Guosheng Securities released a research report stating that in Q2 2025, tightened regulatory policies on official and business consumption pressured Baijiu sales in both volume and price. However, Q3 saw sequential improvement as consumption normalized and negative sentiment eased. Kweichow Moutai (600519.SH), as an industry bellwether, stabilized in July, rebounded in August, and further improved in September. Meanwhile, mass-market products benefited from resilient demand for weddings and family gatherings. Facing industry headwinds, major Baijiu producers stabilized prices and explored new demand through product and channel innovations. The worst phase of sales pressure has passed, and further stabilization is expected as demand recovers.
**Sales: Past the Trough, Monthly Recovery** In Q2 2025, Baijiu sales faced dual pressure from declining volume and prices due to reduced group consumption, particularly in high-end corporate and business scenarios. June saw significant sales declines, with core product wholesale prices trending downward, while channel confidence weakened amid inventory and margin pressures. By Q3, sequential improvement emerged: Moutai’s sales stabilized, while mass-tier products gradually recovered on rigid demand. Producers also focused on price stability and innovation. Overall, after hitting bottom in Q2-Q3 2025, Baijiu sales are poised for recovery.
**Financials: V-Shaped Adjustment, Accelerated Clearing** In Q3 2025, the Baijiu sector reported revenue of RMB 78.69 billion (-18.4% YoY) and net profit of RMB 28.06 billion (-22.0% YoY), marking the steepest quarterly declines since 2013. Contract liabilities stood at RMB 38.96 billion (+17.2% YoY), reflecting stability. Gross margin dipped to 80.7% (-0.7 ppts YoY) due to product mix dilution, while net margin fell to 37.1% (-1.7 ppts). Among high-end players, Moutai’s growth slowed to <1%, Wuliangye (000858.SZ) saw revenue/profit drop 53%/66%, and Luzhou Laojiao (000568.SZ) declined 10%/13%. Mid-tier players like Shanxi Fenjiu (600809.SH) grew 4%, while regional brands like Gujing (000596.SZ) slumped over 50%.
**Historical Context: Price Recovery Precedes Fundamentals** During the 2013–2015 downturn, triggered by austerity policies, Baijiu performance followed a sequence: sales decelerated (2012Q4), sharply declined (2013Q2), and rebounded (2014Q4). Moutai’s wholesale price bottomed in late 2014 (~RMB 810/bottle) before recovering in 2016, signaling a new cycle. Stocks bottomed in early 2014 (-46%) and turned positive by 2015Q2, indicating market recovery ahead of fundamentals.
**Investment Opportunity: Absolute Value Emerges** With inventories clearing, risks dissipating, and valuations at historic lows, Baijiu offers compelling value. Dividend support from leaders like Moutai and Wuliangye further bolsters appeal. Recommendations include: 1) **Short-term rebound plays**: Luzhou Laojiao, ZJLD (06979), Shede (600702.SH), Jiugui (000799.SZ), Shuijingfang (600779.SH); 2) **Improved positioning**: Yingjia (603198.SH), Yanghe (002304.SZ), Laobaigan (600559.SH); 3) **Long-term quality leaders**: Moutai, Wuliangye, Fenjiu, Gujing, Jinshiyuan (603369.SH).
**Risks**: Slower-than-expected demand recovery, policy shifts, and intensified competition.
Comments