The year 2026 marks both the 70th anniversary of the founding of Jiugui Liquor Co.,Ltd. (SZSE: 000799) and a decade since it officially became a member of the COFCO Group.
Over these ten years, this representative of Hunan's baijiu industry, which has weathered numerous storms, emerged from operational difficulties with the empowerment of a central state-owned enterprise (SOE), reaching a peak in revenue, only to see consecutive declines during the industry's structural adjustment, with its performance nearly returning to its starting point a decade ago.
Financial Performance Trajectory
When COFCO took over, Jiugui Liquor was mired in a severe operational crisis. Affected by historical negative events, the company suffered consecutive losses and chaotic operational order. Having just turned a profit in 2015 with revenue of only 601 million yuan, the company, leveraging COFCO's resources and standardized management, quickly overcame its difficulties. It successfully removed the ST designation in 2016, with annual revenue of 655 million yuan, formally embarking on a path to recovery.
The period from 2016 to 2022 became a golden era of development for Jiugui Liquor, with performance climbing steadily. Over these seven years, revenue surged from 655 million yuan to 4.05 billion yuan, achieving a compound annual growth rate (CAGR) close to 30%. Net profit grew from 109 million yuan to 1.049 billion yuan, with a CAGR nearing 40%.
In 2021, revenue skyrocketed by 86.97% year-over-year, reaching the peak of its growth momentum, and the company consequently set a revenue target of 10 billion yuan. Its two core product lines, Neican and Jiugui, drove this growth with five-year CAGRs of 46% and 31% respectively, showing initial success in its premiumization strategy.
Starting in 2023, as the industry environment shifted, Jiugui Liquor's performance took a sharp downturn, with significant declines for three consecutive years. Revenue in 2023 was 2.83 billion yuan, down 30.14% year-over-year. In 2024, revenue was halved to 1.423 billion yuan, with net profit plummeting 97.72%. In 2025, revenue further dropped to 1.108 billion yuan, a decline of 22.17%, and the company reported an annual net loss of 33.95 million yuan, marking its first annual loss in eleven years.
Breaking down the 2025 data, Xuchang Pangdonglai became the company's largest customer with sales of 196 million yuan, accounting for 17.66% of total revenue. Excluding this portion, Jiugui Liquor's own revenue was only 912 million yuan, similar to its 2016 level. This decade of performance presents a distinct inverted V-shaped trajectory, where the gains accumulated during the rapid early growth phase were quickly eroded, and growth momentum has comprehensively weakened.
Channel Strategy and Its Consequences
Channel development was a key focus area after COFCO's entry and a primary trigger for the company's rise and subsequent decline. Initially, COFCO focused on rectifying the previously lax channel management, strictly cracking down on cross-regional arbitrage, and streamlining sales order to lay a solid foundation for market expansion.
In 2019, Jiugui Liquor implemented a national strategy, promoting the corporatization and nationwide operation of the Neican brand, and began a large-scale expansion of its dealer network. From 2019 to 2023, the number of dealers increased from 528 to 1,774, a net addition of 1,246 over four years, with the share of markets outside its home province once exceeding 60%. This massive channel expansion drove short-term sales growth, becoming a core pillar supporting the peak performance.
However, behind the rapid expansion, the company's channel control capabilities and terminal service levels failed to keep pace, allowing hidden risks to accumulate. The numerous, scattered new dealers highlighted regional management loopholes, leading to concentrated outbreaks of issues like price inversion and inventory buildup.
As market pressure became apparent, Jiugui Liquor was forced to begin channel contraction. In 2024, it cut 438 dealers, a reduction of 32.78%, with significant attrition in key out-of-province regions like North and East China. In 2025, channels were streamlined further, with the total number of dealers dropping to 1,109, a reduction of 227 for the year. Over half of the attrition came from the Central China region, which is considered its home base.
This dramatic channel fluctuation exposed strategic misjudgments. While blindly expanding in out-of-province markets, Jiugui Liquor failed to deeply cultivate its local market. The Hunan baijiu market exceeds 30 billion yuan in scale, yet the company's long-term sales within the province were only a few billion yuan, indicating a weak home base. It was not until the out-of-province channels collapsed that the company shifted back to deepening its Hunan market in 2023, establishing a "Hunan Business Division." By 2025, the proportion of revenue from within the province rebounded to 63.33%, but by then, the overall channel structure was already difficult to repair.
Challenges in Premiumization Strategy
Price-per-ton data outlines the true trajectory of Jiugui Liquor's brand upgrade under COFCO from another angle. In 2024, the company's overall gross profit margin fell by 7.0 percentage points year-over-year to 71.4%. The main reasons included a downward shift in product mix, negative scale effects from fixed costs, and a decrease in the price-per-ton of core products.
By product line, the price-per-ton for the Neican series fell 25% year-over-year in 2024, with revenue plunging 67.06% to 235 million yuan, and year-end inventory reaching 1,395 tons. The price-per-ton for the Jiugui series fell 6%, and for the Xiangquan series, it fell 10%. These figures indicate that the premiumization strategy launched in 2020 has come under significant pressure. In 2025, the divergence in price-per-ton trends across product series became more pronounced. The Neican series saw a slight 3% increase to 715,400 yuan per kiloliter, but its sales volume fell 30.7% to 235 kiloliters, a situation industry insiders described as an awkward "price up, volume down" scenario. The price-per-ton for the Jiugui and Xiangquan series fell 14% and 10% respectively.
