Anhui Kouzi Distillery Co.,Ltd. has become the worst-performing listed baijiu company this earnings season, with its strategic and management dilemmas intensifying during the industry's adjustment phase.
On October 28, the company reported shocking Q3 results: revenue of 643 million yuan (down 46.23% YoY) and net profit attributable to shareholders of just 26.97 million yuan (plunging 92.55% YoY).
**Profit Engine Stalls: Premium Product Collapse & Channel Failure** The company's former profit driver - premium baijiu - has become its biggest drag, with sales dropping nearly 28% to 2.96 billion yuan in the first three quarters. Mid-range products followed the same downward trend, while the only bright spot came from low-end products (up 25% YoY), reflecting its retreat from the high-end market.
Wholesale revenue fell nearly 30%, showing dealers' weakening confidence in the brand's sales performance. Compared with local peers like Gujing Distillery (13.8 billion yuan revenue) and Yingjia Distillery (3.1 billion yuan revenue), Kouzi's 3.17 billion yuan total revenue clearly lags behind.
**Strategic Missteps: "Big Dealer System" Backfires & Brand Hollowing** Both domestic and out-of-province markets declined (down 27.24% and 23.93% respectively), exposing systemic issues. The company's long-standing "big dealer" partnership model, while enabling low-cost expansion during growth periods, has now become its biggest transformation obstacle.
While competitors adopted precision marketing, Kouzi's bloated distribution system showed inflexibility. Management recognized the need for deeper distribution but hesitated to reform due to concerns about damaging dealer relationships and short-term profits.
Product strategy appears equally conservative. Over-reliance on core products like "Kouzi 5/6/10 Year" and unsuccessful premiumization attempts contrast sharply with Gujing's successful premium series. Brand building remains fragmented, failing to establish emotional value or cultural identity with new consumers.
**Governance Challenges: Centralized Control & Conservatism** The founder-led management team's insularity and lack of external perspective have created decision-making rigidity. Most executives promoted internally lack experience with national brands or digital transformation, resulting in outdated approaches to new consumption trends.
Digital adoption lags significantly behind competitors, with traditional channels conflicting rather than integrating with e-commerce platforms. The company attributes poor performance to "weak high-end demand and slower cost reduction than revenue decline," revealing strategic adjustment delays.
**Make-or-Break Reforms** Kouzi has begun flattening its distribution channels and increasing terminal control, though this risks disrupting existing dealer relationships. Its new "Jianxiang premium" strategy faces challenges breaking through price ceilings amid entrenched consumer perceptions.
For regional expansion, focused cultivation of select provincial markets appears more viable than aggressive nationwide pushes. Ultimately, success depends on organizational revitalization - whether Kouzi can modernize talent acquisition, incentives, and innovation mechanisms.
**Industry Crossroads** Kouzi's predicament mirrors regional baijiu producers caught between national brands' downward expansion and local players' stronghold defenses. With consumption scenarios shrinking and digital channels rising, companies must strengthen channel control and digital capabilities - areas where regional players typically underperform.
As of October 29, 2025, Kouzi's share price stood at 32.22 yuan (down 1.38%), with market capitalization collapsing 62% from its 2021 peak to 19.5 billion yuan. The current industry adjustment has exposed multiple strategic failures in channel models, product planning, and corporate governance.
Breaking through ideological constraints to rebuild product strength, channel power, and brand value will determine whether regional players like Kouzi survive this existential transformation.
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