**On May 18, it was reported that the ice cream brand Zhong Xue Gao completed a 200 million RMB Series A financing round, with investors including Yuansheng Capital (lead), H Capital, Wanwu Capital, and Tian Tu Investment. Previously, Zhong Xue Gao had received angel financing from ZhenFund and FreeS Fund in 2018, and Pre-A financing from Tian Tu Capital and Toutou Shidao. In this round, Yuansheng Capital, founded in 2015, is a growth-stage internet investment fund initiated by former Tencent Vice President and General Manager of Tencent Investment & M&A Department Peng Zhijian and former Deputy General Manager Xu Liang, aiming to support new-generation internet innovation companies by providing key support at critical junctures. Its portfolio includes Xiaohongshu and Chayanyuese. "Zhong Xue Gao is not short of money; financing is not for survival but for more efficient development. In war, you need to prepare ample supplies to fight bigger battles," said Lin Sheng, founder of Zhong Xue Gao, in response.
-01- Three Years to Build a High-End Chinese-Style Ice Cream The traditional ice cream market emerged in the 1990s, targeting mainly minors, with the primary function of cooling off in summer and relieving thirst, while winter was often the off-season. The price per stick was also low, typically ranging from 2 to 8 RMB. Under such circumstances, China's ice cream industry was long divided into three major camps: high-end foreign brands represented by Nestlé, Başyi, and Häagen-Dazs; domestic brands such as Guangming, Mengniu, and Yili; and regional old-brand ice cream enterprises like Deshi, as well as numerous small and medium-sized local private enterprises. However, with market innovation, the maturity of cold-chain logistics, and the improvement of people's living standards, ice cream and other cold drinks have gradually broken seasonal restrictions while undergoing a significant shift in self-positioning, moving toward the path of leisure desserts. The continuous upgrading of ice cream has also driven further expansion of the industry scale. According to data from the China Food Industry Association, in 2019, China's ice cream market size rapidly grew to nearly 138 billion RMB, ranking first globally, and is expected to exceed 160 billion RMB by 2021. Meanwhile, according to relevant data, per capita ice cream consumption in China is only 2.5 kg, while Japan's per capita consumption is four times that of China, and the United States is nine times. Therefore, China's ice cream market still has significant room for brands to fully develop. In recent years, the rapid rise of new e-commerce channels represented by Tmall, JD.com, and Pinduoduo, coupled with the wave of consumption upgrading, has also promoted new changes in the ice cream market and the birth of new ice cream brands like Zhong Xue Gao. Zhong Xue Gao was born at this opportune moment. Founded in Shanghai in March 2018, starting on Tmall and gradually expanding to multiple online channels including JD.com and WeChat, Zhong Xue Gao quickly established a foothold in the ice cream market with its patented traditional tile-shaped ice cream. It has now launched multiple product series, including classic flavors, mini ice cream, co-branded editions, offline channel editions, and Zhong Xue Gao's cakes, with single-product prices around 13-18 RMB, proving that domestic ice cream can also be "expensive." It can be said that Zhong Xue Gao has developed very rapidly. From January to June 2020, Zhong Xue Gao's total sales on Taobao and Tmall reached 128 million RMB, with 905,000 orders and an average price of 141.82 RMB. During the 2020 Double 11 shopping festival, Zhong Xue Gao ranked first in Tmall's ice cream category sales, with over 1.8 million followers on its Tmall flagship store, and shipped 34 million ice cream sticks throughout 2020. With such excellent performance as a foundation, in response to doubts that selling desserts like Zhong Xue Gao's cakes was due to hitting a ceiling, Lin Sheng responded: "In the first quarter, Zhong Xue Gao's all-channel growth was 300%, and the ceiling is still far away." Currently, although Zhong Xue Gao's scale cannot yet compete with past industry giants, as a dark horse taking the route of Chinese-style high-end ice cream, it has attracted widespread attention.
