Click to read the original article for details For some brands: if it doesn't affect returns, then even minimal investment, or even cost reduction, is perfectly fine. For example, making changes to the ingredient list that consumers overlook. Last summer, Magnum caused a stir due to the double-standard incident of using different formulas in China and Europe, which also caused its high-end image, painstakingly built over many years in China, to plummet. Whether it's Magnum or the familiar Cornetto, both belong to the same ice cream brand—Wall's. In this issue, I want to talk about the rivalry between Wall's and Nestlé. 0****1 The ice cream we know today mainly originated in Italy, spread to the Americas in the 18th century, and then in the 19th century, with the development of refrigeration technology, ice cream gradually achieved industrial production. After World War II, multinational companies like Unilever became well-known manufacturers, and 'Wall's' was one of the ice cream brands it acquired. In 1992, Unilever decided to establish an ice cream business in China. Coincidentally, Zeng Xiwen, who was then in the Planning Department of the Ministry of Light Industry, was tasked with forming Qunxing Group. One side needed market entry qualifications, the other was seeking new projects; the two hit it off and immediately formed a joint venture. Qunxing Group invested 20 million yuan, holding 15% of shares, while 'Wall's' held 85%. By the way, Unilever's first choice of partner was actually Beiyang, but the deal fell through because Beiyang insisted on retaining its brand name. In 1993, 'Wall's' officially entered the Chinese market under the Chinese name 'Hèlùxuě' (Wall's). But at that time, the general public mainly consumed ice pops, called 'bīnggùnr' in the north. Using my common food classification method, the ice pops we ate in childhood belong to the class of sweets, order of cold drinks, family of water ice, genus of ice pops; their main raw materials are sugar and water. Ice cream and ice milk bars, both in the family of milk ice, have roughly the same basic raw materials (water, cow's milk, milk powder, cream or vegetable oil, sugar); they are respectively the genus of ice cream and the genus of ice milk bars. The main difference lies in the different requirements for fat and protein content. Ice cream has a fat and protein content of no less than 5% and 2.2%, and also has certain requirements for milk and dairy product content; while ice milk bars have a fat and protein content of no less than 1% and 0.4%, and have no specific requirements for milk and dairy product content. So, how did Wall's manage to gain fame and seize market discourse in such a short time? It can only be said that Wall's had a wealthy father who was not afraid to take risks. At a time when the domestic retail market was still dominated by mom-and-pop stores, Wall's boldly implemented the 'freezer strategy', which was to provide free freezers with Wall's iconic logo to various stores, along with a red-and-white large umbrella. Of course, Wall's had conditions. In their freezers, only their own products were allowed to be placed. This move not only firmly controlled the terminal market for ice cream sales but also made small shops invisible billboards for Wall's. Freezer + umbrella, with strong red and white colors, Wall's created a highly recognizable summer-specific consumption scene. For my childhood, seeing this big umbrella meant seeing the grocery store. At that time, the Beijing Evening News used 'the city is full of Wall's' to describe the summer storm stirred up by Wall's. This freezer strategy became almost a routine tactic in the cold drink industry war, determining the life and death of many brands. Subsequently, Wall's replicated the Beijing promotion model in Shanghai. 13,000 freezers appeared on the streets of Shanghai one after another. Starting from 1994, with Beijing and Shanghai as the core, Wall's gradually opened up markets in other first- and second-tier cities in China. The freezer strategy not only left domestic brands, especially those small manufacturers mainly producing ice pops, without the ability to fight back, but also knocked down big names like Meidenggao. This made Wall's old rival in the international market—Nestlé—start to feel restless. In fact, as early as around 1995, after Wall's had already made a name for itself, Nestlé planned to establish an ice cream business in China, and first targeted the Shandong market, intending to build a factory there. Wall's, having learned of the internal news, in order to intercept its opponent, staged a spy war, going all out to enter Shandong before Nestlé's launch, filling the channels, which caught Nestlé, which was about to make a big move, off guard. In 1997, Wall's was already dominating, ranking first in brand awareness for ice cream. Nestlé couldn't sit still. Besides copying the 'freezer strategy', it also used its eternal 'trump card'—the acquisition method. First, it acquired the local well-known brand 'Shengmaile' in Shanghai, thereby occupying nearly 1/4 of the market in Shanghai and surrounding areas; two years later, it obtained the operating rights of the famous brand 'Wuyang' under Guangdong Frozen Factory with 97% of the shares. Wall's was not to be outdone. Especially after Nestlé, relying on Wuyang, made Wall's hit a snag in entering the South China market, Wall's immediately acquired 'Manlin Deng' to further expand its base. In terms of timing, Nestlé was a step behind; in terms of momentum, Wall's still had a slight advantage at that time; it seemed Nestlé was suppressed, but after all, the two had been fighting for so many years, neither would underestimate the other. Many people probably have a general impression: On the one hand, Wall's and Nestlé, as foreign brands that entered China in the 1990s, are naturally associated with high-end and expensive, just like McDonald's and KFC at the time; On the other hand, just looking at the actual pricing, it's clear that neither follows a civilian mass-market route. Take Wall's as an example: to occupy the market, it initially