of such products is often not very solid. High gross margins are almost the biggest reason why internet-famous ice cream attracts manufacturers to invest tirelessly, but internet-famous ice cream still needs the test of time. The reporter noticed that Zhong Xue Gao, a representative internet-famous product that became popular the year before last, used to never sell through retail terminals, only online in packs with an average order value of over 100 yuan. This year, however, it has quietly entered the freezers of many convenience stores, and consumers can buy single servings. In this regard, Wang Haining believes that internet-famous brands initially leverage huge online traffic to quickly acquire consumers, open the market, build word-of-mouth, and form brand effects. But for FMCG products, especially ice cream with seasonal characteristics, going offline is a necessary path because ice cream is an impulse purchase; consumers do not predict when they will eat it. Going offline and placing products in terminals so consumers can see and buy them is the foundation for increasing sales. "Internet-famous brands have now completed the stage of online brand building and are entering the stage of sales growth layout," Zhu Baowei said. During interviews, the reporter also found that many small and medium-sized internet-famous brand manufacturers have chaotic internal management systems, basically no brand promotion departments, and place more emphasis on sales and online livestream promotion. It is clear that they lack long-term strategic planning for their brands, have unclear positioning, and are merely "following trends." "The reason internet-famous ice cream becomes internet-famous is that it gathers huge traffic in a short time, and the fundamental reason for attracting traffic is taste and packaging (including product names). They satisfy consumers' desire to try new things, but most regional brands often only focus on taste development while neglecting brand building. Secondly, many ice cream companies still engage in copycat behavior. For example, last year's popular Double Yolk Egg saw more than a dozen brands on the market, but unfortunately consumers only remembered the category, not the brand. So, ice cream that relies solely on taste and packaging innovation will not last long; companies should pay more attention to brand building," Wang Haining said. Source: China Business Journal, Author: Li Yuan