Moutai ice cream targets “small town youth”

The article provides a clear analysis and insight into the overall marketing strategy of Moutai ice cream, starting from its business model of high gross profit, low repurchase, and reliance on IP premium, to its trial in first-tier cities and then its expansion to second-, third-, and fourth-tier cities, and its channel layout from KA customers to LKA and SMB.

Author: Zou Shuai, Editor: Liming; WeChat public account: "Shenran (ID: shenrancaijing)"

Leon Lai’s Moutai ice cream, which became an “Internet celebrity” last year, will open more stores this year.

In May, Moutai Ice Cream opened six experience stores in Chongqing, Fujian, Guizhou and Guangdong. In addition, Moutai Ice Cream flagship stores opened in four more cities, namely Nanchang, Kunming, Hefei and Taiyuan.

When Moutai ice cream was first launched, the original price of 66 yuan was once hyped up to several hundred yuan, and the quantity was limited, so it could only be purchased at iMoutai and specific channels. The trial period has passed, and Moutai ice cream has not only not become a short-lived limited edition product, but has opened more and more offline stores. In March this year, Moutai ice cream also launched three new products: yogurt ice cream, matcha ice cream and Moutai slush (blueberry juice slush).

There is more doubt than curiosity from the outside world regarding a box of Moutai ice cream that has a net content of 75 grams and is priced at 66 yuan.

1. Can Moutai ice cream penetrate the market among young people, especially those in small towns?

2. Does Moutai really need the ice cream business?

3. Is Moutai ice cream competitive if it is just a little bit of Moutai liquor added to ordinary boxed ice cream?

After fully entering the market, Moutai Ice Cream has to think about where its long-term potential and loyal consumer groups lie.

1. Entering the sinking market, Moutai ice cream is still "rolling"

Recently, Shenran visited the Maotai ice cream offline store located in Chaoyang Joy City, Beijing. This is the only flagship store in Beijing. The store's front is eye-catching, with a huge iMaotai logo printed on it. The store area is almost equivalent to that of a Starbucks, with more than ten seats and a relatively spacious space. Shenran saw that the SKUs in the store were quite rich, but there were not many products on the shelves.

The store mainly sells the most common packaged ice cream. The clerk introduced that Moutai blueberry juice slush is a new product with a smoothie taste. In addition, freshly made ice cream scoops and cones are also popular, with six flavors and 39 yuan per scoop. The menu also displays 9 kinds of ice cream desserts, with prices and names already marked, but the clerk told Shenran that the desserts are not yet available in the store. The "Ice Pure Love" in the freshly made ice cream column is priced at 99 yuan, but the clerk also said that "it has never been on the shelf. I didn't know what it was when I came to the store."

The clerk said that every product in the store contains Moutai liquor, and you cannot drive within half an hour after eating it. The alcohol content of boxed ice cream is 1.6% and 2%, and the freshly made one is 3%. The Moutai ice cream priced at 66 yuan can be understood as an ordinary ice cream with a few drops of original Moutai liquor added, with the ice cream flavor as the main flavor and the alcohol flavor as the secondary flavor, which is very slight.

Products in Moutai ice cream offline store/Photo by Shenran

Moutai Ice Cream has opened dozens of stores like this. Located in popular business districts and covering a large area, it seems that it is not just to sell boxes of high-priced ice cream, but to create a leisure space that young people like and need more.

In the second half of last year, Moutai Ice Cream opened offline flagship stores in first-tier cities such as Beijing, Shanghai and Guangzhou, as well as cities with large young consumer groups such as Changsha and Hangzhou. Not long ago, Moutai said that Moutai Ice Cream has now been deployed in 24 provinces offline, with 27 flagship stores, and online in 25 provinces, covering 160 prefecture-level cities across the country. This year, Moutai Ice Cream will continue to open stores.

According to the official WeChat account of Moutai, from April 29 to May 9, Moutai Ice Cream opened six experience stores in Chongqing, Fujian, Guizhou and Guangdong. On May 9, Moutai Ice Cream's flagship stores in Nanchang, Kunming, Hefei and Taiyuan also opened one after another. There have been two changes in Moutai Ice Cream's store opening strategy.

First, it needs to go deeper into the lower-tier cities. After testing the waters in several first-tier cities last year, Moutai ice cream needs more young consumer groups, and these people need to be found in a wider and deeper lower-tier market.