launched more than 20 brands including 'Cornetto', 'Magnum', 'Calippo', and 'Paddle Pop'. But among them, the cheapest basically cost two yuan, with Cornetto initially priced at 4 yuan. Not to mention Magnum, which was initially priced at 7-8 yuan. It is said that at that time, the most popular bet in mahjong games among Beijing government agencies was a Magnum. Similarly, Nestlé ice cream also took a mid-to-high-end route. But since both wanted to gain more market share, they couldn't always stay aloof. In contrast, Wall's lowered its stance earlier and adopted a common practice for foreign companies: after acquiring Manlin Deng, it launched a series of products at the same price point below two yuan, and used Manlin Deng's original channels to sell these products together, gradually swallowing up Manlin Deng's original sales network. Once the channels matured, Wall's completely abandoned the 'Manlin Deng' brand. Let me show you what it means to be truly 'ruthless'. Nestlé, on the other hand, was a step behind in this regard. After acquiring 'Shengmaile', it basically gave up operating this old brand that had won people's hearts, using the original production lines to produce its own ice cream products, which laid the groundwork for its withdrawal from the East China market years later. In summary, from 1999 to 2003, Wall's and Nestlé were basically at loggerheads. Wall's several well-known brands saw price reductions of up to 30% at most. In addition, many new products launched during these years offered distributors strong buy-one-get-one-free promotions. Nestlé also reduced prices by nearly 20% for most of its products. 02**** However, in the price war, the strong dragon clearly couldn't suppress the local snake. Yes, I'm talking about Yili. Since gaining fame with 'Bitter Coffee' in 1997, Yili set its sights on the mid-to-low-end ice cream market. Over several years, it 'worked silently', relying on price advantages and its original channel advantages based on dairy products, and within just five or six years, it became the market leader. Perhaps it was the rise of Yili and more domestic ice cream brands that made the two foreign brands, Wall's and Nestlé, realize that blindly lowering prices wouldn't work. So, after irrational competition, both successively chose to abandon the price war and turned to brand marketing offensives. Especially Nestlé, which launched a fierce attack in 2003. Compared to 2002, Nestlé's advertising investment accounted for only 3% of the entire ice cream market, less than Mengniu's 9%, while Wall's accounted for as much as 35%, and Yili also occupied 20%. Finally, after fighting a futile price war with Wall's, Nestlé, contrary to its usual behavior, launched two new advertisements with two new products, Kaleidoscope and X Crisp. And it introduced a new brand image spokesperson—the Blue Ice Elf. In today's terms, it was equivalent to a virtual idol. It's worth mentioning that many of Nestlé ice cream's advertisements were directed by Wuershan. △Wuershan So overall, they maintained a unified visual style, with a touch of fantasy imagination, plus an overall blue tone, creating a dreamy feel that greatly enhanced the brand recognition of Nestlé ice cream. To generate more buzz, the 'Blue Ice Elf' later had its own 'undercover' representatives, such as supermodel Chun Xiao and actress Re Yizha. Although Nestlé ice cream's efforts in brand marketing yielded some returns, from the broader market environment, Nestlé's market share was widening the gap with the other brands mentioned. Especially in 2011, when it closed its Shanghai factory and announced the termination of its ice cream retail business in the Jiangsu-Zhejiang-Shanghai area, Nestlé basically retreated to most of South China and North China in its ice cream business. Now when mentioning Nestlé ice cream, perhaps the deepest impression is the 'Ben Nana Ice Cream' that became popular through social media marketing; the fact that it could be peeled like a banana was somewhat gimmicky at the time. But in recent years, there seem to be no more hits. In contrast, Wall's marketing started much earlier. As early as 1995, when Wall's was mainly targeting first-tier markets like Beijing and Shanghai, it used TV advertising as its strongest support. At that time, the first advertisement invited the team of Mo Kang Sun, known as the 'godfather of advertising', and took three months to produce. In the commercial, the consumption scene of street-side freezers and umbrellas was recreated, with the song 'Wall's, like a friend' running throughout, conveying the feeling that eating Wall's can share happiness. Later, there was another classic advertisement where a little lion led children to find treasure. However, overall, the advertisements at that stage focused on highlighting the Wall's brand, aiming to make people remember Wall's. So, almost every advertisement ended with a singing 'Wall's~'. By the way, another reason I have a deep impression of Wall's is because of 'I'll Cry for You'. Doing product placement in that era, Wall's was also at the forefront of brand marketing. 'I'll Cry for You' After Wall's firmly established its focus on the mid-to-high-end market, especially in 2005 when Wall's changed its leadership and completely changed its operational approach, no longer fighting meaningless price wars, its main products were more clearly differentiated, taking a sub-brand differentiation route. Among them, the ace product Cornetto targeted the youth market, so its advertising focused on emotional marketing. Mentioning Cornetto seems to be associated with keywords like first love, confession, youth, and pure love. How many people still remember the Cornetto advertisement starring JJ Lin and Kym from the early days? After that, Cornetto also launched a series of micro-movies with themes of youth and love, such as 'Love at This Moment', starring actors with similar labels like Chen Bolin and Ariel Lin. For the children's market, there was 'Max Lion', transformed from the childhood Paddle Pop. Although it was still the same lion, because of the promotion combined with the animated series 'Max Lion's Adventure', this little lion gained greater fame in the children's market. As for Magnum, due to its pricing, everyone would default to its aloof and high-end vibe without any promotion. From a brand positioning perspective, Magnum initially targeted the fashion and white-collar crowd, so its marketing often associated it with keywords like sexy, fashionable, and luxurious. Therefore, the advertisements were particularly lavish. Abroad, it was personally directed by Karl Lagerfeld, making a stunning debut, while domestically, stars like Li Bingbing, Lin Chiling, and Gao Yuanyuan became spokespersons. Up to now, although Magnum's spokespersons have changed wave after wave, the overall advertisements still follow a high-quality route, which also represents the brand philosophy it wants to convey. 