Anhui Kouzi Distillery Co.,Ltd. (603589.SH) delivered its weakest financial results since listing in 2025, with both revenue and net profit experiencing significant declines. Net profit attributable to shareholders fell to a ten-year low, dropping nearly 60%. The company's once ambitious "10-billion-yuan Kouzi" strategic goal has not only failed to materialize despite cumulative consulting service fees exceeding 100 million yuan, but has also drifted further out of reach.
The financial report highlights the challenges facing the broader baijiu industry while also exposing Anhui Kouzi Distillery's own weaknesses. The company's core profit driver, premium baijiu, recorded the largest revenue decline, becoming the primary factor dragging down overall performance. The company lost ground in its home market of Anhui province while also struggling to expand nationally. Although channel reforms boosted direct sales, this growth was insufficient to offset a sharp decline in traditional distribution channels.
The downturn continued into the first quarter of 2026, with both revenue and profit declining, contract liabilities shrinking significantly, and operating cash flow remaining negative, indicating a prolonged adjustment period ahead.
Net Profit Halved, Reaching a 10-Year Low with Negative Cash Flow According to the annual report, Anhui Kouzi Distillery achieved revenue of 3.991 billion yuan in 2025, a decrease of 33.65% year-on-year. Net profit attributable to shareholders was 673 million yuan, down 59.32%. After non-recurring adjustments, net profit was 656 million yuan, a decline of 59.27%. All three key performance indicators showed significant deterioration.
Listed on the A-share market in June 2015, Anhui Kouzi Distillery specializes in the production and sale of baijiu and is a representative brand of Jianxiang-style baijiu. Its product portfolio includes brands such as Kouzi Cellar, Lao Kouzi, Kouzi Fang, and Kouzi Jiu. Compared to previous years' results, the 2025 net profit was the lowest in ten years and represented the steepest decline since its IPO.
The actual revenue achieved was only 60% of the company's previously disclosed 2025 financial budget target of 6.616 billion yuan, which anticipated 10% growth, revealing a substantial gap.
Back in 2022, Anhui Kouzi Distillery outlined a strategic goal to "accelerate the realization of a 10-billion-yuan Kouzi and enter the top tier of national baijiu producers." It engaged the international consulting firm McKinsey as a "strategic partner" to develop a five-year plan aiming for leadership among Anhui baijiu makers. Subsequently, the company invested heavily in consulting services: spending 12.8887 million yuan in 2022, 38.2691 million yuan in 2023, 30.0746 million yuan in 2024, and 23.3361 million yuan in 2025. Over four years, cumulative consulting fees surpassed 100 million yuan, yet the 10-billion-yuan target remains distant.
Despite the double-digit decline in revenue and profit in 2025, Anhui Kouzi Distillery still proposed a cash dividend of 5 yuan per share (before tax), totaling 298 million yuan, representing 44.31% of net profit attributable to shareholders. However, this dividend is significantly lower than the 13 yuan per share distributed in 2024.
The weak performance persisted into the first quarter of 2026. Quarterly revenue was 1.375 billion yuan, down 24.02% year-on-year. Net profit attributable to shareholders was 329 million yuan, a decrease of 46.16%. Adjusted net profit was 327 million yuan, down 46.12%, indicating the downward trend has not reversed.
The company's operating cash flow situation deteriorated markedly. At the end of 2025, net operating cash flow was -216 million yuan, a year-on-year decrease of 114.81%, primarily due to lower cash collection from sales following the revenue decline. In Q1 2026, net operating cash flow remained negative at -135 million yuan, highlighting ongoing cash flow pressures.
Weak Mid-to-High-End Sales and Losses in Both Domestic and External Markets In its annual report, Anhui Kouzi Distillery acknowledged that 2025 was challenging, with increased macroeconomic downward pressure, intense industry competition, weak consumer demand, high inventory levels, and sluggish sales, collectively putting pressure on the entire baijiu sector. Internally, the poor performance of its high-end baijiu, which is the core revenue source, was the main reason for the overall profit decline.
The company's product portfolio is clearly tiered. The high-end segment includes products such as Five-Year Cellar, Six-Year Cellar, Yu Zun, Xiao Chi Cellar, Ten-Year Cellar, Twenty-Year Cellar, Thirty-Year Cellar, Early Summer Reserve, Mid-Autumn Reserve, Founders Edition, and the Jian 5, Jian 6, Jian 8, Jian 10, Jian 20, and Jian 30 series. The mid-range segment consists of Lao Kouzi, Kouzi Meijiu, and Kouzi Fang. The Kouzi Jiu series is classified as economy-tier.
In 2025, revenue from high-end baijiu was 3.689 billion yuan, down 35.08% year-on-year. Mid-range baijiu revenue was 54 million yuan, a decrease of 21.1%. Economy-tier baijiu revenue was 161 million yuan, up 27.43%, making it the only category to achieve positive growth. However, due to its small scale, the economy segment's growth was far from sufficient to offset the decline in the mid and high-end segments.
Because the revenue decline for mid and high-end baijiu exceeded the decrease in their cost of sales, the gross profit margin for both price segments fell in 2025. The gross margin for the largest segment, high-end baijiu, decreased by 4.19 percentage points, while the mid-range segment's margin fell by 4.47 percentage points. Although economy-tier revenue grew, its cost of sales surged by 52.89%, far outpacing revenue growth, causing its gross margin to plummet by 12.94 percentage points to 22.3%, further dragging down the overall gross margin.
The product structure challenges continued into Q1 2026. High-end baijiu sales fell 25.38% to 1.289 billion yuan. Mid-range baijiu revenue declined 10.79% to 18.3612 million yuan. Economy-tier baijiu revenue grew 17.59% to 45.7362 million yuan, maintaining the pattern of "mid-to-high-end weakness with the economy segment unable to shoulder the burden."
In the regional market, Anhui province is home to three other listed baijiu companies besides Anhui Kouzi Distillery: Gujing Distillery, Yingjia Distillery, and Jinzhao Distillery. Competition is intensifying, and national expansion has fallen short of expectations. In 2025, Anhui Kouzi Distillery added a net 53 distributors outside Anhui province, but revenue from these external markets fell 28.58% to 657 million yuan. While facing bottlenecks in external expansion, the company also failed to defend its home turf. Within Anhui province, the number of distributors was 564, generating revenue of 3.246 billion yuan, a decrease of 34.51% year-on-year. In Q1 2026, the total number of distributors increased to 1,143, a net addition of 9, but revenue both inside and outside Anhui province experienced double-digit declines.
From a channel perspective, Anhui Kouzi Distillery's efforts to streamline distribution, split large distributor rights, and focus on group purchases and direct sales have shown initial results. In Q1 2026, revenue from direct sales (including group purchases) reached 123 million yuan, an increase of 59.7% year-on-year. However, revenue from the wholesale distribution channel was 1.23 billion yuan, down 28.06%. Despite the strong growth in direct sales, its small base and limited scale made it unable to offset the decline in the wholesale channel.
Contract liabilities, often seen as a "reservoir" for baijiu companies, reflect channel bargaining power and distributor willingness to prepay. Anhui Kouzi Distillery's contract liabilities stood at 334 million yuan at the end of 2025, down 40.26% year-on-year. By the end of Q1 2026, they had further decreased to 201 million yuan, indicating persistently low distributor ordering confidence.
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