On May 11th, Kweichow Moutai Co., Ltd. held its 2025 annual and Q1 2026 performance briefing as scheduled. The management team provided direct responses to key concerns, including their assessment of the industry cycle, the deceleration in Q1 profit growth, and the transformation of channel relationships. Throughout the briefing, the management's candor and willingness to address issues directly demonstrated the company's more open approach. It systematically outlined the direction and methodology of its current market-oriented transformation centered on the consumer.
**Proactive Gear Shift: Short-Term Trade-offs for Long-Term Health** Moutai summarized last year's performance in three straightforward statements: "Moutai liquor maintained stable market performance overall, Moutai's sauce-flavor liquors faced significant challenges, and international operations encountered substantial pressure." This direct assessment highlighted the difficulties without embellishment.
Facing volatility in Moutai liquor sales during Q4 last year, the company's response was to immediately halt product distribution to channels, even if it meant sacrificing some quarterly targets. For its sauce-flavor liquors, Moutai proactively reduced supply volume starting in the second half of the year and introduced a package of sales-stimulation policies, ultimately stabilizing its fundamentals during the industry's deep adjustment period. The changes in international revenue were also the result of active management—strengthening control over overseas markets from Q3 to curb the disruption of "reflow liquor" in the domestic market, even suspending supply to some channels.
These actions are underpinned by Moutai's profound understanding of the current industry adjustment. The company clearly stated that the baijiu industry is undergoing concurrent cyclical and structural adjustments. Navigating the cyclical adjustment requires resilience and confidence, while the structural adjustment demands innovation and evolution with the times. Moutai believes that proactive adaptation during this critical reform window is preferable to passive reaction, laying the groundwork for a comprehensive shift towards the consumer end (C-end).
In Q1 2026, Moutai achieved total operating revenue of RMB 54.703 billion, a year-on-year increase of 6.34%. Net profit attributable to shareholders was RMB 27.243 billion, up 1.47% year-on-year. Specifically, revenue from Moutai liquor was RMB 46.005 billion (up 5.62%), and revenue from sauce-flavor liquors was RMB 7.881 billion (up 12.22%). This dual growth in revenue and profit validates the correctness of the company's strategy to steadfastly pursue market-oriented transformation "centered on the consumer." However, the slower growth in net profit compared to revenue also drew market attention.
Moutai provided a candid breakdown of this phenomenon. On one hand, Q1 was a critical phase for launching market-oriented reforms, with the primary tasks being to rationalize the product and price systems. Moutai liquor returned to a "pyramid structure," series liquor focused on a "2+N" product portfolio, and a "market-responsive, relatively stable" direct retail price system was implemented on the i-Moutai platform and in direct stores, covering nearly all core products. Notably, at the end of March, an asymmetric price adjustment for the 53% vol 500ml Kweichow Moutai liquor was implemented on both the supply and market sides, marking the basic establishment of a market-centric dynamic price adjustment mechanism.
On the other hand, to alleviate pressure on the distribution channels, Moutai largely refrained from distributing non-standard products (like premium, aged, and zodiac editions) to social channels in Q1, with these primarily sold through direct channels. Concurrently, during the reform period, the company continued to increase investment in brand building and marketing expenses to widen its brand moat and consumer reach, which also increased operational costs.
The combined adjustment of "volume" and "price" brought the revenue per ton of liquor back to a level matching market demand, which is the key reason for the slower net profit growth relative to revenue. However, Moutai views this as a healthier and more sustainable path for the company's future development.
**Channel Transformation: From Distributors to Channel Partners** A recurring question this year as Moutai advances its market-oriented reform is whether this weakens distributors. The company did not avoid this pointed question at the briefing, instead systematically explaining the transformation logic of the manufacturer-distributor relationship in the era of being "comprehensively C-end oriented."
Reflecting on Moutai's development, from embarking on marketization in 1998, to optimizing and expanding channels in 2013, and to building a comprehensive direct sales system in 2019, the roles of manufacturer and distributor have served different purposes at each stage. The current round of marketization reform is fundamentally different from past efforts that focused solely on "channels."
"This round of reform focuses on being consumer-centric, with the emphasis on the supply side's ability to genuinely develop capabilities suitable for the C-end. It is a comprehensive transformation and adaptation of the product system, channel ecosystem, business model, and supply chain organization," Moutai responded.
This statement clarifies the deeper logic of the reform: structural changes have already occurred on the consumption side, challenging the traditional channel-centric product operation model. A profound transformation centered on the consumer is necessary. Building a resilient, stable, efficient, and collaborative channel ecosystem is a key focus of this reform.
Regarding the specific direction of the manufacturer-distributor relationship, management provided a clear framework. During the reform process, the manufacturer will gradually evolve from its "upstream" role in product supply and policy support to an overarching "brand operator" role. It will drive the construction and collaborative development of the channel ecosystem through products, data, and user operations. Distributors, on the other hand, need to enhance their capabilities in consumer outreach, conversion, and service. "Distributors" need to accelerate their adaptation to the new landscape, transforming into "channel partners."