03**** From the 1990s to now, Wall's has developed in the domestic market for nearly 30 years. According to Euromonitor data, from 2016 to 2021, in terms of total retail sales, Wall's market ranking has always maintained second place. Behind this, besides the early investment without regard for cost and years of brand marketing, there is another key point that is most easily overlooked: Wall's cold chain technology. The birth of ice cream is inseparable from the development of cold chain technology, especially mid-to-high-end ice cream with high milk content and easier melting, which places higher demands on cold chain logistics. In fact, the development of domestic cold chain technology does owe a debt to Wall's. In 1996, in many parts of our country, refrigerated transport still used the crude method of smashing large ice blocks with hammers and then scattering the crushed ice into the compartments loaded with food. Wall's, on the other hand, established modern factories in Beijing, Taicang, and other places, as well as a cold storage in Guangzhou, with both equipment and technology imported from abroad. Furthermore, from building warehouses, to setting up distribution centers, purchasing refrigerated transport vehicles, planning transport routes, and training employees, the creation of this entire cold chain team indirectly provided everyone with a learning window. By the way, Nestlé's defeat back then was also related to its cost-saving on cold chain. Originally, Nestlé had thirty or forty self-owned refrigerated transport fleets. Later, to save on cold storage and cold chain transport costs, it gradually let third parties take over, which meant that Nestlé ice cream had to wait for the third party to fill the truck before shipping, and the slower shipping speed naturally affected the competitiveness of Nestlé products. Compared to Nestlé, Wall's was clearly more willing to invest in costs. From building its own cold chain team, to entrusting the entire northern region's logistics to Huari Feitian for exclusive operation in the early days, and later becoming the only enterprise in China at that time to adopt pallet-based operations, i.e., packaging all products on pallets, and continuously optimizing transport routes in the later period, Wall's has always been at the forefront of cold chain. Moreover, it was Wall's that brought a set of strict execution standards for ice cream cold chain. For example, after production, ice cream needs to enter a -40°C freezer, then be transported via refrigerated trucks with temperature controlled below -20°C to a wholesale freezer with a constant temperature of -26°C, and then using refrigerated trucks with temperature controlled between -18°C and -20°C, the ice cream is transported from wholesalers to retail terminals. After the Magnum double-standard incident, Zeng Xiwen responded, mentioning that Wall's brought the overall cold chain concept, crying injustice, implying that with all these costs we've spent, how could we save on a little auxiliary material cost. After reading the materials about Wall's, I couldn't help but think about this issue. It's a fact that Wall's invested in costs, and it's also a fact that Magnum had double standards, and such incidents are common. Why? Here I only state my conclusion, and everyone can discuss it. In the early 1990s when foreign brands first entered China, it must be admitted that they had huge advantages in both technology and management. Facing this huge domestic market, they only needed to transplant their past experience to quickly occupy the market and obtain extremely high profits. Therefore, for areas like cold chain that could maintain advantages and continue to generate profits, Wall's was naturally willing to spend money. This objectively promoted the development of the domestic ice cream industry and even the frozen food industry. Simply put, if the returns are large enough, then no matter how much investment, it's worth it. For example, marketing: as long as I create a high-end concept through marketing and make consumers willing to pay a premium, then marketing expenses are not a problem. Conversely, if it doesn't affect returns, then even minimal investment, or even cost reduction, is perfectly fine. For example, making changes to the ingredient list that consumers overlook. But Wall's didn't anticipate that in the internet age, such double standards would spread rapidly and eventually evolve into a public relations crisis. They didn't realize that today's Chinese consumers are completely different from those thirty years ago. It's not about fooling them, but truly unified standards. What we need is simply three things: fairness, fairness, and still fairness. And if similar brands still operate with the 'pioneering' mindset of thirty years ago, such incidents of overturning due to double standards will continue to occur repeatedly in the future. References: 'China's Beat: Unilever Dancing with China', Niu Yi 'Wall's Blue Ocean', Luo Wenli 'Smelling the Smell of Gunpowder', Zhang Xinyue 'Tracing the Source of Nestlé's Ice Cream Failure: Repeated Blunders in Sales' 'The Ice Cream War: Successive Waves, Taking Stock of the Hot Arena in the Ice Pop and Cold Storage World' Source: IC Laboratory (ID: InsightPlusClub) -END-