The Resurrection of Zhong Xuega: Price Cuts Are Just the Ticket—in the Real Battle, It's About Being "Within Reach"
Hello everyone, I'm your financial observer. Recently, the internet-famous brand Zhong Xuega, which was once ridiculed for selling an ice cream for 20 yuan and then disappeared due to operational issues, has made a comeback.
This time, it hasn't embraced the "luxury" label again; instead, it's gone straight to the obvious solution: price cuts. The prices of its new products have been reduced from around 20 yuan to 6-8 yuan.
Many people's first reaction was, "Finally, they've realized they need to be more reasonable?" or "Will lower prices really lead to better sales?"
As a journalist who frequently visits the market and analyzes data, I want to tell you: Don't get too excited just yet, and don't underestimate this move. Zhong Xuega's price cut is indeed a clever strategy, but the challenges it faces are much more complex than just lowering prices. It's now competing in a completely changed ice cream industry.
Below, I'll break down the key points from this news into five key aspects, explaining in plain language whether Zhong Xuega's "resurrection" will be successful:
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1. The Sharp Price Drop: From "Buy It or Not" to "Going with the Flow"
Core Interpretation: Zhong Xuega has finally come down to earth and joined the "6-yuan price range."**
The biggest criticism Zhong Xuega faced was its high prices. An ice cream for 20 yuan was more expensive than the meat in many fast-food restaurants, which made it seem unworthy to many consumers. The new parent company, Zhong Xuega Brand Management (Shanghai) Co., Ltd., has clearly stated that the first batch of products (three classic flavors) will be priced at 6-8 yuan.
- Why the price cut? Officials say it's because the cost of raw materials has decreased, and logistics have improved, also in response to consumer expectations.
- Actual Effect: This price is right in the middle: slightly more expensive than domestic mainstream brands like Yili and Mengniu (which are mostly under 6 yuan) but much cheaper than imported luxury brands like Menglong and Nestle (which are mostly over 10 yuan).
Journalist's Comment: This is a very practical pricing strategy. It no longer tries to convince consumers that high prices equal quality but acknowledges that it's just an ordinary ice cream brand. The 6-8 yuan range is the "golden zone" in the Chinese ice cream market, where most consumers are willing to spend. However, this also means Zhong Xuega has lost the high profit margins associated with its higher prices and must rely on volume sales, which poses a significant challenge for its cost control.
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2. A Changed Market: People Are More Frugal, Not More Willing to Spend
Core Interpretation: The overall ice cream market is shrinking, and luxury ice creams are struggling to survive by becoming smaller and more widely available.
There's a stark statistic from the news: retail sales during the ice cream season have decreased by a quarter (25%) from 2023 to 2026. People are spending less on ice cream.
However, an interesting trend is emerging: the market share for ice creams priced over 6 yuan is actually on the rise.
Why? It's not because people have suddenly become richer. It's because companies like Menglong have changed their approach:
1. Smaller Packages: They offer mini sizes so consumers can try luxury flavors for less money, satisfying the desire for "emotional value."
2. Wider Distribution: Luxury ice creams used to be only sold in supermarkets, but now they are being pushed into convenience stores and small shops.
Journalist's Comment: Consumers are more discerning. They don't want to waste money. By pricing its products at 6-8 yuan, Zhong Xuega has hit the right spot. But it needs to be cautious as competitors like Menglong are using wider distribution and smaller packaging to capture this market. If Zhong Xuega only cuts prices without changing its distribution strategy, it might end up with good reviews but poor sales.
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3. Changing Competitors: Freshly Made Ice Creams Are a Threat
Core Interpretation: Zhong Xuega used to compete with brands like Yili, Mengniu, and Heluxue. Now, its biggest competitor might not be other ice cream brands but street-side ice cream shops that offer unique flavors like pistachio or rice.
These shops have several advantages:
- Visual Appeal: The ice cream is made on the spot, which is appealing and great for social media photos.
- Innovative Flavors: Unique flavors like pistachio and rice attract younger consumers.
- Entertaining Experience: You can sit and enjoy the ice cream, making it more of a leisure activity than just quenching thirst.
Journalist's Comment: Zhong Xuega's advantage lies in convenience and standardization. However, freshly made ice creams offer a social and fresh experience. To stand out, Zhong Xuega needs to make its products more shareable and engaging, otherwise, it will be marginalized by these more dynamic competitors.
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4. Leveraging Partnerships to Expand
Core Interpretation: Zhong Xuega lacks its own distribution network, so it's partnering with a local player to help with sales.
The news mentions that Royal Tiger has become a new shareholder. Although it's just a financial investment, the goal is clearly to gain access to their distribution channels.
- Who is Royal Tiger? They are a leader in frozen food (dumplings, tangyuan, etc.), with their own factories and cold chain logistics, covering snack shops, convenience stores, and community stores, especially in lower-tier cities.
- Why Partner with Them? Zhong Xuega mainly relied on online sales and high-end supermarkets, with almost no presence in small shops. To sell ice creams at 6-8 yuan, it needs to reach smaller stores. Building its own network is costly and time-consuming, so it's better to use Royal Tiger's existing network.
Journalist's Comment: This is a risky but strategic move. It allows Zhong Xuega to quickly expand to small shops across the country, solving the problem of being "within reach" for consumers. However, there are challenges: frozen food and ice cream are different; frozen food has a longer shelf life, while ice cream requires special storage and is highly seasonal. Will Royal Tiger's stores be willing to sell ice cream, and will their existing infrastructure be suitable?
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5. The Final Test: Convincing Shop Owners That It's Worth Selling
Core Interpretation: Lowering prices is easy, but convincing distributors to sell the products is difficult.
The most realistic and challenging aspect of the news is that although the retail price has dropped, the factory price remains the same, meaning distributors' profits have decreased.
Previously, a 20-yuan ice cream might have generated a 5-yuan profit for the seller; now, a 7-yuan ice cream might only yield a 1-2-yuan profit.
- Shop Owners' Logic: Space in my store is limited. Why should I sell your ice cream? Only if it sells quickly or if the profit margin is high.
Journalist's Comment: Zhong Xuega faces a trust crisis. In the past, poor management may have led to inventory issues and returns for distributors. With lower prices, the profit margin has further shrunk. Zhong Xuega needs to prove to shop owners that its brand is still appealing, that its products sell well, and that it can manage inventory effectively. It also needs to provide marketing support to help sell the products.
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Summary: Zhong Xuega's Resurrection Is a Tough Battle
The price cut is just the first step in Zhong Xuega's comeback. The real tests lie in:
1. Expanding Distribution: Can it really reach thousands of small shops?
2. Managing Channels: Can it integrate with Royal Tiger's network to solve storage and inventory issues?
3. Consumer Behavior: In a market where people value cost-effectiveness and experience over nostalgia, can Zhong Xuega still stand out?
In short: Zhong Xuega has gone from being a high-end internet brand to a more accessible one. To win, it needs to understand distribution better than Yili, be more cost-effective than Menglong, and offer a better shopping experience than freshly made ice creams. This battle is just beginning.