Economic Observer reporter Zheng Yuxin, intern Fan Xingqi

On the evening of August 30, with the disclosure of the semi annual report of Shanxi Fenjiu (600809. SH), the 2026 "midterm examination" of major listed Baijiu companies was basically handed in.

Wind data shows that the total operating revenue of 20 listed Baijiu companies in the first half of the year was about 2004 billion yuan, down about 6.65% year on year; The total net profit attributable to the parent company was approximately 73.681 billion yuan, a decrease of approximately 8.28% compared to 80.335 billion yuan in the same period last year.

Song Shuyu, president of the China Wine Association, pointed out in a public speech at the beginning of 2026 that the Baijiu industry has entered a period of deep adjustment of "stock competition and structural differentiation". 2026 will be the "year of bottoming", but the bottom may run longer than expected.

This is not the first time that the Baijiu industry has encountered a crisis. In 2012, the "three public consumption" ban was introduced, coupled with the plasticizer scandal in 2013, the industry experienced a cliff like decline. As business consumption and private consumption gradually took over government demand, the industry took about two years to emerge from the trough and enter a new round of business cycle.

He Yong, Secretary General of the China Alcoholic Drinks Association, said that this round of adjustment is different from any previous one, and is the result of the combination of three factors: population structure, consumption concept, and economic cycle. There is no possibility of a V-shaped reversal in the short term.

Xiao Zhuqing, an expert in the wine industry, said that the number of drinkers continued to decrease, and the core consumers of traditional high-end Baijiu gradually aged; The business scenarios related to real estate, infrastructure and finance that supported high-end Baijiu consumption in the past have shrunk significantly; The traditional scene of using alcohol for political and business banquets has significantly declined; Superimposed consumers' expectations of future income are cautious, resulting in consumption contraction and consumption degradation. The overall effective consumption demand is shrinking, and the decline of Baijiu is far from bottoming out.

Industry Collective Pressure

The financial reports of listed companies show that only Kweichow Moutai (600519. SH), Wuliangye (000858. SZ), Yingjia Gongjiu (603198. SH), Jinhui Jiu (603919. SH) and Zhenjiu Lidu (06979. HK) achieved year-on-year growth in revenue, of which Wuliangye, Yingjia Gongjiu and Zhenjiu Lidu achieved positive growth in net profit attributable to the parent company.

The net profit of the industry leader is also declining. In the first half of the year, Kweichow Moutai's operating income was 90.703 billion yuan, up 1.47% year on year, and the net profit attributable to the parent company was 44.517 billion yuan, down 1.95% year on year.

Wuliangye is one of the few bright spots, achieving a revenue of 28.417 billion yuan in the first half of the year, a year-on-year increase of 20.87%; The net profit attributable to the parent company was 8.753 billion yuan, a year-on-year increase of 89.3%. But this high growth rate is based on a low foundation. Wuliangye retrospectively adjusted some accounting treatments for the first half of 2025 in its 2025 annual report, resulting in a change in the year-on-year base and amplifying the growth rate figures.

Compared with the performance of revenue and net profit, the decrease in the number of dealers, the decrease in payment from dealers, and the decrease in purchase volume also reflect the real situation of the Baijiu industry.

From the changes in the number of distributors, it can be seen that the channel networks of many liquor companies have significantly contracted in the first half of the year. Lao Bai Gan liquor (600559. SH) has a net decrease of 366 distributors, Gujing Gong liquor (000596. SZ) has a net decrease of 125 distributors, Shuijingfang (600779. SH) has a net decrease of 39 distributors, and Jiugui liquor (000799. SZ) has a net decrease of 447 distributors. The continuous decline in the number of dealers means that the channel system is being passively cleared, no longer following the expansion logic of the past "horse racing and enclosure".

From the sales performance of distribution channels, the decline is also significant. The distributor model, which accounts for 90% of the revenue of Laobaigan liquor, achieved a revenue of 1.927 billion yuan, a year-on-year decrease of 15.62%. This also led to a year-on-year decrease of 15.23% and 18.47% in the revenue and net profit attributable to shareholders of Laobaigan liquor in the first half of the year, respectively. Shuijingfang's distributor channel revenue decreased by about 6.17% year-on-year. Shuijingfang claimed to actively control goods and reduce inventory, and channel inventory decreased by about 50% compared to the same period last year. The revenue of Jiugui liquor distributors' channels decreased by about 8% year-on-year. Jiugui liquor explained that it was due to actively adjusting its channel strategy and controlling its delivery pace to digest social inventory.

The changes in contractual liabilities can also illustrate the issue. Contractual liabilities refer to the obligation of a company to transfer goods to customers for consideration received or receivable from them. In the Baijiu industry, especially for strong brands such as Moutai and Wuliangye, dealers are usually required to make payment before delivery. This money has been deposited into the distillery's account and cannot be considered as operating income. Accounting standards classify it as a contractual liability. By analyzing contract liabilities, it is possible to predict the future performance direction of the enterprise.

