【China】The ‘Ice Cream Assassins’ Have Disappeared, Yet Mengniu Earns 50 Billion from Ice Cream | Focus Analysis

In 2023, summer temperatures have repeatedly broken records, but the ice cream industry seems not to have welcomed its own summer.
On August 13, the phrase “Hangzhou ice cream and popsicle shop business is 30% worse than previous years” became a trending topic. An industry insider close to the cold beverage wholesale sector revealed to 36Kr that competition in the cold beverage industry has intensified this year, sales have been sluggish, distributors are complaining to each other, and a short essay titled “In Memory of Cold Beverage Workers” has been circulating on social media.
The ones most keenly feeling the chill are undoubtedly the “ice cream assassins” who aggressively pushed high prices last summer. According to observations by 36Kr, in the same freezer at the same Lawson convenience store, at least a quarter of the space was occupied by Zhong Xue Gao last summer. This year, only one flavor of Zhong Xue Gao remains in the freezer: “Yangmei (Waxberry) flavor.”

Zhong Xue Gao once single-handedly expanded the imagination of the ice cream market.
In 2018, Zhong Xue Gao launched a 66-yuan “Ecuadorian Pink Diamond” ice cream on Tmall, claiming to be made from rare natural pink cocoa and meticulously crafted by master developers, with a cost of 40 yuan alone. Founder Lin Sheng declared, “That’s the price, take it or leave it.”
The expensive pricing did not dampen consumer enthusiasm. This first-generation “ice cream assassin” sold out 20,000 units within 15 hours of listing and generated countless discussions on Xiaohongshu.
Riding the wave of consumption upgrade, Zhong Xue Gao topped Tmall’s 618 ice cream sales charts for three consecutive years starting in 2020. Its revenue doubled to 800 million yuan in 2021, and its valuation quintupled in one year to over 4 billion yuan in 2022.
Following Zhong Xue Gao’s lead, more ice cream brands began raising their price benchmarks: Dove’s 29-yuan dark chocolate ice cream, Heytea’s 17-yuan Grape Cheese Tea popsicle, Yili’s 20-yuan Xujinhuan… A 2022 Financial Times report noted: “Some ice cream brands have seen price increases exceeding inflation.”

Before the summer of 2022, Zhong Xue Gao was the expensive outlier in the freezer. However, the proliferation of “ice cream assassins” not only stung consumers but also meant Zhong Xue Gao faced more competitors—battling fellow new consumer brands like Heytea, Daily Black Chocolate, and Oatly in the freezer, as well as established giants like Yili, Mengniu, and Moutai.

Outside the freezer, premium-positioned ice creams might also face cross-category competition, such as from new-style tea drinks and artisanal gelato.
Both being social currencies for after-meal treats, ice cream and milk tea are in fact competitive. As early as 2021, media reported that in many city core business districts, Häagen-Dazs stores had given way to Heytea and Nayuki. Now, with new categories like lemon tea and yogurt层出不穷, young people’s stomach capacity is almost insufficient.
“Gelato” is another hot new category this year. Venchi in Beijing’s Guomao and Sanlitun, and Corner Cone Gelato at Shanghai’s Wukang Building are newly popular网红 shops. Searching for “gelato” within a 2km radius of “Shanghai Fumin Road” on Dianping yields 18 results, with average prices集中在 30-40 yuan.
Considering gelato’s Italian cultural roots, handcrafted preparation,现场 scooping, and叠加 fancy offline store environments suitable for Xiaohongshu check-ins, compared to the 10-40 yuan industrial product Zhong Xue Gao, it seems one could say “you get what you pay for.”
However, for Zhong Xue Gao and similar brands, the biggest challenge isn’t an overcrowded赛道, but consumers losing their desire to spend.
On one side, it was embroiled in a PR crisis over “not melting when burned”; on the other, consumer spending欲望 weakened. The “ice cream assassin”背负骂名, reflected in sales data: according to Jing参谋, during the peak sales season from May to August 2022, Zhong Xue Gao’s sales volume同比下降 10%.
In March this year, Zhong Xue Gao shifted from its past high-priced 66-yuan Ecuadorian Pink Diamond image and launched a平价 version—the 3.5-yuan Sa’Saa (a sub-brand of Zhong Xue Gao).

For Zhong Xue Gao, however, the平价 market is a more complex world.
In the ice cream market, the sub-10-yuan平价 segment remains mainstream, and traditional ice cream brands represented by Yili, Mengniu, and Wall’s firmly占据 this market. In the ice cream market, the CR3 reaches 43%.
Zhong Xue Gao’s进军平价 market意味着 delving deep into the territory of Mengniu and Yili, facing the same难题 as Genki Forest—a vast disparity in渠道, product, and供应链 strength compared to the giants.

The same story is happening with Zhong Xue Gao. In 2020, Zhong Xue Gao entered offline channels, relying on higher channel fees than traditional ice cream products to enter nearly 400,000 freezers in over 200 cities. But at that time, Yili had over 6 million terminal outlets nationwide, penetrating下沉 markets like capillaries—with nearly 1.096 million乡镇 outlets alone.
The gap is not only in quantity but also in attractiveness to channels. For channels, selling one Zhong Xue Gao can yield higher profits, but the premise is that the product sells well. Now, with高价 ice creams not moving, distributors lack motivation to stock them.
Traditional ice cream companies with richer product structures also have more底气 facing market changes. Taking Mengniu as an example, it walks on two legs at the product level—relying on平价 products like Suibian and Green Mood to dominate the mass market, becoming the “ice cream guardians” in consumers’ mouths; and挖掘 new growth through collaborations with Moutai and Disney to分食 the高端 market. Last year, Moutai ice cream累计 sold nearly 10 million cups, achieving sales of 262 million yuan.
Well-funded traditional ice cream companies also have significant advantages at the供应链 level. For any brand wanting to scale and develop long-term,供应链 is an unavoidable环节. In 2021, Genki Forest suffered 1 billion yuan in sales losses due to erythritol supply shortages, forcing it to personally invest in suppliers.
The past three years have also brought great uncertainty to global供应链. Starting from 2020, various major ice cream manufacturers began building factories. For instance, Mengniu planned to invest 1.5 billion yuan in 2022 to build production lines. Estimating based on 2021 data, this investment额 is roughly equivalent to Zhong Xue Gao’s revenue for two years without spending a penny.

In the past, Zhong Xue Gao could become an expensive网红 brand through unique products,话题制造, and外围造势. But selling cheaply is a较量 of渠道经营, cost control, and规模效应.
Now, Mixue Bingcheng in the neighboring milk tea赛道 has already driven the price of cones down to 3 yuan relying on供应链 advantages. The downgrade path for the ice cream assassins is not easy.