The Baijiu industry is undergoing a long and painful adjustment.

In 2021, the CSI Baijiu Index hit a historical high, and then fell for six consecutive years. Kweichow Moutai's share price has halved from its high. In 2025, the revenue of the Baijiu sector declined 18.1% year on year, and the net profit attributable to the parent company declined 23.9% year on year.

Faced with the multiple pressures of shrinking consumption scene, loss of young groups and high channel inventory, Baijiu enterprises are not waiting to die. In the past few years, they have made numerous attempts at transformation.

On the channel side, liquor companies are trying various transformations. Yanghe and other liquor companies have lowered their payment targets and controlled their delivery pace, while Maotai is bypassing intermediaries and facing consumers directly. On the product side, low alcohol content has become the most sought after direction - Wuliangye launched the 29 degree "instant heart to heart" series, Gujing Gongjiu released the 26 degree "light vintage 20" series, Shede Winery followed suit with the 29 degree "Shede Freedom" series, and Luzhou Laojiao launched the 28 degree highlight series in June 2026. On the marketing side, Fenjiu launched the "Everyone loves Fenjiu" topic challenge, with an exposure of over 1 billion. Jingjiu gained popularity with hot topics such as "Jingjiu enters the throat, Auntie doesn't worry", and added 9 million young users in two years.

From product form to channel mode, from brand narrative to marketing means, the transformation of Baijiu enterprises is not infrequent. But the performance curve did not turn upwards as a result. According to research data from the China Alcoholic Drinks Association, in the first quarter of 2026, 72% of surveyed companies reported a decrease in sales revenue, and as many as 86% reported a decline in profit margins. In the first half of 2026, among the 8 liquor companies that have disclosed their semi annual performance forecasts, 7 have experienced a decline in profits or losses.

Why haven't these transformations been effective?

Technology is a worthwhile direction to explore

To sort out the transformation actions of Baijiu enterprises in recent years, the three high-frequency words are low degree, young and online. The product's degree has decreased from 53 degrees to 22 degrees, packaging has been changed from traditional gift boxes to trendy designs, and channels have expanded from offline distribution to instant retail.

Baijiu enterprises want to acquire new customers and stabilize existing customers. The initial idea is to change the marketing image and reach a new generation of consumers with younger communication methods and lower product forms. But the problem is that, as a kind of drink, the final consumption of Baijiu is the product itself - taste, quality, and after drinking experience. If there is no substantial improvement in product quality, it is difficult to form true repurchase and stickiness solely through packaging replacement and marketing hype.

There has been a structural problem in the Baijiu industry for a long time: quality is highly dependent on experience rather than a traceable and verifiable scientific system. In the propaganda and narration of Baijiu, keywords such as "master blending" and "century old cellar" often appear, which just shows the problem: blending depends on the tongue of the master, but the microbial mechanism behind the cellar is not fully understood.

Luzhou flavor Baijiu relies on mud cellar fermentation. The longer the cellar is continuously used, the higher the quality of the original liquor will be. The long-term domesticated microbial community in the cellar over a hundred years old is the key. However, there are still many cognitive blind spots regarding the succession and flavor metabolism mechanisms of these microbial communities.

Sun Baoguo, an academician team of Beijing Technology and Business University, pointed out in the research that, because the internal relationship between the important microorganisms that affect the quality of Baijiu and the formation of key flavor substances in the traditional brewing process has not yet been clarified, extensive experience mode is still used in many links of the production of Luzhou flavor Baijiu, with low efficiency, poor batch stability, difficult to achieve quality improvement, and slow progress in standardized chemical industrialization. The experiment increased the content of flavor ethyl ester and ethanol in Baijiu solid fermentation system through the microbial assembly mode of chain extension microbial combination, which is conducive to the quality improvement and intelligent control of Baijiu.

This is not an isolated case. The fermentation strains of high-end wine have long relied on imports, and there are few domestic manufacturers that can provide localized high-quality brewing microbial preparations. The investment gap in basic microbiological research in the entire brewing industry has constrained the transition from "experience brewing" to "scientific brewing".

On the other hand, in the rise of Japanese whiskey, science has been implanted into the industry's genes from the very beginning. In 1923, when Noboru Torii and Masataka Takekawa established the Yamazaki Distillery, Takekawa's systematic study of applied chemistry and Scottish distillation technology at the University of Glasgow formed the starting point of the industry. Over the next century, from water source selection to peat treatment, from fermentation control to oak barrel aging, Japanese whiskey has always been finely controlled using scientific methods.

