---
title: "Where Have the 1-Yuan Ice Creams Gone?"
description: "The article explores why ice cream prices have risen and where affordable ice creams have gone, attributing it to multiple distribution layers, high cold-chain logistics costs, and the shift towards premium products in convenience stores. It highlights the case of Xuelian, a 0.5-yuan ice pop that went viral but still struggles to reach consumers due to lack of profit margins."
author: "胡楠楠"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-07-10"
language: "en"
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---

# Where Have the 1-Yuan Ice Creams Gone?

> The article explores why ice cream prices have risen and where affordable ice creams have gone, attributing it to multiple distribution layers, high cold-chain logistics costs, and the shift towards premium products in convenience stores. It highlights the case of Xuelian, a 0.5-yuan ice pop that went viral but still struggles to reach consumers due to lack of profit margins.

********Click to read the original article for details********
Every slot in the freezer must be considered for its output.
"So how much do you plan to sell it for?" After Xuelian went viral, a convenience store buyer asked Zhuang Huanhuan if they could supply some Xuelian to them, and Zhuang would blurt out this question.
Zhuang Huanhuan is the general manager of Ningbo Huancheng Food, mainly engaged in ice cream distribution in East China. Currently, she is the first-tier agent for over 30 ice cream brands in the Ningbo region. The brands she represents include domestic brands, internet-famous brands, and some imported brands. Domestic brands include Hongbaolai, Zhongjie 1946, Madeier, etc.; internet-famous brands include Heytea, Apollo Taiyaki; and there are also cultural and creative brands and imported brands such as Haagen-Dazs and Mars. She mainly focuses on the mid-to-high-end ice cream market.
Her concern is not unfounded.
Five days after the 0.5-yuan Xuelian went viral, it transformed into an alternative "ice cream assassin." On July 5, China Entrepreneur searched online platforms for "Xuelian ice cubes" and found that some cold drink wholesalers were already selling Xuelian online: 20 bags of Xuelian were priced from 66 yuan to 126 yuan, averaging 3 to 6 yuan per bag. No longer the well-known 0.5 yuan.
On June 30, the hashtag #Xuelian Collapse# trended on Weibo. The reason was that a netizen who had worked at a Xuelian factory exposed that the production factory was dirty and messy, and posted a picture of the green outer packaging of Xuelian. Shortly after, an account named "Xuelian Ice Cubes" posted several Douyin responses, saying, "Our workshop is very clean." It is understood that the Douyin account "Xuelian Ice Cubes" is registered under Shandong Linyi Gushanzhai Food Co., Ltd., and at the time of the response, it had not even completed verification; it was a newly registered account.
As a result, netizens began to spontaneously defend Xuelian: "I'm blind, I didn't see anything." "It doesn't despise me for being poor, how can I despise it for being dirty?" "A 0.5-yuan ice cream can't just disappear; you quickly fix it, and I'll pretend I didn't see it."
**First, there were 'ice cream assassins' – high-end ice creams invading, and consumers were caught off guard buying expensive ice creams. Then, there was the Xuelian defense battle – affordable ice creams disappeared, and memories of 1-yuan ice creams like Xiaobuding, Green Tongue, Green Mood no longer dominate summer freezers. Now, the affordable representative 'Xuelian ice cubes' has also started to rise in price after going viral.** These events point to the same direction – why are ice creams getting more expensive, and where have those affordable ice creams from memory gone?
**The ice cream market is still mainly offline, with many distribution links and a short sales season, and every layer of distributors needs profit.** Low-priced ice creams have no profit margin and are difficult to enter the market. Unlike beverages and other consumer goods, ice cream requires cold chain throughout transportation, so logistics costs are much higher. Zhuang Huanhuan told China Entrepreneur, "If you send a few ice creams online, the foam box, dry ice shipping, express fees, etc., add up to about 30 yuan per order in shipping costs."
