Mixue Bingcheng: The Haagen-Dazs of Southeast Asia!

Snow King has come step by step to where it is today, and it can be said to be one of the tea brands that is doing well. This article analyzes the business logic of Mixue Ice City's success. The author analyzes Mixue Ice City's layout in Southeast Asia and points out the key to its success in sinking. Let's take a look.

From questioning the Snow King, to understanding the Snow King, and then to wanting to become the Snow King.

Mixue Ice City can be said to be the most prosperous brand among new tea drinks, and is the envy of many companies. Especially in the past two years, there is no room for Snow King in China, and Mixue Ice City has even expanded overseas faster than some Internet companies. In Southeast Asia, Japan, South Korea, Europe and the United States, the number of Mixue Ice City stores has increased dramatically.

While other brands are still struggling in China with the price of 9.9 per cup, Mixue Bingcheng has already become the fourth largest restaurant chain in the world, and may even become a consumer brand with 100,000 stores worldwide.

What is underestimated is that Mixue Bingcheng is actually a "cultural company" with a strong potential difference, which is its competitive core.

01Haagen -Dazs in Southeast Asia is indeed worthy of its reputation

Why is Snow King defined as the “Haagen-Dazs of Southeast Asia”?

In addition to having similar categories, Snow King also replicates the mental impact of Haagen-Dazs on consumers. Whether in Southeast Asia or Europe, America or Australia, Mixue Ice City can say that it is a world-class cultural company.

I will not elaborate on how popular Snow King is in China. After five years in the Southeast Asian market, the Snow King IP is almost a household name. There are many inflatable Snow Kings running on the streets of Thailand and Malaysia; taxi drivers in Singapore also hum a few lines of the Snow King divine song; Hanoi, Vietnam is known for having a Mixue Ice City every hundred steps.

Moreover, Mixue Ice City’s Southeast Asian stores not only sell milk tea, ice cream, and fruit tea, but also Snow King key chains, dolls, and various peripheral products. Now children in Southeast Asia collect Snow King peripheral products, just like we collected cards in instant noodles when we were kids.

Once upon a time, the most famous slogan, "If you love her, treat her to Haagen-Dazs", perfectly combined the sweet taste with love, allowing Haagen-Dazs to spread rapidly in metropolitan areas and become the darling of fashionable white-collar workers. Mixue Ice City is the same, using brainwashing theme songs to repeat the brand, using extremely cost-effective online celebrity products to open the hearts of consumers, and gradually going overseas for cultural exports.

More importantly, Mixue Bingcheng has replicated its low-price strategy overseas. In developed countries, Mixue Bingcheng "sells the cheapest milk tea in Australia and is located on the street with the most expensive rent." Even if it loses money itself, it has to crush its competitors and continue the Snow King effect in China's first- and second-tier cities.

In economically underdeveloped Southeast Asian countries, such as Cambodia, Laos, etc., don’t ask, Mixue Bingcheng is the local Haagen-Dazs in terms of mentality and positioning.

In the consumer industry, whether at home or abroad, there is one unchanging truth: whoever wins the young people wins the world.

For example, data from the World Economic Forum shows that there are nearly 700 million people in Southeast Asia, with a large number of Chinese people living there, of which more than 50% are under the age of 30. Our domestic consumer IP gameplay is relatively advanced and is directly copied to Southeast Asia. Therefore, the prospectus of Mixue Ice City disclosed that Snow King has basically not lost money in Southeast Asia and is still making money. As of the end of March 2022, Mixue Ice City has opened a total of 249 stores in Vietnam, with total revenue of 9.2904 million yuan and a loss of 322,000 yuan; there are 317 Mixue Ice City stores in Indonesia, with operating income of 25.4108 million yuan and net profit of 2.2355 million yuan (net profit is nearly 10%).

It can be seen that Mixue Bingcheng's overseas expansion is also a form of export of soft power. In addition to selling milk tea, it also sells a tea drinking culture, which is a way for Chinese companies to promote their culture to the outside world.

02Why has Mixue Bingcheng been able to successfully expand into lower-tier cities?

From a strategic perspective, Mixue Bingcheng actually regards going overseas, especially going to Southeast Asia, as another step down.

