On August 26, Jiangsu Yanghe Distillery Co., Ltd. released its 2026 interim report. During the first half of 2026, the company recorded operating revenue of RMB 10.54 billion and net profit attributable to shareholders of listed companies of RMB 2.602 billion. The baijiu industry is currently in a deep adjustment period, with market share rapidly concentrating toward premium producing regions and leading enterprises, intensifying divergence among distilleries. Among baijiu companies that have disclosed their interim reports, 75% experienced revenue declines and 83% saw net profit drops. The industry's growth logic has fundamentally shifted; the old "inventory-pushing" model is no longer viable, and competing for "end consumers" has become the industry consensus.
Facing this industry transformation, Yanghe was among the first to implement channel reforms, actively driving channel destocking. On the marketing front, centered around the "end consumer," the company successfully achieved product outreach and brand rejuvenation through initiatives like the Jiangsu Super League. Yanghe's deep transformation has pivoted toward the "terminal consumer."
During the first half of the year, Yanghe underwent a profound organizational shift, primarily through restructuring its organization and product portfolio to cater to the "terminal consumer." In terms of organizational structure, the company abandoned its long-standing brand-separate operating model, consolidating brand sales companies into 14 combat zones, shifting from brand-based to zone-based operations. Alongside this restructuring, decision-making authority was delegated to regional zones, granting frontline teams more agile market response capabilities. The company also streamlined its organization and facilitated cross-regional personnel mobility to activate frontline execution capabilities. More crucially, the performance assessment orientation shifted from "collection-focused" to "process- and sell-through-oriented," guiding teams to focus on genuine terminal consumption.
Channel and inventory reforms followed, establishing a sell-through-driven inventory adjustment mechanism that unified national pricing and promotional policies. Marketing expenditures were redirected from channel subsidies to end-consumer incentives, ensuring market spending directly stimulates retail sell-through. Additionally, distributor structures were optimized, prioritizing quality clients with terminal service capabilities to restore inventory to healthy levels. On the product front, the company streamlined its portfolio by eliminating redundant SKUs, slimming down product lines, and optimizing pricing structures, with strict quota controls on Dream Blue Handcrafted and Dream Blue M6+. The goal of easing channel burdens is to pave the way for product launches; in the first half, the newly upgraded Dream Blue M9 officially hit the market, the seventh-generation Sky Blue began full-scale distribution outside Jiangsu province, Sky Blue and Crystal Dream focused on core markets, and premium light-bottle baijiu launched nationwide.
In essence, these organizational and product adjustments ultimately target genuine end-consumer bottle-opening. Judging by this year's operational and financial performance, this logic is gradually paying off. Feedback indicates that Yanghe's leading products maintained stable pricing during the first half, with core product social inventory roughly halved from peak levels, returning to healthy ranges. Channel price spreads and terminal margins are also recovering, laying the foundation for long-term growth. Amid the industry downturn, the company stabilized price positions through volume control. Yanghe's overall gross margin remained stable in the first half, corroborating this feedback. Concurrently, selling expenses declined 22.77% year-over-year, reflecting the benefits of prior marketing reforms and organizational streamlining. This cost reduction epitomizes improved operational efficiency, accumulating room for future profit release. With channel inventory cleared and terminal sell-through pressure significantly alleviated, Yanghe has solidified its foundation for long-term growth.
Behind the "Jiangsu Super League" outreach: Yanghe is nurturing growth momentum through brand rejuvenation. On the brand marketing front, Yanghe has deployed a series of integrated initiatives, successfully achieving product outreach and scenario expansion, with the most notable being its partnership with the Jiangsu Super League. In 2025, the Jiangsu Super League became a nationwide phenomenon; in January 2026, the 2026 Jiangsu City Football League business cooperation conference was held in Nanjing, where Yanghe, seizing this hotspot, announced Sky Blue as the league's official strategic partner.
Yanghe eschewed traditional simple title sponsorship of sports events, refusing to limit the collaboration to brand exposure. Instead, leveraging the league's mass-participation platform, the company deeply embedded its products into lifestyle scenarios such as spectating, family gatherings, and cultural tourism, constructing a complete marketing loop of "event IP鈥攅motional resonance鈥攔cenario consumption鈥攖erminal bottle-opening." During match periods, on-ground activities like crayfish carnivals, night-market tastings, and QR-code sweepstakes directly converted spectating environments into drinking occasions. During the Spring Festival alone, seventh-generation Sky Blue saw daily bottle-opening numbers exceed 10,000 bottles for consecutive days.
Beyond driving terminal sell-through, the greater significance of these marketing campaigns lies in achieving product outreach and brand rejuvenation. Yanghe has consistently led the industry in product youthfulness. In recent years, through initiatives like the Super Fan Festival, crayfish carnivals, and sports events, the company has fused cuisine, sports, and baijiu, transforming baijiu from a formal "business beverage" into a "social drink" suited for casual friend gatherings, spectator entertainment, and leisure night markets, breaking down barriers with younger consumer demographics. Against the industry-wide backdrop of aging core consumer bases and intergenerational user transition pressures, rejuvenation has long been a necessity for baijiu enterprises. In 2026, Yanghe has reinforced its "national classic" brand image through a series of activities.
As a leading distillery, brand power is Yanghe's core competitive advantage. In recent years, the "two-end consumption" trend in the baijiu industry has intensified, with premium and mass-market price segments emerging as primary growth drivers. Brands wielding strong brand equity hold inherent advantages when capturing mass-market demand. As a century-level blockbuster product selling over 100 million bottles annually, seventh-generation Sky Blue naturally possesses the capacity to absorb mass-market consumption expansion. Looking ahead, as the nationwide rollout of premium light-bottle baijiu progresses and brand rejuvenation continues to break new ground, Yanghe is poised to achieve dual-engine growth across "premium" and "mass" segments, reaping growth dividends amid intense competition for market share.
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