**01 The 0.5-yuan Xuelian also becomes an 'assassin'**
"Don't pick up unfamiliar ice creams from the freezer." Since May, there have been discussions about ice creams across the internet. Ice creams that look ordinary in the freezer sting you with their price at checkout. Thus, the "ice cream assassin" was born.
"I bought 4 ice creams at an unknown convenience store near my company, and the total was over 40 yuan. When I asked the owner, I found out that one of the unknown brands was 13 yuan. There was no choice; I had already paid, so I had to be the fool." said Xu Li, who works in Beijing.
The reporter visited several mainstream convenience stores in Beijing, such as 7-Eleven and Lawson, and found that Lawson's ice cream prices ranged from 4.4 yuan to 18 yuan. The 4-yuan and 18-yuan items were rare; most ice creams were priced between 7 and 10 yuan. The brands in the freezer included well-known ones like Nestlé, Zhong Xue Gao, Cornetto, Magnum, Zhongjie Daguo, and Baxy.
There were also new brands like Apollo Taiyaki, Asosan Aoharu, and Melon, mostly priced around 10 yuan. 7-Eleven mainly sold brands like Zhong Xue Gao, Magnum, and Nestlé, including some co-branded items like the Deshi and 7-Eleven co-branded Thick Milk Cathedral ice cream at 16.8 yuan, and the Dongbei Daban co-branded with Yongpu and Daily Dark Chocolate.
Beijing 7-Eleven convenience store ice cream freezer. Photo: Hu Nannan.
Against the backdrop of the nationwide criticism of "ice cream assassins," Xuelian, which trended on Weibo, became an outlet for consumers' frustration with high-priced ice creams due to its affordability. "It's more of a sentiment." said Zhu Baowei, an ice cream market expert and senior researcher at Longpinxi China Market Research Center.
Just like before, brands like Bee & Flower, Erke, and Baixiang were embraced by consumers for not raising prices for years. Everyone took practical actions to support affordable and conscientious domestic brands.
From the first Douyin post on June 30 to 7:00 PM on July 5, the Douyin account "Xuelian Ice Cubes" had gained 756,000 followers. Zhong Xue Gao currently has only 477,000 followers.
Xuelian Ice Cubes established 12 fan groups within 5 days, and each group with a 500-member limit filled up within hours. Fans in the groups kept asking, "Where can I buy it? I can accept a price increase to 1.5 yuan..." "When will the little yellow cart be listed?"
**Xuelian is a category, not a brand.** Currently, on online platforms like Taobao and JD.com, multiple cold drink wholesalers have listed Xuelian, with various prices and brands. Visible brands include Zhongyuan, Sun's, Huakang, and other unknown brands. The only commonality is the Sprite-like green packaging. And not all are called Xuelian; in the purchase options, there is also a choice of "Xuebing or Xuelian randomly sent."
"Because it hasn't raised prices for 13 years and has been selling for 0.5 yuan, there is no extra profit for developing new products." said the person in charge of Shandong Gushanzhai Xuelian in a media interview.
Xuelian, which had not raised prices for 13 years, has also started to increase prices.
On Taobao, the best-selling Xuelian shop had over 200 buyers as of July 5, with 20 bags priced at 79 yuan and 40 bags at 99 yuan. Different cold drink wholesale stores have different online prices; the highest was 126 yuan for 20 bags, averaging 6 yuan per bag.
**02 Every layer of distributors needs profit**
"Many people think our cold drink industry has high gross margins, but in reality, not many actually make money, because the ice cream industry has, first, many distribution links, and second, a short sales season." Zhuang Huanhuan said.
The peak season for the ice cream industry is roughly from May to October.
But for distributors, the distribution business usually gets busy starting from February each year. "Almost after the Spring Festival, we start stocking up from various brand manufacturers because there are many distribution links, involving many warehouses and transportation processes. By mid-February, most manufacturers' ice creams are in storage. Starting in March, we distribute to downstream second-tier warehouses, which then distribute to terminal stores. Basically, terminal stocking happens from March to May each year."
