Every scorching summer, a cold ice cream can instantly beat the heat. However, the 'sky-high ice cream' trend from a few years ago often left unsuspecting consumers feeling chilled to the bone. This summer, however, 'sky-high ice cream' seems to be vanishing. Typical 'ice cream assassin' Zhong Xue Gao has dropped its unit price from 40-60 yuan to 10 yuan. Additionally, brands like Moutai Ice Cream and Magnum are also shedding their 'arrogant' facade and bowing to consumers. Most consumers are relieved to see the ice cream assassins disappear, as no one wants to awkwardly discover at the checkout that their ice cream is outrageously expensive but still have to pay for it. But after the price cuts, can these brands really relax?
The Disappearing 'Sky-High Ice Cream'
Looking back, the domestic high-end ice cream market has long been controlled by foreign brands. A few years ago, Zhong Xue Gao used internet celebrity hype, leveraging aesthetics, storytelling, and social fission marketing to become a market dark horse, managing to sell domestic ice cream at a high price of 60 yuan. Subsequently, many brands followed suit, and 'sky-high ice cream' sprang up like mushrooms, with sales continuing to climb. Typical examples include Wuliangye ice cream at 32 yuan per scoop, Dassai ice cream at 53 yuan per box, and Moutai ice cream starting at 59 yuan per box. 'High prices' indeed can earn more money. In 2021, Zhong Xue Gao's sales exceeded 1 billion yuan at its peak. In June last year, Ding Xiongjun, Party Secretary and Chairman of Moutai Group, stated that Moutai ice cream had sold nearly 10 million cups cumulatively, estimating annual sales of over 600 million yuan. However, since this year, Zhong Xue Gao has taken the lead in price cuts, and recently other brands have followed suit. According to media reports, Zhong Xue Gao's prices have dropped from the initial 40-60 yuan to 10-20 yuan; Moutai ice cream's price has also dropped from 66 yuan per box to 10 yuan per box. On Haagen-Dazs' Tmall flagship store, the original price of 350 yuan for an 81g*10 small cup multi-flavor combo is now only 215 yuan after discounts, averaging 21.5 yuan per cup, with an overall discount of about 68%.
Image source: Internet
Even Magnum under Unilever, which used to cost around 15 yuan per stick, has started to cut prices this year. The original 13.9 yuan Magnum cherry blossom flavor ice cream is now only 5.9 yuan per stick. Moreover, this year Magnum has also launched 'Mini Magnum' to further lower prices, such as the suggested retail price of 8.8 yuan for Mini Magnum Golden Dragon and Mini Magnum Azure Dragon. Major brands cutting prices have forced other brands to follow suit. On JD Daojia platform, Yili Qiaolezi Qiaocui Bar ice cream 75g5 sticks is only 14.7 yuan, averaging less than 3 yuan per stick; Mengniu Suibian Vanilla flavor 75g5 sticks is 21.8 yuan, averaging just over 4 yuan. The top brands have unanimously cut prices, pushing industry competition to a peak. From my visits to multiple stores, 70% of ice cream retail prices are below 5 yuan, and products above 10 yuan are very rare. In communication with many merchants, I found that previously, merchants, considering high premium and high gross margin, tended to introduce ice cream products above 8 yuan, and rarely introduced products below 3 yuan. However, since the second half of last year, many merchants have been unwilling to wholesale ice cream products above 5 yuan. Why? Because high-priced ice cream products don't sell well, and inventory pressure is too high. An ice cream distributor said that he still has thousands of boxes of high-priced ice cream in his warehouse, a number that has never appeared even in the past winter off-season. After sensing the risk, the distributor decided to reduce purchases of high-priced ice cream products. According to Beijing News, many supermarkets in Beijing are still selling 'old stock' produced a year ago, with some channels having 'old stock' accounting for 40% of 2023 products, and some ice cream products produced in February 2023 are still being sold in freezers. These 'old stocks' have undoubtedly affected the pace of new ice cream launches. To clear inventory, merchants have to discount or reduce prices.