Opening stores in several non-first-tier provincial capitals is only the first step. Kweichow Moutai has publicly stated that this year, Moutai ice cream will establish two-level distribution channels at the provincial and prefectural levels. In 2023, all provinces will develop provincial distributors and open flagship stores at the provincial level; provincial distributors can develop prefectural distributors, open experience stores at the prefectural level, and open "Moutai Ice Cream Stations" at the county level.

The second is to have more diversified models and increase the number of experience stores.

On April 10, the first Moutai ice cream experience store opened in Yan'an, Shaanxi Province, and the official announcement of Moutai ice cream experience stores was made nationwide. Within a month, Moutai has opened a total of 10 experience stores in Guizhou, Chongqing, Guangdong, Fujian, Shaanxi and other regions.

However, in addition to experience stores and flagship stores, Moutai ice cream can also be purchased online and in supermarkets, reaching a wide range of consumers. It can be said that experience stores are just a supplement to Moutai ice cream's channel layout. The Taiyuan flagship store just opened in May. Consumer Amei told Shenran that there was no queue after the store opened, but there were many young people around her who went to experience it.

"I bought the newly released Moutai blueberry slush and a strawberry ball. I think the taste is quite unique and creative, which exceeded my expectations. The light wine aroma is a little surprising." Ah Mei's friends also gave basically the same evaluation, saying that the taste is good, "but the price is a bit high." Ah Mei said that according to the local salary level and consumption capacity in Taiyuan, Moutai ice cream is unlikely to become something that people buy casually when shopping and leisure. Young people are more likely to try it out. "It is a new thing that can be talked about after dinner. I also plan to try every flavor. It is unlikely to be stockpiled or repurchased."

2. What does Moutai want to achieve by opening a large number of stores?

Industry insiders believe that Moutai can continue to increase its investment in the ice cream business because it can make money. Dairy analyst Song Liang estimated to Shenran that the gross profit margin of Moutai ice cream can be as high as 70% or more, "usually the gross profit margin of high-end ice cream will reach 55%-60%." Guizhou Moutai Chairman Ding Xiongjun previously revealed at the 2023 market work conference that Moutai ice cream is expected to achieve revenue of 262 million yuan in 2022. Moutai officials have not disclosed the specific repurchase rate, but in the industry's view, the repurchase rate of this product will not be high.

The reason is that ice cream itself is not a rigid consumption, but a seasonal and occasional consumption. In addition, the iteration speed of packaged ice cream products on the market is too fast. Only a few classic models of Mengniu and Yili can occupy the minds of users for many years. Opening in a business district, having freshly made products, and high prices, these additional conditions make it more difficult to form a stable repurchase.

Song Liang said that generally speaking, ordinary ice cream can make a profit only if it has a certain repurchase rate, but Moutai ice cream does not need to care too much about the repurchase rate, but rather plays the role of Internet celebrities and wins by price. In short, as long as there are young people willing to try new things, Moutai ice cream will make money.

A clerk at a Maotai ice cream store in Beijing told Shenran that the store has a considerable flow of customers on weekends. Since the store does not provide takeaway services, some consumers also ask runners to pick up their goods. This year, Maotai ice cream plans to expand its market, which is also in line with the idea of ​​​​a retail consumer product to enter the market.

Wen Jing, a retail industry practitioner, told Shenran that in terms of channels, high-premium products must first enter various KA (key customer) channels, that is, direct sales and large supermarkets. KA channels can reach the largest range of consumer groups. After cultivating user minds through KA channels, the next step is to sink to relatively small cities to do KA, and then LKA (local key customers), that is, local retail channels with a certain degree of popularity, such as Pangdonglai in Henan.

The last is SMB (regional customers), opening up non-chain channels, similar to distributors. The way Moutai ice cream works is different from Moutai liquor, and the channel thinking is completely different. Moutai intends to make a brand new product with the idea of ​​consumer goods.

From the outside, young people are not the main consumer group of Moutai, but the ice cream category can be used to cultivate Moutai brand awareness among young people in advance, and then they will become the consumer group of Moutai after they reach middle age.

In fact, there is no need to wait for young people to grow old. Moutai ice cream can now be used as a social currency. Like Haagen-Dazs and other high-premium consumer goods, it has become a small hit among young people.

In addition, Moutai also has reasons to make other products. Guo Fan, a brand marketing industry insider, analyzed to Shenran that the premium of Moutai brand is very high, but nothing can absorb it except wine.

"So as long as other categories get the green light, we can make money by making a Moutai tea, wine, or cigarette. Product information other than wine is only used to take on the overflow traffic of the Moutai brand." He added that Moutai liquor is a representative of high-value, high-frequency consumer products.