"The company's annual costs for renting cold storage, loading and unloading, and warehouse management labor are about 700,000 yuan, plus operating costs, totaling several million yuan." Zhuang Huanhuan also revealed, "At least 3 months of the year are loss-making; only summer makes money, and winter loses money."
In terms of market size, GlobalData data shows that China's per capita annual ice cream consumption is just approaching 3 kilograms, less than one-eighth of the US per capita. "The entire ice cream industry's scale is smaller than that of a single beverage company." Zhuang Huanhuan said.
**And in the multi-layer distribution process, each layer requires reasonable profit distribution.**
Because the FMCG industry mainly uses a large distributor system, brands, in order to achieve light operations and save costs, need layers of distributors to promote and enter the national market with minimal labor costs. "Distributors going down to community stores requires a lot of manpower. We tried this operation before, but later found it didn't suit us; it required too much energy." Zhuang Huanhuan told China Entrepreneur.
It is understood that **from factory to retail terminal, an ice cream goes through at least four links: manufacturer, first-tier agent, second-tier wholesaler, and home-batch (family-style wholesale stores, usually offline stores specializing in ice cream)/convenience stores/community stores/mom-and-pop stores.** Each link must ensure reasonable profit distribution.
Tianyancha data shows that there are currently nearly 45,000 ice cream-related enterprises in China, of which over 90% are individual businesses, and about 70% are in wholesale and retail.
The closest to consumers, and also the highest profit in the entire distribution chain, whether it's home-batch or convenience stores. "Terminal profits can reach 30%-40%. For example, for a 10-yuan ice cream, a convenience store can earn 4 yuan. Adding operating and logistics costs, maybe 5 yuan goes to the convenience store." Zhuang Huanhuan told China Entrepreneur, "In the entire chain, first-tier agents like us have the thinnest profit, basically 5%-10%. A 10-yuan ice cream can earn about 0.5 to 1 yuan. Because you can't have both volume and high profit."
Due to the channel positioning of convenience stores, they tend to prefer mid-to-high-end products, and their customer base is mostly young people and white-collar workers. "Many brands want to enter convenience stores." Zhuang Huanhuan told reporters, "But some brands enter convenience stores more for brand promotion needs, not to make money through the convenience store channel."
Beijing Lawson convenience store freezer with price tags already attached. Photo: Hu Nannan.
Zhu Baowei also said that many convenience store ice creams are not regular products because convenience stores are expensive, and every slot in the freezer must be considered for its output.
The issue of Xuelian and Zhong Xue Gao is essentially a battle for freezer sovereignty.
**03 Competing for offline convenience stores**
Unlike previous domestic brands that went viral, Xuelian's popularity has not translated into sales. Because there is almost no profit margin, it is hard to find 0.5-yuan Xuelian in supermarkets and convenience stores now.
On Douyin, "Xuelian Ice Cubes" also posted a video responding to consumers' enthusiasm, saying, "We are actively communicating about logistics." However, as of July 5, there was no information in the Xuelian Ice Cubes fan groups about how to buy. The group administrators replied in the groups, "Still communicating about logistics; cold chain costs are too expensive..."
**For ice cream, which has strict storage temperature requirements, transportation is a high proportion of costs.**
Unlike other FMCG products, ice cream requires cold chain throughout transportation, making transport costs high. Currently, sales mainly rely on offline. Prospective Industry Research Institute data shows that in 2020, online and offline sales of ice cream accounted for 5% and 95%, respectively. In 2021, this figure reached 20% and 80%. This means 80% of ice cream sales are still conducted offline.
A Beijing ice cream retail terminal still mainly sells 3-5 yuan ice creams. Photo: Hu Nannan.
Zhuang Huanhuan also revealed, "Currently, many brand manufacturers are doing online sales, but many are not making money. The reason is the high cost of online logistics and distribution. Unless it's near-expiry or high-priced products, they can be sold online. And only after the volume increases, saving a few cents per order, can there be some profit. Otherwise, it's more of a promotional role for brand manufacturers."