By the end of June 2026, the contractual liabilities of Kweichow Moutai were 3.178 billion yuan, down about 42% from 5.507 billion yuan in the same period last year; The contractual liabilities of Wuliangye amounted to 10.441 billion yuan, a year-on-year increase of approximately 3.6%; The contractual liabilities of Luzhou Laojiao amounted to 2.437 billion yuan, a year-on-year decrease of approximately 31%; The contractual liabilities of Shanxi Fenjiu amounted to 6.658 billion yuan, an increase of approximately 11.3% year-on-year; Yanghe Shares (002304. SZ) had contract liabilities of 4.303 billion yuan, a year-on-year decrease of approximately 26.8%. The general decline in contract liabilities indicates a general weakening of dealers' willingness to make payments, and the future revenue pool of liquor companies is shrinking.

The sub high end can't hold on anymore, the former 'big customers' are gone

In addition to financial reports, channels have a more direct perception of warmth and coldness.

A Baijiu dealer in Beijing recalled that even during the epidemic period, some large enterprises used Baijiu for gifts, gifts and banquets, and he could sell hundreds of thousands of cases of group purchases a year. Before the epidemic, maintaining several major clients, there was no need to worry for a year. But the changes from 2023 to 2024 are very obvious. Many companies are restricting procurement, and some are starting to cut costs. Previously, those who drank Maotai and Wuliangye were downgraded by one level, and later they basically stopped purchasing. By 2025, group buying orders will be very rare, and this year they will be almost non-existent.

According to the Interim Research Report on the 2026 Chinese Baijiu Market released by the China Liquor Association and KPMG, 61.2% of the surveyed enterprises saw a decrease in the number of customers, 74.1% reported a decline in the customer price, 74.8% reported a decline in the turnover, and the proportion of the decline in operating profit further rose to 86.7%.

The owners of three tobacco hotels in Henan province said that consumers are becoming increasingly sensitive to prices. In the past, old customers would believe that the prices offered by the owners were reasonable. Now, old customers also compare prices from three different stores, and new customers come to the stores with low prices online to ask if they can sell at this price. They are worried about buying fake wine online, but they also dislike the high prices in the stores.

The wines that have been greatly impacted are those with a secondary high-end positioning. The owner of the above-mentioned tobacco hotel stated that from the perspective of consumer scenarios, the demand for business banquets, gifts, and other items that supported such products in the past has shrunk. If you really want to treat someone, it's better to buy Maotai. Low end products don't perform well at family dinners, gatherings with friends, and public banquets. Consumers value cost-effectiveness more in personal use scenarios.

Shuijingfang is a typical sample for observing the secondary high-end price market. In the past, Swellfun positioned itself as the representative of the secondary high-end Luzhou flavor Baijiu. In 2025, it launched the dual brand strategy of "Swellfun" and "First Square". "Swellfun" focused on the secondary high-end range of 300-500 yuan, and "First Square" aimed at the high-end market of more than 800 yuan. It said that high-end brand is a long-term strategy of 3-5 years, and will not be shaken by short-term fluctuations. However, in the first half of 2026, Shuijingfang achieved a revenue of 1.082 billion yuan, a year-on-year decrease of 27.78%, and the net profit attributable to the parent company changed from profit to loss. From the market price perspective, the prices of Shuijingfang Collection, Xinjingtai, and Zhenniang No. 8 have all shown an inverted trend.

Not only Shuijingfang, but also many high priced wines from liquor companies are not selling well. These changes are also reflected in the financial report. Lao Bai Gan liquor has a revenue of 1.078 billion yuan from products priced above 100 yuan, with a year-on-year decrease of 18.10%, based on a threshold of 100 yuan; The revenue of products below 100 yuan was 1.016 billion yuan, a year-on-year decrease of 11.93%, with a greater decline in high priced products. Shede Liquor Industry (600702. SH) divides its products into mid to high end liquor and regular liquor. In the first half of the year, revenue from mid to high end liquor decreased by 22%, while revenue from regular liquor increased by 11.97%. Gujing Gongjiu disclosed by brand line that its annual raw liquor revenue was 7.965 billion yuan, a year-on-year decrease of 27.32%; The revenue of Gujing Gongjiu series was 1.052 billion yuan, a year-on-year decrease of 11.14%; The revenue of Yellow Crane Tower and other products was 979 million yuan, a year-on-year decrease of 34.57%. Although the caliber is different, it indicates that the sales pressure faced by mid to high end products is more direct, and the Volkswagen price range is relatively more resilient.

Sales are not good, and product prices are becoming increasingly inverted. Industry reports show that 56.6% of surveyed dealers and end retailers have reported an increasing degree of price inversion.

