China's ice cream market is crowded and fiercely competitive, with three major forces controlling nearly 90% of the market share. The first force is leading dairy companies like Yili and Mengniu. According to 2018 financial reports, Yili's cold beverage products generated revenue of 4.979 billion yuan. The second force is foreign companies such as Wall's, Nestlé, Başi, and Haagen-Dazs, which have long dominated the high-end and part of the mid-range market. The third force consists of regional legacy ice cream companies that rely on geographic advantages and position themselves in the mid-to-low end, entrenched in various regions. It was in this concentrated, three-way market structure that a dark horse emerged in April 2018—Zhong Xue Gao. Within two weeks of launching on Tmall, it topped the ice cream category. During the 2018 Double 11 shopping festival, it launched a 66-yuan ice cream bar that sold over 4 million yuan in a single day, and Zhong Xue Gao's first Double 11 saw it jump to first place in the ice cream category. In just 14 months since its founding, Zhong Xue Gao has recently become the focus of leading companies like Yili and Wall's, which have launched competing new products and are applying heavy pressure. In the new retail era, the internet has become an indispensable part of people's lives. Consumers' instant reach, instant social interaction, instant transactions, and instant feedback have given more opportunities to innovative products, allowing them to bypass the brand and channel barriers built by traditional FMCG giants and connect directly with consumers. Recently, New Distribution interviewed Mr. Lin Sheng, founder of Zhong Xue Gao. As a veteran with over 15 years of consulting and management experience in the FMCG industry, he previously managed marketing for Madeier and Zhongjie 1946. In the internet era, how did he execute a brilliant strategy in the brand's early stage? Compared to traditional FMCG, how does he view the market, brands, channels, and competition? We hope this provides inspiration for FMCG practitioners. Within a year of founding, completed two rounds of financing Zhong Xue Gao was founded on March 14, 2018. Before it was officially established, it received angel investments from Matrix Partners China, ZhenFund, and FreeS Fund. Six months later, it secured Pre-A funding from Tian Tu Capital and Toutou Shidao Investment Fund. With capital backing, Zhong Xue Gao has been on a fast track, achieving many results that have shocked the industry.

During the recent June 1 e-commerce promotion day, Zhong Xue Gao sold out 300,000 ice cream bars in less than half a day;

The company was founded in March, launched its first ice cream product in May, and by July had rapidly climbed to become the top brand in Xiaohongshu's food category in terms of notes. To date, it has accumulated over 4,000 recommendation articles;

Over the past 12 months, Zhong Xue Gao has held over 20 pop-up stores, opened 5 physical stores, and its Tmall flagship store has over 500,000 followers;

