---
title: "Franchise Expansion and Low-Price Strategy: Who Still Buys Moutai Ice Cream?"
description: "Despite the popularity of Moutai ice cream, it is not a lucrative business for franchisees. The product's high price and limited variety, coupled with a shift towards affordable ice cream and increased competition from new tea drinks, pose challenges. Moutai's primary goal is brand rejuvenation, but the long-term conversion of young consumers to high-end liquor remains uncertain."
author: "林京"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-08-18"
language: "en"
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# Franchise Expansion and Low-Price Strategy: Who Still Buys Moutai Ice Cream?

> Despite the popularity of Moutai ice cream, it is not a lucrative business for franchisees. The product's high price and limited variety, coupled with a shift towards affordable ice cream and increased competition from new tea drinks, pose challenges. Moutai's primary goal is brand rejuvenation, but the long-term conversion of young consumers to high-end liquor remains uncertain.

Screenshot from the "i Moutai" platform. However, for franchisees, it is not a lucrative business. The franchise manual shows that a 66-yuan cup of Moutai ice cream costs 45 yuan to purchase, leaving franchisees with a fixed gross margin of 31.8%. They can only sell six pre-made ice cream products: the boxed ice cream initially launched by Moutai, available in original, vanilla, and plum wine flavors, and the "bottle-shaped" products with upgraded packaging from March this year, including yogurt ice cream, matcha ice cream, and blueberry juice sorbet. Moreover, emerging ice cream brands typically choose to overtake competitors online. Zhong Xue Gao, for instance, initially leveraged a 199-yuan boxed ice cream set to transform ice cream from a traditional seasonal product into a daily leisure item, targeting household storage consumption through online channels. Online, emerging ice cream brands can already compete with giants. According to statistics from Rentuo Intelligence, a third-party independent data monitoring agency, from March 2022 to March 2023, Zhong Xue Gao's sales on mainstream online platforms (JD.com + Tmall) were approximately 141 million yuan, Haagen-Dazs 109 million yuan, and Magnum 118 million yuan. However, offline sales channels are a tough nut to crack. The "2022 China Ice Cream & Popsicle Industry Trend Report" shows that four brands—Yili, Wall's, Mengniu, and Nestlé—hold over 50% of the offline market share. Revenue data also indicates that traditional ice cream giants focus on offline business. Yili's cold beverage business revenue in 2022 was 9.567 billion yuan, a year-on-year increase of 33.61%, ranking first in domestic market share; Mengniu's ice cream revenue increased by 33.3% to 5.652 billion yuan. This is a sales volume that emerging brands cannot match. However, unlike Zhong Xue Gao, Moutai ice cream is intensifying its offline layout and expanding into lower-tier markets to achieve faster growth. In May this year, on the first anniversary of Moutai ice cream's launch, the company disclosed its downward expansion plan: gradually expanding channels according to the plan of "M experience stores in 100 cities and N Moutai ice cream stations," opening experience stores at the prefecture level and "Moutai ice cream stations" at the county level. To support the lower-tier market, Moutai ice cream's new product "Xiao Qiao Zhi" has dropped its price to below 30 yuan, with a product specification of 50g, each containing 2% Feitian Moutai liquor. The flavors are also more diverse, including milk, chocolate, sour plum, peach, and green pomelo. A rough estimate shows that the previous 66-yuan product had a specification of 75g or more, with a price per gram of 0.88 yuan. Now, the price per gram is 0.68 yuan, equivalent to a discount of about 35%. In the offline channels where ice cream giants have a strong advantage, it remains to be seen how much success Moutai ice cream can achieve. Can it continue to attract young people? When Moutai ice cream was launched, the high-priced ice cream market was at its peak. Now that affordable ice cream has become mainstream again, it is not easy for Moutai ice cream to continue winning over young people with a price of 29 yuan per unit. According to Foodtalks data, in the second quarter of this year, among the top 25 best-selling ice cream products in South China, the highest-priced products were two Magnum ice creams priced at 10 yuan each, ranking 18th and 22nd in sales. In North China, East China, and Central China, products priced below 10 yuan dominated the list. Since the beginning of this year, major ice cream brands have also adjusted prices. Wall's Magnum launched a new mini series, with each piece priced at about half of the regular version. Yili's high-end ice cream brand "Xu Jin Huan" launched four new products in April this year, with prices reduced from 18 yuan to around 12 yuan per piece. Moreover, under the influence of the El Niño climate this year, the ice cream industry unexpectedly cooled down. This is because the main sales period for ice cream is from April to August each year, with April and May being the most critical sales season; sales in these two months basically determine the annual baseline. This year, due to special climate conditions, temperatures did not rise from April to June, and the weather was not hot enough, significantly affecting ice cream sales. This is also reflected to some extent in Moutai ice cream. Tech Planet noticed that Wumart and Yonghui Superstores have recently been selling near-expiry Moutai ice cream at a price of 9.9 yuan. At the Moutai ice cream offline flagship store in Beijing Chaoyang Joy City, ice cream with about half a month left before expiration is being sold with a "buy one get one free" promotion. An insider in the ice cream industry said that besides weather reasons and consumers becoming more rational, new tea drinks are also a key factor affecting ice cream sales. In social scenarios, users must eat ice cream quickly after purchase, and consumption scenarios are relatively limited. Moreover, new tea drink brands are also launching ice cream-flavored products, and the density of new tea drink stores is increasing. This year, there is also an overall price reduction trend, which will affect consumer decisions. After all, 15 yuan can buy a cup of milk tea, but not a cup of high-end ice cream. Currently, the ice cream industry faces many challenges, but Moutai's continued investment in ice cream is mainly aimed at promoting brand rejuvenation. Tech Planet noticed at the Moutai ice cream offline store in Beijing Chaoyang Joy City that although not many consumers entered the store between 7 and 8 pm, most passersby stopped to take photos. On December 29 last year, Guizhou Moutai's WeChat official account stated that approximately 3.4 million people had purchased and tasted Moutai ice cream, and about 400 million people knew about it. According to Moutai's latest 2023 semi-annual report, sales from "other businesses," including hotel and ice cream operations, were 223 million yuan, close to Moutai Group's daily profit level. The financial report shows that in the first half of 2023, Moutai achieved a net profit attributable to shareholders of the listed company of 35.98 billion yuan, a year-on-year increase of 20.76%, equivalent to earning 200 million yuan per day. Since it is merged with the hotel business under "other businesses," the exact sales of Moutai ice cream cannot be calculated, but as of the end of the reporting period, the cumulative registered users of "i Moutai" exceeded 42 million, making it a model and main platform for Moutai's digital marketing. The semi-annual report disclosed that during the reporting period, Guizhou Moutai achieved liquor revenue (excluding tax) of 9,338,550,100 yuan through the "i Moutai" digital marketing platform. **"i Moutai" is Moutai's experimental field for rejuvenation and the main online sales channel for Moutai ice cream.** Essentially, Moutai ice cream is still aimed at cultivating young consumers for baijiu. However, ice cream is not a high-frequency essential product, and whether consumers will continue to pay a high premium and ultimately convert into customers who spend thousands of yuan on Moutai liquor remains unknown. (Note: Wang Xiao in the text is a pseudonym.)


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