Consumers Refuse to Be 'Suckers'
Water can carry a boat, but it can also overturn it. When 'sky-high ice cream' caused brand and capital frenzy, it moved further away from consumers. The fundamental reason for the shift from 'sky-high' to 'price cuts' is that consumers are no longer willing to be 'suckers'. The Paper once conducted a survey asking 'Would you buy Zhong Xue Gao after the price cut?', and over 70% of respondents said no.
Image source: The Paper
According to iiMedia Research's '2023 Chinese Consumers' Acceptable Price for a Single Ice Cream or Popsicle' survey, Chinese consumers generally accept prices between 3-15 yuan (excluding 15 yuan). It is clear that affordable pricing is the most basic demand for ice cream. Why are consumers not buying high-priced ice cream? First, because brand marketing is too aggressive, producing the opposite side effect. Many high-priced ice creams have weak essential demand, as ordinary people won't buy them every other day. Therefore, these products rely heavily on marketing to drive repeat purchases. However, if marketing raises consumers' psychological expectations but the actual experience doesn't match, consumers will feel a significant psychological gap. Once they pass the 'trial stage', they won't repeatedly consume. Second, many high-priced ice cream products have overly crazy marketing, with some prices being hyped to hundreds of yuan, and even requiring queuing to buy. Excess is as bad as deficiency; this frenzied atmosphere easily triggers consumer aversion. With excessive marketing and weak products, consumers' enthusiasm for 'sky-high ice cream' gradually wanes, making related products harder to sell, and some brands' operations are affected. Zhong Xue Gao was once the sales champion in the ice cream category on Tmall during the 618 shopping festival for three consecutive years, but now it has been exposed to unpaid wages and debts, with the boss becoming an enforcement target, and the number of employees reduced from 1,700 to several hundred. Unilever, which owns brands like Wall's and Magnum, reported in its 2023 financial report that its ice cream business saw pricing increase by 8.8% but sales volume decreased by 6%. Earlier, Unilever announced on its official website that to save costs, it would divest its ice cream business and plan to lay off 7,500 employees globally.
After the Price Cut, Is Everything Easy?
In the business world, price cuts are often a 'crude' commercial tactic. While they can stimulate consumer demand and boost sales in the short term, they are not a panacea. Using the marketing 4Ps (Product, Price, Place, Promotion) to analyze high-priced ice cream brands, it becomes clear that besides promotion, they have shortcomings in the other three aspects. So from a long-term perspective, although prices have been cut now, future competition will still revolve around product and channel. Separately, product is the foundation of a brand. Some high-priced ice cream brands think that after this price cut, they will regain consumer favor, but that's not the case. A consumer said that after hearing about a brand's high-priced cone ice cream price cut, they excitedly bought a box. However, after tasting one, they found it wasn't this year's new product; the production date was old, clearly not stored well, and the overall taste was very poor, so they didn't want to eat the rest. Cutting prices without cutting experience is the right way to win consumers' hearts. Besides product, ice cream brands also need to strengthen channel construction. On one hand, they should stabilize the distributor group, improve online and offline channel turnover, and accelerate inventory digestion. On the other hand, in channels communicating with consumers, ice cream brands should strengthen management, actively respond to consumer doubts and criticism, and resolve trust crises. For example, Zhong Xue Gao's founder once responded to the high price of their products: 'It's just that price; take it or leave it.' This caused huge controversy among consumers and affected Zhong Xue Gao's brand reputation. Similarly, Magnum was previously exposed for 'double standards'—in the European market, its ice cream products mainly use milk as the main ingredient, while domestic products mainly use water and milk powder, triggering criticism from domestic consumers.
Image source: Pexels
It can be said that in the face of consumer doubts, Zhong Xue Gao and Magnum did not respond or handle well, nor did they soothe consumer emotions, thus losing some target consumers. Even after price cuts, 'sky-high ice cream' won't be easy; the perception of 'ice cream assassin' established in consumers' minds is hard to eliminate in a short time. It can be predicted that this year's ice cream market will see a 'calm' year. As consumption becomes more rational, whether traditional giants or new industry players, they will return to the dimensions of brand itself and product competitiveness, and consumers will also return to rationality.
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