The prerequisite for Mixue Ice City's success in sinking is thanks to high-end new tea brands such as Heytea and Nayuki. They gradually replaced the old mom-and-pop shops and street stalls with new tea drinks made from high-quality tea, fresh milk and fruit ingredients and more professional milk tea shops. This market education allows Mixue Ice City to become a substitute for sinking, and the demand in the sinking market is relatively predictable. Products that have been verified in first-tier cities will become popular in small places after a while. Following the big cities can save a lot of detours, and Mixue Ice City also has time to calmly organize supply chain production and further reduce costs.

In addition, the sinking of the market means that Mixue Ice City can use extremely low costs to uniformly carry out cultural output. For example, the brainwashing theme song "You Love Me, I Love You" did not become popular at the beginning, but in a year and a half, Mixue Ice City played it uniformly in all its stores in China, accumulating tens of millions of audiences, and then it had a concentrated explosion on Douyin, and was magically modified and sung.

Therefore, whether in the sinking market in Southeast Asia or the sinking market in China, Mixue Bingcheng has become a form of entertainment for grassroots people and a cultural symbol of the sinking market.

Like many brands that are "high and mighty", Mixue Bingcheng has taken another path of cultural expansion overseas. It has a gene of "self-deprecation" and is very entertaining. It has chosen the down-to-earth "earth".

For example, when the Snow King IP was being created, you could often see videos of Snow King dancing with other brands of puppets at Gu Ming, Cha Bai Dao, Yi Dian Dian, etc. on Douyin, and they would also go to be “street stalkers” in groups. Moreover, Mixue Ice City would also do things in many down-to-earth places, such as the Shandong Weifang Kite Festival, where Snow King flew into the sky and occupied a huge advertising space; built a five-meter-high Snow King statue on Harbin Central Street; opened a store in Mount Tai, with the price only one yuan more expensive; officially announced his girlfriend Xue Mei, etc…

Even later, after people began to feel tired of hearing the song "You love me, I love you", Mixue Ice City started shouting again - "We have sundaes and milkshakes, and Mixue Ice City's prices are low. Ice cream melts quickly, so why not have a big sundae?"

Nowadays, we have no shortage of material things. Price and quality are only the basic elements in the competition of milk tea, but a cup of milk tea can bring consumers a positive emotional experience, which is rare. The Snow King IP of Michelle Ice City is a symbol of happiness. Through the operation of Michelle Ice City IP, people of all ages and nationalities will receive a happy signal and feel relaxed when they see Michelle Ice City.

To put it bluntly, it is the sugar in the mouth that can bring happiness to people, and the dopamine in the brain that can bring happiness to people.

So people are willing to pay for this low-cost instant happiness, which is also the unique cultural symbol of Mixue Ice City.

Under this premise, the main consideration for Snow King's expansion is the urbanization rate and the number of urban populations. Because the pleasure brought by Michelle Ice City is strong enough and the price is low enough, it can succeed without considering the local GDP when calculating the store capacity. Zhang Hongfu, the founder of Michelle Ice City, once wrote: "Many fans jokingly call Michelle Ice City the savior of slum girls."

03Of course, this generation of consumers is particularly tolerant of Snow King

In a workplace post on Maimai, someone asked, "If I have 1 million yuan, should I buy a house in Beijing or go back to my hometown to open a Mixue Ice City?" Under this post, netizens started to argue for the first time. Joining a milk tea shop was almost a "tax of intelligence", but joining Mixue Ice City was an exception. Many people would say that as long as the location of Mixue Ice City is right, it can also be a good business.

In addition to the relatively lenient threshold for joining Snow King, some netizens also said: "It's not that the ingredients of Mixue Bingcheng are expired, it's that I'm late", "Mixues really touched my bottom line this time, I decided to lower my bottom line a bit more."

Why do people generally have double standards when it comes to the Snow King?

First, it is because of the low price. Mixue Ice City's expansion into thousands of stores has brought about economies of scale. For Snow King, simply low prices are not a strategy, but the low cost behind them is the strategy.

