Founder Securities released a research report stating that the liquor sector has accelerated its clearing process since May 2025 under multiple policy catalysts. It is expected that liquor companies will continue destocking in Q1 2026, with fundamentals remaining weak. Investors should monitor the setting of corporate targets for 2026 after financial risks are released.
For the beer sector, the report suggests that cost advantages will diminish in 2026, and attention should be paid to demand recovery. Additionally, while China's spirits consumption is dominated by baijiu, other spirits currently have smaller market shares and lower industry maturity. Under the trend of market segmentation, industry-wide opportunities may emerge.
Key views from Founder Securities are as follows:
**Baijiu: Inflection Point Nears Amid Widening Divergence** In 2025, the sector experienced three phases: 1) Q4 2024–Q1 2025 saw sequential improvement, with companies adopting pragmatic strategies to control growth and ease channel pressure. 2) Weak terminal demand due to macroeconomic and policy pressures led to a deep adjustment in Q2 2025, with prices of mainstream products declining. 3) The slowdown continued in Q3 2025; despite policy easing, demand remained sluggish. Companies shifted focus from financial growth to supporting distributors, accelerating industry clearing.
Currently, stable development is the consensus, with fundamentals bottoming out and valuations recovering. Post-risk release, the focus will shift to 2026 corporate targets and demand recovery. Leading firms prioritize stability over aggressive growth, aiming for inventory reduction, price recovery, and demand-driven sales recovery. Policies such as supply control, volume cuts, and subsidies are being implemented to support distributors.
The report expects financial risks to persist in Q4 2025 and Q1 2026, with fundamentals bottoming and brand differentiation intensifying.
**Beer: Weak Demand Recovery, Declining Volume, Slight ASP Growth** In 2025, beer sales initially benefited from low base effects and new management but weakened quarter-on-quarter due to sluggish catering demand and alcohol restrictions. Average selling prices (ASP) saw slight growth due to cost advantages and CPI pressures. Revenue grew modestly in Q1–Q3 2025, while profits outperformed. For 2026, cost advantages are expected to fade, making demand recovery a key focus.
**Low-Alcohol Spirits: Growth Potential Amid Changing Consumption Trends** As the world's largest spirits market, China's consumption is dominated by baijiu. However, other spirits, such as whiskey, show potential due to their growing scale. In terms of usage scenarios, baijiu is primarily a social tool for business banquets and gifting, where alternatives like huangjiu could gain traction.
**Risks:** - Slower-than-expected macroeconomic recovery - Weaker-than-expected consumer spending rebound - Food safety risks - Intensified industry competition
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