-02- The Foothold: Young People's Refrigerators The Zhong Xue Gao team has long discovered that once entering the household domain, consumers' dependence on a brand increases. Compared to impulsive consumption in convenience stores or supermarkets, household consumers are less likely to switch brands. Therefore, to enter the household consumption scenario, Zhong Xue Gao regards young people's refrigerators as its foothold. Starting from a layer of ice cream-filled ice trays, to form its unique style and barriers, Zhong Xue Gao first adhered to "natural" and "individuality": the materials used contain no emulsifiers or stabilizers, and there are only over 10 SKUs (Stock Keeping Units). Secondly, over the past three years, Zhong Xue Gao has actively launched a series of themed co-branded products with well-known brands such as Luzhou Laojiao, Nayuki's Tea, Wufangzhai, Hema, and Wahaha AD Calcium Milk, creating the image of an internet-famous national trend ice cream. In addition to numerous innovative attempts, Zhong Xue Gao also conducted extensive marketing through a large number of KOLs on social software, encouraging check-ins, and leveraging the social currency attribute of the ice cream category to form a positive cycle in the chain of sharing-interest-purchase. In terms of communication, Zhong Xue Gao starts from the perspective of people and topics, allowing the co-branding topics to ferment on their own and letting the products "speak." Product refinement injected strong competitiveness into the brand. Subsequently, Zhong Xue Gao used social platforms like WeChat Moments for direct promotion, letting everyone understand and experience, ultimately returning to the product itself and gaining recognition through the product. The overall successful closed loop facilitated Zhong Xue Gao's cross-border expansion, and the internet-famous market accumulated through several successful marketing campaigns was fully reflected later: In April this year, Zhong Xue Gao launched the "Zhong Xue Gao's Cakes" series named "Xingyounian," "Zhimailongli," and "Heni Luolao," and "prepared over 20,000 boxes, which sold out immediately." To establish brand momentum through online-offline integration, starting with pop-up store attempts, Zhong Xue Gao has opened flagship stores in cities such as Shanghai, Chengdu, Hangzhou, and Shenzhen, covering channels in over 100 cities including supermarkets, convenience stores, pop-up stores, and Hema, breaking the history of domestic ice cream having "only freezers, no stores." This year, Zhong Xue Gao will also deploy smart freezers and vending machines to complement and synergize with online channels. On the other hand, because Zhong Xue Gao has established a high-end persona in the industry, to target more consumers and achieve sufficient flexibility and differentiation, in the arena competing with traditional ice cream, in April 2019, Lin Sheng's team also launched Li Daju, with an orange cat as its IP, focusing on the mid-end track. However, being internet-famous is a necessary path and a passing line, but never the goal. To avoid "success due to ice cream, failure due to ice cream," Zhong Xue Gao is also attempting to expand into more categories. Among them, based on three main reasons: complementary options for natural seasons, channel compounding, and optimism about the frozen food market, in 2020, Zhong Xue Gao launched its high-end dumpling brand "Lixiangguo," selling products including dumplings, wontons, and buns. Lixiangguo plans to leverage Zhong Xue Gao's mature TO C cold-chain system to step out, "heading for the freezer compartment below the consumer's refrigerator." However, this high-end is not the same as that high-end; it means good-quality mid-to-high-end. Since the store launched pre-sales on September 15, 2020, Lixiangguo's Tmall followers have reached 394,000. Lin Sheng revealed that without any major promotion, in the first four months of 2021, Lixiangguo's sales exceeded 10 million RMB, and it is expected to achieve monthly sales exceeding 10 million RMB in about a month. It can be seen that Zhong Xue Gao is attempting to transform traditional random retail into warehouse-style, household consumption, giving it a certain rigidity of demand. In the future, Zhong Xue Gao may build a product matrix around ice products and frozen foods, gradually transitioning from a niche track to a category representative in consumer minds.
-03- Toward Brand: Zhong Xue Gao's Ideal However, unlike ice cream, whether frozen foods lacking social currency attributes can open the high-end market remains questionable. Zhong Xue Gao seems not to have answered why consumers must choose it beyond the national trend style. When commenting on Zhong Xue Gao's cake "Xingyounian," a netizen wrote: "One bite is sweet to the heart, two bites are a bit salty, three bites: I want to call the price bureau." It can be seen that, as Lin Sheng once said, today's consumers need unparalleled participation, but when the cost of participation exceeds the experience, how many consumers in Zhong Xue Gao's market will be brave enough to participate? At the same time, Zhong Xue Gao's practice of suppressing best-selling products to make consumers remember the brand is also questioned by many. Externally, this practice has also brought problems such as scalpers reselling and inflating prices of Zhong Xue Gao products. To this end, on May 14, Zhong Xue Gao had to clarify personally to avoid public opinion fermenting, but jokes like "Hermès of ice cream" and "Zhong Xue Gao that rich women can't afford" have already become popular topics among netizens. It is also worth mentioning that Zhong Xue Gao's cold-chain cost is 46%, far higher than the industry average of 32%, which means that if Zhong Xue Gao wants to further penetrate lower-tier markets, it would need higher cold-chain logistics costs, and profits would be squeezed even lower. In this summer when the trend of "everything can be ice cream" is rising, facing continuous operational pressure, how to enhance user stickiness, elevate the internet-famous label to a brand, and amplify its competitive advantages may be the urgent problem Zhong Xue Gao needs to solve. It remains to be seen what kind of answer Zhong Xue Gao's flexible brand strategy will give to consumers and other observing brands this time, and where Zhong Xue Gao's next impressive growth point will emerge. Reality is always harsh. Looking back at Zhong Xue Gao's three years of development and attempts, it can be briefly summarized as: on the road to brand building, Zhong Xue Gao is only just getting started. Source: Pangjing Toutiao (ID: pangjing-toutiao)