First-year sales exceeded 30 million yuan, and in 2019 it aims to triple growth... Lin Sheng told New Distribution that compared to other categories, ice cream upgrades have been relatively slow. Zhong Xue Gao simply followed the major trend of consumption upgrading by making products with zero additives, using better ingredients, and more design-forward packaging, while choosing e-commerce, which is more "efficient" than traditional distribution channels, to meet consumers' demand for quality ice cream. Unlike mainstream ice cream, Zhong Xue Gao targets not street-side retail for immediate thirst-quenching needs, but planned family/office scenarios, which Lin Sheng defines as a household storage consumption scenario. Of course, this consumption scenario has drawn skepticism from industry insiders: How high is Zhong Xue Gao's ceiling? In response, Lin Sheng admitted that if we only look at past household consumption scenarios, the capacity may be relatively limited, but the past cannot represent the future. "Take the rise of Three Squirrels as an example. In the past, nut snacks were mainly consumed in wholesale markets, sold in bulk. When Three Squirrels appeared, no one knew that Chinese people loved nuts so much. In fact, Three Squirrels is doing household storage snacks. Is it possible that in the future, ice cream will become a household staple like snacks and candies?" Zhong Xue Gao is a startup brand, and it may be impossible to definitively prove how high the market ceiling is, but Lin Sheng believes in three things: First, consumers will not reject good products; second, consumers will not reject convenient and fast experiences; third, when basic needs are met and consumers are well-off, eating good ice cream is a 'reward' for life. As long as you make good products and serve consumers well, leave the rest to the market. According to Tmall flagship store data, Zhong Xue Gao's current repurchase rate is over 30%. When positioning fails, what is the brand methodology? Being able to carve out a path in a fiercely competitive market is always accompanied by unconventionality, especially when innovating a brand. In the eyes of traditional FMCG practitioners, positioning is the most effective way to innovate a brand and establish a long-term market presence. But Lin Sheng believes that Zhong Xue Gao, as a startup, does not need it yet, or rather, traditional brand theory seems no longer suitable for current brand innovation. The traditional brand positioning theory involves market analysis and research, insight into consumer needs, combining one's own product features, self-imposed labels, and communicating the brand's value proposition to consumers through various forms of advertising. This classic theory has influenced a generation, but today, whether positioning can adapt to fragmented traffic and meet fickle consumers is questionable. In Lin Sheng's understanding, the external environment has changed. The internet allows us to reach consumers with products in real-time. Why not let consumers label us and define who Zhong Xue Gao is and what it represents? "I've seen the largest market research: distributing 20,000 questionnaires in Shanghai, but Shanghai has 30 million people. Can 20,000 respondents represent the thoughts of 30 million?" Lin Sheng said. "I used to be a staunch supporter of positioning theory, but later became increasingly confused because many things cannot be explained by positioning." When an actor first debuts, no one can clearly define their style. When they perform well in each role, and after the audience watches more, they naturally feel whether you are a method actor, a comedian, an idol... The same applies to brands in the new era. Brands are not self-positioned but labeled by consumers. Zhong Xue Gao only needs to focus on three things: make good products with differentiation; differentiate content to attract attention; and create external momentum to find more people to endorse Zhong Xue Gao. To date, Zhong Xue Gao has accumulated 40,000-50,000 reviews. When these reviews become 400,000, 4 million, 40 million, and when a certain word appears in over 50% of reviews, the brand's identity will naturally emerge. This is what consumers vote for with their wallets. Consumers will gladly accept it. This is the correct brand evolution logic in the new era. When the brand strategy changes, what about others? Is it channel-first or brand-first? If you look at the growth path of FMCG companies, there are only two paths: channel-driven and brand-driven. But if we return to the essence of business, is a company operating a channel, a product, or a brand? Lin Sheng believes that the ultimate goal of a company is to operate a group of users! In the past, there was no such thing as operating users because companies were too far from consumers—they couldn't touch or see them. After advertising, they didn't know if consumers saw it, bought it, liked it after buying, or would buy again. Due to intermediaries between companies and consumers, companies couldn't hear consumer voices or see feedback. Now, through internet platforms, the distance between companies and users has shortened. Companies can hear real user feedback, adjust strategies accordingly, and continue to earn user trust. Lin Sheng mentioned that his favorite activity is reading consumer comments on the flagship store and Weibo. "I read every consumer's message carefully. From these, we can see where we did right or where we have shortcomings. I don't mind consumers saying we're expensive; I hope they recognize our value." The essence of channels is interest-driven, meaning companies can buy access with money. Lin Sheng told New Distribution that this is not "discrimination" against channels, but because in the current environment, channels are the most unstable—new selling formats can appear every day. Since they are so changeable, it's better to directly "serve" the C-end well. Moreover, traditional distribution channels are also facing difficulties in moving products, and the key to moving products is still C-end consumers. So as long as people buy Zhong Xue Gao, the channel doesn't matter; it's just a sufficient condition, not a necessary one. Facing traditional giants, what should Zhong Xue Gao do? Facing traditional giants that lack neither resources, talent, nor R&D, how should Zhong Xue Gao respond? Lin Sheng told New Distribution, "Indeed, we feel pressure. The elephant may turn slowly, but it will eventually turn. Looking at the TPO100 brands during Double 11, 'Taobao brands' are becoming fewer. The only thing we can do is ensure we are not a 'Taobao brand.' Use the time gap (1-2 years) of the giants' turnaround to make Zhong Xue Gao a more three-dimensional and comprehensive brand." Additionally, the elephant won't "kill" the ant; the ant still has living space. When it grows into a small leopard, that's when it's most dangerous. At least in the next 2-3 years, Zhong Xue Gao won't become a direct opponent to the giants, because the storage consumption scenario for ice cream is still an incremental market—this is the time to expand the pie. Being an internet celebrity is easy, but to be a brand that can stand long-term and withstand tests, Zhong Xue Gao is always on the road. The backend supply chain, mid-office management and operations, and front-end channel system all require time to accumulate; they cannot be achieved overnight. According to Lin Sheng, Zhong Xue Gao established a large product center from the start, including procurement, R&D, production, quality control, and information security. Core members from Japan's Meiji (dairy brand) handle quality control, and Yili's production manager oversees the production line. 80% of the company's employees with master's degrees or above are in the product center. As a new brand founded only 14 months ago, facing the imminent pressure from giants, the only thing Zhong Xue Gao can do is: run!