More telling is the reverse adjustment in product mix. In 2025, revenue from the premium Neican series was 168 million yuan, down 28.61% year-over-year. The wholesale price of the Neican liquor, once a "price benchmark" with a suggested retail price of 1,499 yuan, had fallen below 700 yuan, indicating severe price inversion. Conversely, the low-end Xiangquan series saw a slight increase against the trend.
This situation of "premium collapse, low-end support" reflects the fragility of the brand pyramid structure built during the COFCO era under external pressure. While COFCO enhanced the baseline stability of the brand through its SOE endorsement and standardized internal management, within the national premium baijiu landscape, the differentiated value of Jiugui Liquor's "Fuyu Aroma" has yet to effectively penetrate consumer perception barriers. The brand premium for its high-end products has struggled to gain sustained market support.
Data from 2025 shows the Neican, Jiugui, Xiangquan, and other series achieved revenues of 170 million, 660 million, 60 million, and 210 million yuan respectively, with year-over-year declines of 29%, 21%, 25%, and 20%. Against the backdrop of overall declines in both volume and price, the gradual erosion of the high-end price system is the most concerning signal. This precisely indicates that the changes COFCO brought to Jiugui Liquor over the decade are more evident in the standardization of internal governance and the systematization of channel control. However, at the brand level—arguably the highest and most difficult barrier in China's premium baijiu market—COFCO has yet to find an effective breakthrough strategy.
COFCO's Stabilizing Role and Unresolved Brand Challenges
A comprehensive review of the decade since COFCO took over Jiugui Liquor leads to a core conclusion: COFCO did not transform Jiugui Liquor into a baijiu star with linear annual growth, a feat no company could maintain during a period of deep industry adjustment. However, it successfully turned Jiugui Liquor from an enterprise in "constant danger of failing" into a "normally functioning" business operating on commercial logic.
This "stabilizer" effect is manifested in three areas. First, financially, COFCO quickly helped Jiugui Liquor remove its ST designation, securing a seven-year period of rapid growth. Second, in channel governance, by cracking down on regional arbitrage and expanding the dealer network nationally, it fundamentally reformed the company's sales foundation. Third, in management, it established a corporate governance system meeting SOE standards, changing the historical pattern where the company was frequently thrown into turmoil due to shareholder changes.
However, the other side of the coin is equally undeniable. While COFCO's SOE background brought standardized governance, it may also have introduced a certain "institutional insensitivity." In the premium baijiu sector, which relies heavily on brand momentum and market-driven marketing, COFCO's management team had inherent shortcomings in cross-industry experience, brand innovation, and refined channel operations.
The 2025 annual report reveals that three of the company's top five customers were e-commerce companies, with Pangdonglai becoming the largest customer with 196 million yuan in sales. This channel structure fundamentally exposes the historic pressure Jiugui Liquor faces to transform as traditional dealer confidence collapses.
Simultaneously, frequent management changes over the decade have also been an internal constraint on the company's development. Since COFCO's entry, core positions including chairman, general manager, and deputy general manager have seen repeated adjustments. From 2024 to 2026, over five high-level management changes were publicly disclosed. Most dispatched executives came from non-baijiu sectors, lacking deep understanding of Hunan's baijiu culture, regional consumption habits, and the operational logic of the baijiu industry, making it difficult to formulate long-term plans suited to the company's reality.
Management changes directly led to frequent strategic shifts. Over the decade, the company's development direction was adjusted multiple times: from a full push for nationalization and a冲刺 towards the 10-billion-yuan target, to turning inward to deepen the home province market and create model markets elsewhere, and then to transforming into a boutique baijiu producer. Strategic slogans kept changing, and the development direction remained unsteady. Each leadership change was accompanied by a reconstruction of strategy, leading to a lack of continuity in long-term development planning and constant interruptions to prior investments, channel layouts, and brand plans.
Later, new management began adjusting the operational approach, reducing channel expenses, shifting resources towards consumer cultivation and cultural development, and leveraging COFCO's resources to engage in cross-industry collaborations with large groups in search of new growth points. However, the resource wastage, dealer apathy, and team morale fluctuations caused by long-term strategic instability are difficult to repair in the short term.
In summary, COFCO spent a decade pulling Jiugui Liquor back from the brink to a normal operational track. Financial recovery, channel streamlining, and management standardization are tangible achievements. However, the shortcomings in deep market competition, brand premiumization, and long-term strategic steadfastness are equally glaring.
The aggressive nationalization, constraints of the major-distributor model, and management turbulence have combined to bring Jiugui Liquor back to its starting point in 2026. The new factory anniversary theme mentions a "third startup." How to stabilize the management team, anchor a long-term strategy, consolidate the local market, and rebuild a credible premium brand value will be the core challenges for the next decade. For a regional famous brand backed by a central SOE, balancing institutional norms with market vitality remains a prolonged test.
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