The reason why the transformation of Baijiu is slow and has limited results may be that it has always been focusing on "shape". When the transformation investment of liquor enterprises is concentrated on packaging design and alcohol reducing formula, the real upgrading proposition of the industry - understanding the microorganisms in pit mud and distiller's yeast, controlling the stability of the product by scientific means - has been put on hold instead.

In the traditional narrative system of Baijiu industry, there seems to be some tension between culture and science. Brewing is described as a "gift from heaven" and "craftsmanship", a technique that has been passed down for thousands of years, while scientific analysis is seen as an offense to this mystery. This perception is becoming an implicit resistance to industrial upgrading.

In fact, science is not the opposite of culture, but a means for culture to continue and prove itself. When enterprises can understand the functions of different microorganisms in the fermentation process and achieve flavor targeted optimization through strain screening, "culture" may also be able to transform from vague legends into replicable quality outputs. 'Without Maotai Town, Maotai liquor cannot be brewed' will no longer be a marketing slogan lacking data support, but will become a traceable and verifiable quality assurance.

Wine companies have the ability to shoulder the banner of technology

Baijiu industry has sufficient financial conditions for scientific and technological investment.

The gross profit margin of top liquor companies has been maintained in the range of 75% to 90% for a long time, with ample cash flow. In 2025, the gross profit rate of Baijiu sector will be 82.34%. Wine companies that have accumulated a large amount of cash in their accounts have sufficient financial resources to increase investment in the field of microbiological basic research.

A noteworthy trend is the continuous increase in dividend payout ratio. In 2025, a total of 11 liquor companies will increase their annual dividend rates, with 9 liquor companies having a dividend rate higher than 60% and 14 liquor companies having a dividend rate higher than 40%. Against the backdrop of performance pressure, liquor companies tend to return shareholders through high dividends, which is certainly a necessary part of corporate governance. However, it also raises a question worth considering: when the industry faces fundamental transformation difficulties, are profits used for better purposes besides distribution?

From the current situation, Baijiu enterprises still pay insufficient attention to R&D investment as a whole. According to wind data, in 2025, the total R&D investment of 20 A-share Baijiu listed companies will be only 3.045 billion yuan, accounting for 0.8% of the total revenue. Kweichow Moutai will invest 803 million yuan in R&D in 2025, accounting for only 0.48% of the revenue. The R&D investment for Laobaigan liquor in 2025 is 11.2579 million yuan, a year-on-year decrease of 29.39%, with R&D investment accounting for only 0.27% of revenue. At the same time, the sales expenses of Wuliangye will account for 52.26% in 2025, and that of Kweichow Moutai will account for 40.9%. The overall sales expenses of most liquor enterprises will account for more than 20 times of the R&D expenses.

At the national level, the brewing industry has been included in the "historical classic industry", and in the "Guiding Opinions on Improving and Upgrading the Quality of the Brewing Industry (2026-2030)", it is explicitly stated to "strengthen the screening, development, and application of local brewing microbial strains". Microbiological research is an important part of the field of biological science. Baijiu enterprises have the most abundant brewing microbial resources and application scenarios, and are fully capable and responsible to carry this flag.

Some top companies have already taken action. Wuliangye has applied the high-throughput sequencing platform to the research of ancient cellar microorganisms ten years ago. In 2023, it will establish the "Baijiu Microbiology Research Sub center of China Industrial Microbial Strain Preservation and Management Center". At present, the strain bank has collected more than 400 kinds of brewing microbial strains, more than 2000 strains, and more than 20000 backups, making it the largest enterprise strain bank in China's brewing industry. Wuliangye, together with Jiangnan University, has also found and announced several new strains named after Wuliangye for the first time in the world. Among them, "Microbacterium capricolyticum" JNU-WLY1368 has been proved to be the dominant microorganism in the old cellar mud of Luzhou flavor Baijiu in China. In 2025, the research team of Wuliangye once again isolated and named a new genus of anaerobic bacteria - Lactobacillus fermentum - for the first time internationally.

In 2025, Wuliangye and Kweichow Moutai will successively set up science and technology innovation companies with registered capital of 100 million yuan and 1 billion yuan respectively. These actions send a signal that top liquor companies are shifting from "storytelling" to "scientific research".

But the actions of only a few companies are far from enough. When the industry is faced with multiple pressures such as shrinking consumption scenarios, loss of young groups, and high inventory, instead of repeatedly exploring in form innovation, Baijiu enterprises should try to invest resources in the micro world that determines quality.

(Author Zheng Yuxin)