Regarding the relationship between direct and social channels, management's stance was clear and firm: "Moutai and various channel partners have never been in a competitive relationship of 'one gains while the other loses,' nor a trade-off relationship of mutual substitution. Instead, it is a collaborative relationship where each has its advantages, leading to mutual success—a closely connected community of shared destiny and interests."
In Moutai's envisioned channel blueprint, direct channels serve as the market's "balancer and stabilizer," maintaining stable and balanced market order and preventing excessive speculation. Social channels act as the "amplifier and converter," extending brand services and consumer experiences to countless households. The former stabilizes the overall market, while the latter penetrates deeper markets. Together, they collaborate to build an integrated "overpass" system that merges online and offline operations. Online channels are responsible for efficiency and user reach, while offline channels handle transaction conversion and service experience, moving away from adversarial dynamics.
"Regardless of the channel type, its significance and role lie in whether it can effectively embrace the market. Ultimately, all goals return to being consumer-centric and market demand-driven." This statement can be regarded as the highest principle of Moutai's channel strategy.
**Market-Driven: Business Objectives Determined by the Market** For its 2026 business plan, Moutai did not explicitly set specific economic indicator targets as in previous years. Instead, it emphasized conducting operations around the theme of "adhering to a consumer-centric approach and comprehensively advancing market-oriented transformation." This change itself is a strong signal.
"In the past, Moutai formulated quantitative business targets primarily based on the certainty of the supply side. However, during the market-oriented reform process, market changes and challenges carry a degree of uncertainty. We need to follow market dynamics, not just be determined by the supply side," management stated candidly.
The company acknowledged it has entered a transition period from high-speed growth to high-quality development. Production and operations will revolve around the goal of high-quality, sustainable development, be guided by market demand, and fully commit to implementing reforms. Moutai also revealed that, so far, the overall progress and implementation effectiveness of the marketization reform and transformation are in line with expectations.
This year, Moutai has been active in reforms. On the product front, it has built a more stable pyramid-shaped product matrix. On pricing, it has established a dynamic adjustment mechanism for direct sales product retail prices that is "market-responsive and relatively stable." Regarding channels, it has formed a parallel structure of five major channels: wholesale, offline retail, online retail, food service, and private domains, adopting a multi-dimensional collaborative operation model of "direct sales + distribution + consignment sales." At the terminal level, it continues to improve logistics, delivery, and customer service support systems, optimizing the in-store consumer experience. By deepening its transformation in scenarios, customer groups, and services, Moutai is continuously meeting consumers' "triple value" needs: functional value, experiential value, and emotional value.
Regarding Moutai liquor sales volume this year, the company also provided a clear methodology: On the demand side, driven by market demand, it will use established channel monitoring models to allocate products scientifically and precisely across different intervals, regions, and channels. On the supply side, it will comprehensively consider factors like base liquor resource planning, quality management systems, and supply chain organizational efficiency. Both demand and supply sides will be considered comprehensively, rather than making unilateral decisions.
As a long-term, systematic project, regarding the direction of further deepening reforms, Moutai stated that the company will continue to adhere to a consumer-centric, market demand-driven approach. It will dynamically adjust and optimize transformation measures based on market feedback, promoting precise alignment of products, channels, and terminals with consumer demand.
**A Responsible Enterprise: Continuous, Stable, Sustainable** Shareholder returns remain a significant market concern regarding Moutai. The company has consistently prioritized rewarding investors. Since its listing, cumulative dividend payouts will exceed RMB 401.1 billion, which is 182.7 times the funds raised from its IPO. In 2025, Moutai plans to implement a total cash dividend distribution of RMB 65.033 billion, a record high. The dividend payout ratio reached 79% of net profit, an increase of 4 percentage points year-on-year, fulfilling the commitment of "not less than 75% of that year's net profit" for two consecutive years. Concurrently, the company completed its first-ever share repurchase of RMB 6 billion since listing and launched a second round of "cancellation-style" repurchase plan of RMB 1.5 to 3 billion. A RMB 3 billion share purchase plan by the controlling shareholder is also being implemented.
2026 is the final year of Moutai's three-year shareholder return plan. Regarding future market value management, Moutai stated that the company will strictly and orderly fulfill its commitments and continuously improve its market value management system. "We will scientifically utilize market value management tools based on actual business development, capital expenditure needs, and industry competition dynamics, ensuring the continuity, stability, and sustainability of market value management work under the premise of sustainable development."
Notably, the recurring concern of "shareholder liquor purchases" was addressed again at this briefing. Moutai stated that a key objective of this round of market-oriented reform is to address consumer pain points regarding "fairness, authenticity, and convenience." "Fairness" is a demand placed on Moutai not only by consumers but also by society, with consumer "equal rights" being crucial—no differentiation based on identity or profession. Moutai hopes investors, as consumers, will experience and provide feedback and suggestions through the officially announced channel system.
From proactive adaptation to channel transformation, from market-driven business objectives to a firm commitment to shareholder returns, Moutai for 2026 offers not promises of specific figures, but a systematic strategic logic oriented towards high-quality development. Whether it's the profound judgment of the industry cycle, the redefinition of manufacturer-distributor relationships, or the return to consumer value, all point in one direction: Moutai is shifting the anchor of growth from the supply side to the demand side, from the channel end to the consumer. This represents a profound act of self-transformation.
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