Mixue Ice City can suppress local small stores with its high cost-effectiveness, brand and supply chain advantages. Compared with the fierce competition in the high-end tea beverage field, it faces less pressure. Mixue Ice City is one of the earliest companies in the industry to build its own supply chain. It started preparing as early as when the melamine milk powder incident disrupted the dairy market.

At present, the three companies behind it each have their own responsibilities in the supply chain. Zhengzhou Cross-Strait Enterprise Management Co., Ltd. is responsible for operations and brand management, Henan Da Ka Food mainly supplies raw materials such as jam, milk, and seasoning powder, and a subsidiary Zhengzhou Baodao Trading provides warehousing and logistics services. It is understood that all raw materials of franchisees must come from Mixue Ice City’s own supply chain. As for raw material procurement, the starting price is only 60,000 yuan.

There were even rumors that about 90% of Mixue Bingcheng's products in Indonesia were imported from China. However, due to the rapid development of Mixue Bingcheng's business in Indonesia, Mixue even planned to build a factory there.

We have also observed that Mixue Ice City is slow to release new products and is very restrained in adjusting new products. When I was ordering, someone at Mixue Ice City would tell me directly that the difference between the two ice sundaes is the different sauces, and the difference between the two drinks is that one has orange slices and the other doesn’t. The raw materials are as universal as possible and the categories are relatively single, which reduces a lot of cost waste. At present, the characteristic of Mixue Ice City’s single products is that all fruits are replaced with jams and canned foods, and the only fresh fruits should be lemons and oranges that are in high demand and durable. In this way, we can further control the raw materials, lower costs, and control quality. Therefore, Mixue Ice City’s products are very cost-effective. The flagship products are always 2 yuan ice cream and 4 yuan lemonade, and the main selling point is “making money at a price where no one else can make money.”

Secondly, Mixue Bingcheng has simplified things so that everyone in the Snow King industry chain can make money.

The reason why everyone thinks milk tea shops are a waste of money is because most brands that invite franchisees only want to make money from franchisees, and don't want franchisees to make money.

Mixue Bingcheng is also a franchise model, but 90% of its revenue comes from the raw materials and packaging it provides to franchisees. Lao Wang, who has extensive franchise experience, told me that Mixue Bingcheng, like many franchise brands, basically does not allow franchisees to purchase from outside, but it will supply franchisees with goods at a price lower than the market price. Franchisees purchase from outside because it is cheaper. If your raw materials are cheaper, you don’t take advantage of others, and you have unified management, you can naturally avoid some problems.

On the other hand, Mixue Bingcheng is constantly increasing the proportion of self-production and self-supply. It is understood that Mixue Bingcheng’s core raw materials, solid beverages, are currently 100% self-sufficient, and flavored beverage concentrates are 89% self-sufficient, and the proportion of self-produced fruits has increased to 50%.

For example, last year and the year before, milk tea shops had a kind of orange drink, which caused the price of orange to rise sharply, but this popularity only lasted for two years. Can you still see orange drinks this year? Oranges are unsalable, farmers have planted them in vain, and the brand has only brought short-term traffic. Mixue Ice City has only established its own supply base for a few commonly used fruits. The demand is stable and the supply side is also clear. It strives to make everyone in the industry chain make money, so that everyone is willing to accompany the brand for long-termism.

Because of this, Snow King's profitability is indeed outstanding in the food and beverage industry. From 2019 to 2021, Mixue Bingcheng's "net profit attributable to shareholders" was 440 million yuan, 630 million yuan, and 1.91 billion yuan, respectively, and 390 million yuan in the first quarter of 2022.

Whether Mixue Bingcheng is the Haagen-Dazs of Southeast Asia or is overwhelming other brands in Japan, South Korea, Europe and the United States, when it comes to cost-effectiveness and down-to-earth marketing, it is the YYDS in the minds of consumers, and of course it may also be the YYDS in the minds of investors.

After all, Coca-Cola, which has always been held by Mr. Buffett, does not have much innovation. It has been able to maintain profitability for so many years without raising prices by relying on its scale, and it has also continued to export culture into new circles.

I hope to see the world’s first consumer brand with 100,000 stores be born in China and go global.

Chief Writer: Huanhuan; Article Architect: Miaomiao

Source: WeChat public account "Party A Finance (ID: jiafangcaijing2019)"