Zhenjiu LiDu (06979.HK) is experiencing a stark contrast in its current situation. On one hand, Chairman Wu Xiangdong's video channel has achieved remarkable success, accumulating over 600 million views. The accompanying "Ten-Thousand Merchant Alliance" initiative has signed up more than 3,800 partners, generating 580 million yuan in payments. On the other hand, the company has issued a grim profit warning, anticipating that its 2025 revenue will have decreased by nearly 50% year-over-year, with adjusted net profit plummeting over 60%.
This profit warning casts a shadow over Wu Xiangdong's experimental strategy combining his personal brand with the merchant alliance. The vast discrepancy between high online engagement and poor financial performance leads to questions about the effectiveness of this approach.
Despite the impressive surface-level data for Wu's personal brand, the company's operational results are severely lacking. By the end of 2025, his channel had over 6 billion total views, with 12 videos exceeding 10 million views each. This effort was primarily aimed at promoting the "Da Zhen" product, launched in June 2025. Priced around 600 yuan but positioned as a rival to 3600-yuan products, "Da Zhen" was intended to become a flagship offering, with the majority of the second-half budget allocated to it.
The "Ten-Thousand Merchant Alliance" model was launched concurrently to support "Da Zhen," attempting to bind merchants through equity incentives and create a manufacturer-distributor community. By early February 2026, Wu announced that in 200 days, the alliance had signed 3,816 merchants, covering 31 provinces and 280 cities, with 5.8 billion yuan in payments received.
Based on these figures alone, one might expect an improvement in the latter half of 2025. However, the opposite occurred. The profit warning indicated expected 2025 revenue of 3.55 to 3.7 billion yuan, a decrease of 47.7% to 49.8% compared to 2024's 7.07 billion yuan. Adjusted net profit was projected to be 520 to 580 million yuan, down 65.5% to 69%.
A breakdown of the data reveals a sharper decline. In the first half of 2025, revenue was 2.497 billion yuan with an adjusted net profit of 613 million yuan. This implies that in the second half, revenue fell to between 1.053 and 1.203 billion yuan, and the company likely shifted to a net loss of 30 to 90 million yuan. Comparatively, revenue in the second half of 2024, before the "Da Zhen" launch, was 2.9 billion yuan. Therefore, despite the full launch and promotion of "Da Zhen," second-half 2025 revenue was less than half of the same period the previous year. Clearly, the highly anticipated "Da Zhen" failed to rescue the company's performance.
Even before "Da Zhen's" introduction, sales of ZJLD's core brands were declining significantly. In the first half of 2025, all four major brands experienced sales drops. The flagship Zhenjiu brand, accounting for 59.7% of revenue, saw sales plunge 44.8% to 1.492 billion yuan, with its average selling price also falling. The Lidou brand, representing 24.5% of revenue, saw a 9.4% sales decrease, achieved mainly through price reductions, as its average price fell by over 29%. The Xiangjiu and Kaikouxiao brands, focused on the Hunan market, also saw sharp declines of 38.7% and 63.9%, respectively.
Beyond weaker market demand, proactive measures to halt orders and reduce channel inventory were significant factors in the sales slump. In January 2025, Zhenjiu stopped accepting orders for its "Zhen Fifteen" product, and Lidou suspended supply for several key products. It was in this context that "Da Zhen" was pushed to the forefront.
Priced to fill the gap between the 400-yuan "Zhen Fifteen" and 800-yuan "Zhen Thirty," "Da Zhen" was intended to create a new growth driver during inventory reduction. While its payment collection data seems respectable, a single new product could not quickly offset the substantial declines across the other established brands.
ZJLD attributed the 2025 performance drop to two main factors: weakened market demand, especially for business entertainment and gifting, and continued efforts to reduce channel inventory in the second half. Into 2026, channel adjustments persisted, with Lidou again halting supplies for several product series in February.
Connecting these events shows that for over a year, ZJLD has focused on clearing channel inventory to make space for product portfolio restructuring. In the short term, this strategy has not yielded a clear improvement in performance. Even with substantial "Da Zhen" payments, the incremental gains are insufficient to counter the broader sales declines or quickly reverse the company's overall results.
Following the profit warning, skepticism towards Wu Xiangdong's personal brand and the alliance model has grown. Questions focus on the authenticity of the online traffic, the conversion of views into actual consumer demand, and the lack of public data regarding "Da Zhen's" real terminal sales and consumption rates.
These concerns are not unfounded. The 600-800 yuan price bracket targeted by "Da Zhen" has been under significant pressure. Industry reports indicate the 500-800 yuan segment is particularly challenging. Recent market surveys show a "dumbbell-shaped" consumption trend during the Spring Festival: strong demand for ultra-premium brands like Moutai and value-oriented budget wines, but pressure on the 300-800 yuan mid-to-high-end segment.
Furthermore, competition in this price range has intensified. Major products like Moutai 1935, Junpin Xijiu, and Qinghualang, originally positioned above 1000 yuan, have seen their market prices drop to around 600 yuan, creating intense competitive pressure.
Additionally, the "Ten-Thousand Merchant Alliance" appears to be in a difficult磨合 phase. Wu revealed that within 200 days, 123 penalty notices were issued and cooperation with 150 merchants was terminated, indicating challenges with compliance. To maintain channel discipline, Wu imposed strict rules against online sales, price undercutting, and wholesale transfers. However, sellers offering "Da Zhen" can still be found on major e-commerce platforms, suggesting enforcement difficulties.
These details highlight another aspect of the alliance: behind the signing of over 3,800 merchants lie high attrition rates and ongoing tension regarding profit distribution between the company and its partners.
Not all perspectives are pessimistic. Some industry commentators view the alliance as a proactive self-rescue effort during a sector downturn, aligning with the trend of shifting from "channel-driven" to "consumer-pull" strategies. However, they note that the capital-intensive "equity-for-channels" model carries significant risk in a down cycle. Its ultimate success may depend on a sector recovery in 2026, effective price control, and distributor system stability.
Wu Xiangdong himself shows no signs of slowing down, maintaining a frequent update schedule for his video channel and continuing live broadcasts. Whether his combined "Personal Brand + Alliance" strategy can ultimately alleviate ZJLD's performance pressures might only become clearer with the next financial report.
Comments