"Many domestic consumer goods are either high frequency and low profit, or high profit and low frequency. Very few can achieve high frequency and high profit. Even if they are made into ice cream, they will only have high profit and low frequency." It is impossible to create another Moutai, and of course there is no need to do so. However, Moutai's brand premium has reached a certain level, so a high-profit product like ice cream is relatively suitable.

3. How long will Moutai ice cream be popular?

The concept of high-end ice cream is not new, and the concept of wine + ice cream is not new either. Luzhou Laojiao once jointly launched a "blackout ice cream" with Zhong Xuegao, which added 52-degree high-proof liquor. Yanghe Group also launched Moutai M6 + liquor chocolate. Japanese sake brand Dassai also has an alcoholic ice cream, which is very popular.

In fact, the stability of Moutai ice cream's market performance is not the victory of high-end ice cream, nor the victory of wine + ice cream, but the victory of Moutai IP itself. This attempt may not be replicable.

In the opinion of industry insiders, the same method of making Moutai ice cream will not work if other liquor is used.

The essence is that there is a huge difference between the business logic of Moutai and that of ordinary consumer goods. Among the group of ice cream consumers, Moutai is a mysterious symbol.

Using the IP of Moutai to make a popular ice cream product is a dimensionality reduction attack. When Moutai ice cream was first launched, the price of purchasing a cup on the e-commerce platform was more than 120 yuan. Now, the popularity of Moutai ice cream has not decreased at all. Shenran can still see "middlemen" who purchase and resell Moutai ice cream on various social platforms. The original price of 66 yuan ice cream is priced at 200 yuan. Even if the distribution channels of Moutai ice cream are gradually opened up, the premium strength of IP will not drop drastically.

From this perspective, Moutai's ice cream is a kind of IP experiment. First, make an ordinary-looking ice cream product that is not too difficult to develop, test the waters in some channels, and after finding that the market response is enthusiastic, use the excess production capacity to make ice cream. This is not a problem for the huge Moutai Group.

At least, through ice cream products, Moutai can verify that its own IP is capable of creating more product lines.

No one can copy Moutai ice cream. As for Moutai itself, although it has no worries about making money and repeat purchases, can Moutai ice cream really capture young people in small towns? Will spending so much effort on ice cream bring "backlash" to the Moutai brand?

"Although the consumption of high-end products in third- and fourth-tier markets is unlikely to form habitual consumption, the population is large and the amount of casual consumption is also considerable." Song Liang said that there is room for Moutai ice cream in the sinking market, but with consumption downgrading in the past two years, the supply and marketing of high-end products will also be greatly affected.

In addition, Moutai ice cream can make money, but it is difficult to form a brand like Moutai.

Guo Fan said that the essence of Moutai ice cream is still a combination of Moutai IP and ordinary ice cream. Apart from the Moutai brand, it has no genes and no product competitiveness in the ice cream category.

"No matter how many stores we open, we are digesting the Moutai brand." He explained that it is similar to the principle of IP licensing, licensing a brand with premium ability to a third party, and turning intangible assets into tangible assets. "As long as the IP does not fail, it can be digested continuously, but whether the market will buy it is another matter." In general, Moutai ice cream "has no worries about food and clothing", but its situation in the fast-moving consumer goods market is a bit embarrassing.

Guo Fan said, "The Moutai brand has a sense of the times, but there are not many highlights in the packaging." Just using Moutai's packaging to attract new consumers is far less effective than other time-honored brands. Another embarrassing thing is that Moutai ice cream has an unclear positioning and has not yet formed its own user mindset outside of Moutai.

"High-end consumer goods must be presented in a specific context. Take Haagen-Dazs for example. It doesn't necessarily care about repeat purchases, but it focuses on expressing love, 'If you love him, treat him to Haagen-Dazs.'" Wen Jing said. Since Moutai's current product idea for ice cream is simply a simple addition, rather than creating a new product that does not exist on the market based on the logic of ice cream research and development, even Moutai has to face the possibility of consumers becoming aesthetically fatigued.

This year, Moutai Ice Cream launched a new product, ice cream in wine bottles, with new flavors. Moutai, which is used to the wine channel, seems to have realized the cruelty of creative competition in the consumer goods track.

"I will only consume Moutai for the sake of Moutai itself, not for Moutai ice cream," concluded consumer Amei.

The so-called logic of using ice cream to cultivate a young consumer group for Moutai may just be a false proposition. For Moutai, how to make a truly high-end Chinese ice cream is also a long and arduous task.