Becoming Rich with Daily Scavenging APP-Chapter 522: The Ice Cream and Popsicle Market
Business matters can sometimes be this simple.
All kinds of strategies and tactics, in the end, cannot compare to a single document.
Starting from yesterday, the government issued a statement, taking relevant measures on some medical devices imported from the European Union during procurement activities, restricting imports of medical devices exceeding 45 million from the European Union.
Of course, products from China-European joint ventures are not included in this.
So, after Lu Cheng called Chen Yiyang, the former owner of the medical device factory also called Chen Yiyang, saying he was willing to buy back the medical device factory at double the price.
There’s no way Chen Yiyang would agree to that; he’d only consider it if the price was ten times higher.
Now he finally understood why Zhao Feipeng suddenly called him.
It turns out he thought Chen Yiyang got insider information in advance, which is why he bought the medical device factory.
If Chen Yiyang could obtain such insider information, then his connections were much higher than Feipeng imagined.
Unfortunately, this was just a beautiful misunderstanding.
However, many people didn’t see this as a misunderstanding.
The next day, Zhao Feipeng called again, saying that several private hospital owners wanted to invite Chen Yiyang to dinner to apologize.
But Chen Yiyang had no time to deal with them anymore.
He still had to handle whether to invest in the Yiming Food Factory Yang Chengru mentioned.
Finding experts in the frozen dessert field wasn’t difficult; Chen Yiyang quickly assembled a team.
"If I invest in Yiming Food Factory, upgrade the equipment, and innovate the production process, can the factory’s net profit increase?"
This was the question Chen Yiyang was most concerned about.
After all, for a factory with a net profit of only a few hundred thousand a year, it’s not just about whether it makes money, but any mistake could bankrupt the entire factory.
You can’t have a factory with over a thousand employees go bankrupt because a few workers were injured and the factory couldn’t afford compensation, right?
"I think it’s difficult," said one of the experts Chen Yiyang invited, "because products like ice cream and popsicles are actually hard to profit from."
"Why?" Chen Yiyang was somewhat curious; there are quite a few ice cream manufacturers on the market, how is it they’re not profitable?
"Because ice cream and popsicles are low-frequency consumer goods. Data shows that our country’s annual per capita ice cream consumption is only about three kilograms. And Chen, do you know how much soy sauce we consume per capita each year in our country?"
"Could it possibly be more than ice cream?"
"Yes, that’s the truth. We consume six liters of soy sauce annually, which, when converted, is more than the ice cream consumed.
The main reason is that ice cream and popsicles are seasonal consumer goods; their sales are mainly concentrated in the summer.
Moreover, the logistics cost of ice cream is higher than other costs because it requires cold chain transportation, increasing logistical costs by forty to sixty percent compared to normal logistics.
This means that a significant reason why ice cream continues to rise in price is due to the continuous increase in logistics, raw material, and labor costs."
With these experts’ explanations, Chen Yiyang gradually understood the current plight of the popsicle and ice cream market.
Low-end isn’t profitable, so the only way is to move towards the high-end.
However, high-end prices are currently not something everyone can generally accept.
"If we can increase the sales volume, spreading the costs through sales, what about it?"
"It’s not impossible, but it still won’t be very profitable because even if sales are high, they are only high in the summer. What about the other seasons?
You need to coordinate logistics and raw material supply. You can’t just have them transporting and providing raw materials in the summer and ignore the other seasons.
This would lead to an extremely unstable supply chain, and if raw material suppliers and logistics providers choose more stable clients, it would be devastating for the factory."
"So, this means the ice cream factory has no investment value?" Chen Yiyang began to consider how to refuse Yang Chengru.
"It can’t be said it has none," said someone who had previously managed at another popsicle company. "There was an ice cream brand called Zhongxuegao that invited me to develop products for them. I think their strategy is worth learning from and might even generate significant profits."
"Tell me more," Chen Yiyang inquired.
"The low-end popsicle and ice cream market indeed isn’t profitable, but our country’s ice cream and popsicle market has actually been growing.
That growth is mainly driven by the consumption habits of the younger generation. Nowadays, young people usually don’t inquire about prices like the older generation; they directly take things to the counter to pay."
"So?"
"So Zhongxuegao used a strategy of using slightly better raw materials in a popsicle and then pricing it at ten times the profit margin, selling a single popsicle for forty or fifty yuan."
"It’s hard for an ordinary young person today," Chen Yiyang was skeptical after hearing this method, "even I wouldn’t casually buy a forty or fifty yuan popsicle when I’m out."
"You could use a bit of strategy," the person said with a mysterious smile, continuing.
"It’s well known that there are high-end popsicles in our country’s market. But these popsicles have dedicated cabinets separate from other popsicles.
So guests can easily distinguish which popsicles are particularly expensive and which are cheap.
But Zhongxuegao adopted a method where they didn’t distinguish in appearance from other ordinary popsicles.
They mixed their expensive popsicles with other cheaper popsicles and offered the store owners a high-profit margin. For example, pricing a popsicle at sixty while giving the store a purchase price of forty, allowing the store to earn twenty per popsicle sold.
As mentioned before, today’s young people generally won’t ask the price first. After they take the popsicle to the counter and pay, even if they see the high price on the receipt later, they typically won’t return it."
This idea is admittedly a bit underhanded.
"I know this method is underhanded," the person acknowledged that Zhongxuegao’s strategy might offend some, but he continued to explain the logic behind it.
"Chen, are you familiar with Haagen-Dazs?"
"Yes." Chen Yiyang nodded; when he was young and foolish, he’d bought this expensive ice cream for girls.
Haagen-Dazs takes seventy percent of the ice cream industry’s profits, with over half of their sales coming from our country.
The reason being it is a mid-priced product abroad but a high-end product domestically. 𝙛𝒓𝒆𝙚𝒘𝒆𝓫𝙣𝓸𝙫𝓮𝒍.𝒄𝒐𝓶
Given that our country’s per capita ice cream consumption is far less than Haagen-Dazs’ other markets, the reason Haagen-Dazs can make so much money is purely because they sell it at a high price.
Zhongxuegao sold high-priced popsicles to countless people; even though most wouldn’t buy it a second time after seeing the price,
this still implants a notion in their minds that Zhongxuegao’s popsicles are high-end products."
