Strong-flavor baijiu leader Luzhou Laojiao Company Limited (000568.SZ) saw its net profit fall by more than 40% in the first half of the year, with declining sales of its mid-to-high-end liquor products dragging down overall revenue.
On August 25, Luzhou Laojiao released its 2026 semi-annual report, showing first-half revenue of 10.472 billion yuan, down 36.35% year-on-year, while net profit attributable to shareholders was 4.339 billion yuan, a decline of 43.37%. Basic earnings per share stood at 2.95 yuan. In the second quarter alone, revenue came in at 2.447 billion yuan, down 65.54%, with attributable net profit of 631 million yuan, plummeting 79.45%.
According to Wind data, Luzhou Laojiao's revenue and net profit both declined last year, marking the first such drop since 2015. Over the previous decade, the company's annual revenue and profit had maintained consistent growth. In the first half of this year, the company's performance continued to face pressure, with both revenue and profit declines widening compared to the same period last year.
In its interim report, the company attributed the revenue decline primarily to reduced product sales volumes. Meanwhile, operating costs fell 27.75% year-on-year during the reporting period.
Breaking down by product category, mid-to-high-end liquor serves as the backbone of Luzhou Laojiao's revenue. In the first half, this segment generated 9.2 billion yuan in revenue, down 38.86% year-on-year, accounting for 87.85% of total revenue. Other liquor products brought in 1.211 billion yuan, a 10.27% decrease, representing 11.56% of total revenue. Additionally, other income reached 61.1623 million yuan, up 8.14%.
During the reporting period, sales of mid-to-high-end liquor fell by more than 40%, making it the primary factor dragging down the company's overall revenue. The financial report showed production of these products at 4,801.19 tons, down 77.40% year-on-year, while sales volume reached 13,862.32 tons, a decrease of 42.53%. Inventory stood at 32,713.4 tons, up 8.6%. The company explained that the production decline was due to proactively controlling production pace based on sales demand and inventory levels, while the sales drop was attributed to continued industry pressure and weakening product sell-through.
By sales model, traditional channel operations generated 9.494 billion yuan in revenue during the first half, down 38.61%, while emerging channel operations brought in 917 million yuan, a modest decline of 1.64%. By the end of the reporting period, the company had 1,533 domestic distributors, with 101 added and 263 removed during the period, alongside 106 overseas distributors, with 13 new additions.
The interim report also revealed that both selling and administrative expenses contracted during the period, with selling expenses down 12.42% and administrative expenses down 8.49% year-on-year.
According to the company's official website, Luzhou Laojiao is recognized as the pioneer of strong-flavor baijiu craftsmanship, the setter of its standards, and the shaper of its brand, earning the title of "ancestor of strong-flavor liquor." Its predecessor was the "Sichuan Province Luzhou City Qujiu Factory," established on the foundation of 36 breweries from the Ming and Qing dynasties. In 1994, it was restructured and listed as "Luzhou Laojiao Company Limited," becoming one of the first baijiu companies in the national brewing industry to adopt a shareholding system and the first liquor company listed on the Shenzhen Stock Exchange. Its main products include "Guojiao 1573" and "Luzhou Laojiao" series baijiu.
According to the interim report, the company's top three shareholders are Luzhou Laojiao Group Co., Ltd., Luzhou Xinglu Investment Group Co., Ltd., and China Merchants CSI Baijiu Index Fund, with stakes of 26.05%, 24.86%, and 4.12%, respectively. Both Luzhou Laojiao Group and Luzhou Xinglu Investment are state-controlled entities under the Luzhou State-owned Assets Supervision and Administration Commission, and the two have signed a concerted action agreement.
Data from the National Bureau of Statistics shows that from January to June 2026, cumulative baijiu production among enterprises above designated size reached 1.679 million kiloliters, down 4.7% year-on-year. Among listed baijiu companies that have published their interim reports, performance has generally come under pressure, further confirming that the industry has yet to emerge from its adjustment phase.
In its interim report, Luzhou Laojiao stated, "Currently, the baijiu industry remains in a deep adjustment period, characterized by insufficient consumption growth momentum, increased channel inventory pressure, declining product sell-through, and intensifying competition for existing market share. Only by maintaining strategic stability, adapting to consumption shifts and industry development trends, and actively transforming to build differentiated core competitiveness through product innovation, channel optimization, and brand value reshaping, while continuously solidifying the operational foundation, can a baijiu company steadily advance toward high-quality development."
In terms of strategic planning, the company reiterated its unwavering commitment to the "return to the top three in the industry" strategic goal. It is worth noting that during this industry adjustment, Guojiao 1573, one of the "top three high-end baijiu brands," has adhered to a price-support strategy. At the 2025 annual shareholders' meeting held at the end of June, Luzhou Laojiao's management stated that in the previous cycle, liquor sales were primarily driven by channel influence, and price cuts and promotions proved highly effective. However, the current adjustment is not a short-term cyclical fluctuation but a long-term structural transformation, meaning the experience of the previous cycle cannot be simply applied. Since 2015, the company has continuously advanced channel reforms, consumer operations upgrades, and organizational structure optimization, and its current operational model, channel foundation, and market system are fundamentally different from those of the previous cycle.
Management further pointed out that since the Spring Festival of 2026, Guojiao 1573 sales have maintained a stable base, with prices for 52-degree Guojiao 1573 stabilizing at the terminal level, fully validating the effectiveness of the pricing strategy. The scenario where "no discount equals poor sales" no longer exists. "Looking ahead, premiumization remains a vital foundation for leading baijiu companies, and Guojiao 1573's pricing strategy is a strategic choice for the company's long-term development, with its long-term competitiveness likely to gradually emerge over the next three to five years."
Alongside the interim report, Luzhou Laojiao also announced that its board of directors had approved a proposal regarding the use of self-owned funds for wealth management investments. The company plans to use no more than 2 billion yuan of idle self-owned funds to purchase short-term (within one year) wealth management products with high safety and strong liquidity, explicitly prohibiting investments in high-risk instruments such as stocks, futures, options, foreign exchange, and derivatives. This quota may be used on a rolling basis for 12 months from the board's authorization date, with the total amount of investments at any given time kept within this limit.
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