Eliza Wong
This summer of 2025 scalds temperatures across China, yet the once-sizzling premium ice cream market faces an unprecedented cold snap. Brands famously dubbed ‘ice cream assassins’ for their hidden high-prices—notably Zhong Xue Gao and Häagen-Dazs—now confront financial meltdowns amidst shifting consumer preferences and failed business strategies.
The Luxury Ice Cream Crash Explained
Key drivers behind the collapse:
– Premium brands bankrupted by unsustainable pricing tactics- Consumer rejection of inflated luxury positioning- Resurgence of traditional ice creams under 3 yuan- Shift from novelty flavors to trusted basic formulas- Structural market corrections exposing operational flaws
The Meteoric Rise and Crash of Zhong Xue Gao
In 2018, Zhong Xue Gao rewrote China’s ice cream playbook by launching premium products like the $9 Ecuador Pink Diamond stick. Founder Lin Sheng’s (林盛) unapologetic declaration—It costs 40 yuan to produce, take it or leave it!—became symbolic of luxury ice cream’s rise.
Marketing Innovation Meets Market Deception
The brand captivated young consumers through:
– Livestream collaborations with top influencers- Premium minimalistic packaging with Chinese motifs- Aggressive claims about zero-additive formulasYet deceptive practices surfaced. Its prestigious Ecuador Pink Diamond hid commonplace ingredients. Government penalties revealed Zhong Xue Gao’s premium grapes were regular raisins, while the zero-water formula actually contained water—violating advertising laws. Justifieying premium prices became impossible. The descent accelerated swiftly:
– Stock liquidations at 1 yuan/stick- Founder Lin Sheng (林盛) limited via high-consumption restrictions- Employee exodus from unpaid salariesIn June 2025, Zhongmao (Shanghai) Food Technology declared bankruptcy after Shanghai creditor Andeli Langqing Food Trading petitioned courts citing debt defaults. Racing to recover, Lin Sheng pivoted to selling sweet potatoes on Taobao—symbolizing luxury’s spectacular fall. Zhong Xue Gao exemplifies pricing beyond product reality.
Häagen-Dazs Lose Their Luxury Crown
The iconic romance brand faced parallel demise. When Häagen-Dazs entered China in 1996, its Beijing single-scoop cost half a daily wage—positioning ice cream as luxury tokens through campaigns like Love Her? Gift Her Häagen-Dazs!
Token Romance Meets Price Reality
Metrics tracked Häagen-Dazs’ downhill trend:
– Stores plunging 17% within 18 months (466 to 385)- Urban disappearance: Flagship Beijing/Shanghai locations shuttered- Consumers measured via TikTok hashtags: #notworth30yuan admits owning affordabilityThis collapse triggered strategic retreats. Extending lines from premium experience to discounted items designed targeting prices between $1-$2 aligned Häagen-Dazs closer with competitors like Nestlé/Nissin pursuing family-value segments.
Premium Melt Triggers Market Rebalance
China’s rebalancing ice cream ecosystem clearly favors affordability:
– Mid-priced giants (Mondelēz, Nestlé) reinforce $1-$3 lines- Traditional classics thriving: Northeast Big Board sales spike 40%- Convenience stores replaced luxury brands with space-efficient mono-flavorsConsumer behavior cemented below-$1 preferences: searches for classic popsicle/in cream cone rose 75% quarter-over-quarter this summer. Volume-driven sales outperform exclusivity.
The Recession-Position Realignment
Brands adapted surviving crises:
– Mengniu/Yili withdrew niche innovations broadening milk ice cream suites- Retailers responded to demand spikes in familiar value confections- Manufacturers optimized scaled production reducing custom molds/ingredientsChina’s largest grocery chain removed premium brands showcasing smaller producers contributing sharpening accessibility.
Why Luxury Ice Cream Economics Failed
Illusionary Value Destroying Loyalty
Industry experts pinpoint three destructive mismatches:
Production Costs Overload: Luxury ice creams allocated disproportionate percentages toward packaging/cold-chain transport inflating pricing architectures unsustainably:
– Extreme luxury brands dedicated 50%+ budgets preventing scalability- Mainstream equivalents held packaging/replication under 15% enabling volume distributionThis tangled cost-structures prevented competitive pricing discipline.
– Marketing spends exploding campaigns-starved agility
Consumer Value Awakening
The pandemic triggered scrutinization where socioeconomics clashed:
– Low-income cohorts rationalizing seasonal indulgence humilityFewer younger consumers opted aligning habits to community affordability-driven retailers.
Broader Lessons Beyond Ice Creams
The ice cream assassin collapse heralds broader consumption transitions killing ill-positioned premiumization:
Luxury Product Markets Require Authenticity
Zhong Xue Gao’s falsified ingredient revelations shredded credibility—consumers today probe value-chain ethics. Success mandates:
– Genuine narrative-building showcasing craft sourcing- Pricing reflecting intrinsic utilitarian benefits- Avoiding hollow aspirational messagingShortcuts undermined entire category integrity allowing competitors capturing demand.
China Post-Luxury Consumption Normalization
Premium ice cream rested upon fleeting wealth-effects ignoring dessert fundamentals:
– Satisfaction-resides-within-affordable-accessibilityRising career pressures/core inflation redirected indulgent spending toward clarity—leading decluttering in discretionary niche categories.
The death of China’s ice cream assassins clarifies—value transparency rests upon modest fulfillment rather than expensive illusions securing loyal customers.