This is also why you always get hit by "ice cream assassins" in convenience stores.
For ice cream, there are two types of upgraded channels: online and offline. **Online cold chain costs are high, so the biggest target for ice cream brands to upgrade is offline channels, and convenience stores have been the 'channel darling' in recent years.**
According to data from the China Chain Store & Franchise Association (CCFA), the number of branded chain convenience stores has risen from 91,000 in 2015 to 144,000 in 2020. As of the end of 2021, there were 193,000 chain convenience stores registered nationwide, with the industry currently growing at 8% and adding nearly 20,000 stores each year.
Zhu Baowei believes that from the channel positioning of convenience stores, their consumer groups are: first, quality-conscious; second, convenience-seeking; third, social scenarios.
According to research data from iiMedia Consulting in the "2021-2022 China Convenience Store Industry Development Status and Consumer Behavior Monitoring Report," 25.5% of first-tier city consumers visit convenience stores once or more per day on average, and over 50% of young people (22-40 years old) consume multiple times per week in convenience stores.
Mid-to-high-end ice creams are more willing to enter terminals like convenience stores that are closer to young consumers. The rapidly expanding convenience store channels also crave high-quality, new-category products.
For Xuelian and similar brands to enter convenience store channels, they need to cross a high threshold.
Zhuang Huanhuan revealed that the barcode fee for convenience stores ranges from tens of thousands of yuan to hundreds of thousands of yuan per item. "For example, the Shizu convenience store we cooperate with is relatively economical; the barcode fee for an ice cream brand is tens of thousands of yuan. If you want to stock 10 brands of ice cream, it costs hundreds of thousands. If you want to stock in FamilyMart, one barcode might cost hundreds of thousands."
Some convenience stores also have display fees. For example, where and how much space your brand's ice cream occupies in the freezer, and how much you pay the convenience store per year. Different convenience stores have different fees.
Moreover, entering convenience stores also has capital requirements for distributors. "The payment cycle for convenience stores is generally 1-3 months, which puts significant financial pressure. Unlike distribution business, where you only need to keep enough inventory. Although inventory requirements are high, it's a cash flow business." Zhuang Huanhuan told reporters.
There are also some convenience store brand promotions, such as second item half price, buy one get one free, etc., which are all included in the distributor's operating costs. "Either the manufacturer subsidizes or the distributor subsidizes; anyway, it's all in the same account." Zhuang Huanhuan said.
"Competition in convenience stores is fierce. If you don't do these activities, your products might be removed due to low sales, so manufacturers and distributors are forced to constantly arrange activities and resources."
Regarding the recent attention on expensive ice creams, Zhu Baowei said, "What people are paying attention to now might be those new brands that sell for around 10 yuan as soon as they launch, but consumers haven't yet formed brand awareness of them."
He also said that the current domestic ice cream market is characterized by both consumption upgrading and consumption stratification. The result is that different people have different needs for different products. If you want to eat affordable ice cream, you can buy it. If you want to eat more expensive and better ice cream, you can also buy it.
Zhuang Huanhuan also believes that netizens should pay more attention to those ultra-high-priced ice creams. "Like Zhong Xue Gao's 66-yuan Pink Diamond, Xingyunian, and other ultra-high-priced products, they actually have no market share; they are just tools for brand marketing and price anchoring." Zhuang Huanhuan said that currently, the best-selling mid-to-high-end ice creams are mostly priced at 5-8 yuan.
In some community stores and mom-and-pop shops, affordable ice creams are still mainstream. Zou Jin, who lives in Shenyang, said, "I don't feel ice creams are expensive. Maybe because I usually buy wholesale at a store near the community, they are around 1 yuan each, with many local brands like Zhongjie Bingdian, Fudi Food, Hongqi, Mengniu, Yili, Furao, etc."
Cover image source: Visual China
Source: China Entrepreneur Magazine (ID: iceo-com-cn)
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