Xiao Zhuqing believes that whether the price of core large commodities can stabilize does not depend on the unilateral wishes of enterprises, but on the three major variables of consumer desire recovery based on supply and demand, the speed of consumer scenario recovery, and the improvement of social purchasing power. If the consumption scenario does not show significant improvement and social purchasing power does not rebound, relying solely on manufacturers to control goods can only slow down price declines and make it difficult to achieve true price stabilization.

The above-mentioned group buying merchants stated that they are currently unwilling to purchase goods, and the actual selling price is lower than the cost of purchasing goods. They are under financial pressure until the inventory is fully consumed. Some distributors have stated that the purchase price of 980 yuan for wine is now less than 850 yuan in the market price, and inventory accounts for several million yuan of funds. In order to recoup funds, they had to lower prices and promote sales, even selling one bottle at a loss.

The liquor company has exhausted all means, but none have been effective

In the past two years, liquor companies have almost tried every possible method. On the product side, low alcohol liquor, 50ml small bottles, and new products are appearing intensively; On the marketing side, scenes such as banquets, sports, and cultural tourism are repeatedly explored; On the channel side, controlling goods and stabilizing prices, scanning QR codes to open bottles, member operations, instant retail, and direct sales outlets are being promoted simultaneously.

The core reason why many liquor companies' past transformations have failed is that most of them have only focused on marketing concepts, packaging updates, and advertising placement, without touching on the underlying logic.

Xiao Zhuqing found that many Baijiu enterprises talk about turning to consumers, but the actual resources are still all invested in channels, spending money on display and purchase, instead of really doing consumer education and circle cultivation. Product innovation is superficial and does not match the real needs of the new generation of consumers; The organizational system is still guided by traditional investment promotion and sales pressure, and the assessment still depends on payment and delivery, not on terminal bottle opening and repurchase.

New channels can provide incremental growth, but they cannot temporarily support the decline of traditional channels. Gujing Gongjiu's online revenue increased by 14.92%, but its offline revenue decreased by nearly 3.9 billion yuan. The decline in emerging channels of Luzhou Laojiao is much smaller than that of traditional channels, but the revenue from emerging channels is still less than one tenth of that of traditional channels.

What is the solution to a crisis that has never existed before?

The industry is not optimistic about the second half of the year either. According to the 2026 Mid term Research Report on Chinese Baijiu Market, 68.5% of the interviewed enterprises expect the market to continue downward adjustment, and only 2.1% expect an obvious recovery. Mid Autumn Festival and National Day are still important observation windows, but restocking before the holiday does not necessarily mean that terminal demand has rebounded.

Xiao Zhuqing believes that for liquor companies to truly and effectively transform, they must complete three steps: in terms of assessment logic, shift from relying on distributors to make payments and deliver goods, to focusing on terminal bottle opening rates and consumer repurchase rates, and transform the sales team from a "investment team" to a "dynamic sales team"; In terms of resource allocation, we will cut off inefficient channels such as B-end rebates and shift the focus of marketing expenses to cultivating C-end consumers and building real consumption scenarios, so that money can truly be spent on areas that can drive consumption; In terms of product and organization, optimize the product matrix based on consumer stratification, refuse to blindly pursue high-end products that are detached from reality, and reshape the organizational team to create a frontline team that understands the terminal and consumers. Otherwise, strategic transformation can only be stopped on the PPT.

Song Shuyu, president of China Alcohol Industry Association, pointed out at the Baijiu T9 round table conference that the value of good wine is half in sensory experience and half in emotional value. In the past, the traditional "old wine lane" separated good wine from consumers. Now we must take the initiative to remove the wall, break through the information barrier, and let consumers become participants from passive recipients. He proposed to build a "New Wine Lane": a panoramic consumption field that integrates transactions, experiences, culture, creativity, and socialization, allowing consumers to complete a complete journey from cognition to recognition, from experimentation to loyalty, while creating a "new paradigm of life" that integrates fine wine into various life scenarios that are observable, tastier, livable, learnable, and nurturing.

Industry leader Maotai is already taking action. At the beginning of 2026, Maotai launched a comprehensive market-oriented reform towards C, with the core shift from "channel driven" to "consumer driven". Maotai Group Chairman Chen Hua stated that this reform is not only aimed at the sales end, but covers the entire industry chain and process of marketization, and aims to promote the transformation of the entire chain from "passive response" to "active adaptation". On the specific path, Maotai will launch Feitian Maotai on the i Maotai platform, with a registered user base of 96.9078 million as of June; Simultaneously activate the multi-dimensional collaborative operation model of "self sale+distribution+consignment+consignment" to reconstruct the channel ecosystem. In the first half of 2026, Maotai achieved a tax-free revenue of 40.264 billion yuan from alcoholic beverages, a year-on-year increase of 274%.

Xiao Zhuqing said that the real turning point of the Baijiu industry must be based on the real dynamic sales recovery of the terminal, rather than the transfer of channel inventory.

(Author Zheng Yuxin)