According to a research report from Soochow Securities, the liquor industry entered a deeper adjustment phase in Q2 2025. The firm expects the clearance and bottoming trend to continue into H1 2026. The current period is a critical clearance phase, with a potential new inventory cycle (characterized by price stabilization and improved restocking willingness) anticipated in Q3 2026. Soochow Securities forecasts that the year-on-year revenue growth for the liquor sector in 2026 will be lower in the first half and higher in the second half, with healthy sector expectations likely forming around mid-year. For investment recommendations, the approach is simplified: prioritize relatively high-quality companies with "higher credibility in clearance + strong management and operational capabilities + logical future growth potential." The top recommendation is Kweichow Moutai Co.,Ltd. (600519.SH), whose sales are expected to stabilize first, with its comprehensive direct-to-consumer strategy opening up growth space. Key points from Soochow Securities are as follows:
Accelerated Clearance in 2025, Especially Pronounced in H2; Revenue Decline Narrowed in Q1 2026 In 2025, the liquor sector's revenue decreased by 18.1% year-on-year, net profit attributable to shareholders fell by 23.9%, and non-GAAP net profit dropped by 24.2%. In Q1 2026, sector revenue declined by 0.1% year-on-year, net profit attributable to shareholders fell by 1.4%, and non-GAAP net profit decreased by 1.5%. Clearance accelerated in H2 2025, with the revenue decline in Q4 2025 exceeding that of the first three quarters. This was due to continued weak demand from missing consumption scenarios and difficulties in sales at terminal tobacco and alcohol stores, leading to slow inventory reduction, amplified pressure on distributor shipments and turnover, which in turn pressured liquor companies to release financial statement pressures. The market shows greater recognition for companies that can maintain channel order, relatively stable price levels, and whose inventory and financials are among the first to bottom out and stabilize. Q1 2026 saw a sequential recovery in liquor demand driven by the Spring Festival peak season, but a year-on-year gap remained. Personal dining and banquet scenarios gradually recovered, but business scenarios remained at low levels.
Revenue Side: Widespread Acceleration in Bottoming; Kweichow Moutai and Yingjia Among First to Stabilize in Q1 2026 In 2025, the liquor sector's revenue decreased by 18.1% year-on-year, with net profit attributable to shareholders down 23.9%. Specifically, H1 and H2 2025 revenues fell by 12.7% and 24.7% year-on-year, respectively, while net profits attributable to shareholders dropped by 16.5% and 33.8% year-on-year, indicating a significant deceleration in H2. On a quarterly basis, the revenue growth rate for the sub-premium segment has been accelerating its decline since Q2 2024. Since Q3 2025, with a lower base, its year-on-year revenue decline has been relatively better than other liquor segments. The premium and regional leader segments accelerated their adjustments in Q2-Q3 2025, with year-on-year revenue declines continuing to expand, promptly releasing financial statement pressures. For most liquor companies in Q4 2025 and Q1 2026, the growth rate of cash collected from sales was less than the apparent collection growth rate, which was less than the revenue growth rate, and contract liabilities balances decreased year-on-year, indicating ongoing pressure on channel cash payments. On the sales side, the apparent collection growth rate for most companies largely matched revenue growth, with advance payment balances falling to cyclical lows. Collections for premium liquor faced marginal pressure, differentiation among sub-premium liquor companies intensified, and collections for regional liquor showed marginal weakness. On the cash collection side, as channel collection difficulty increased and inventory占用 funds rose, cash collection for leading liquor companies began to lag behind apparent collection growth year-on-year. The cash collection ratio for premium liquor declined sequentially, the ratio for sub-premium liquor showed intensified differentiation, and the ratio for regional liquor leaders generally deteriorated sequentially.
Profit Side: Pressure on Both Scale and Structure; Net Profit Margin Continues to Decline Regarding gross margin, the liquor sector's gross margin was 83.37% in 2025, a year-on-year increase of 0.44 percentage points. In Q1 2026, the sector gross margin was 82.69%, a year-on-year decrease of 0.83 percentage points. Gross margins for various liquor companies faced阶段性 pressure. On one hand, against the backdrop of declining wholesale prices, companies appropriately increased trade discounts and rebate support, and product structure retreated. On the other hand, revenue declines also created negative scale effects. In terms of expense ratios, the sales expense ratio for liquor companies in FY 2025 and Q1 2026 increased by 1.34 ppts and 0.78 ppts year-on-year to 11.73% and 9.63%, respectively. The administrative expense ratio changed by +0.61 ppt and -0.12 ppt year-on-year to 5.71% and 3.75%, respectively. Revenue declines passively elevated the sales expense ratio, while administrative expenses were more stable under普遍 tightened control. In terms of profit growth, for FY 2025: sub-premium (-7.9%) > premium (-22.39%) > regional liquor (-43.9%). For Q1 2026: premium (8.8%) > sub-premium (-19.4%) > regional liquor (-26.1%). The retreat in product structure and不畅 sales conversion led to a下行 test for companies' gross-profit-to-sales差, while negative scale effects also had some impact.
Risk Warning: Risks of consumption recovery falling short of expectations; Risks of intensified industry competition.
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