On December 1, Yuan Mingquan, founder and chairman of Guizhou Wuyou Liquor (Group) Co., Ltd., published a lengthy letter apologizing to distributors. In the letter, he admitted that misjudgment of market trends and overly aggressive expansion strategies had caused the company to deviate from its foundational principle of "prudent financial risk control."
Once hailed as the "Second Legend of Moutai Town," Wuyou Liquor now finds itself in crisis. On November 21, the company received six consecutive enforcement notices from the Renhuai People's Court, with total enforcement claims reaching 62.5551 million yuan.
This sudden "enforcement storm" did not come without warning. Financial red flags had been appearing consistently. According to Qichacha data, in Q2 2025, Wuyou Liquor accumulated 24.1171 million yuan in overdue taxes across eight categories including urban construction tax, consumption tax, and VAT. More critically, as early as 2023, its controlling shareholder Guizhou Jiajian Industrial Co. had pledged 80.5% of Wuyou Liquor's shares (worth 174 million yuan) for financing.
Reports indicate the liquidity crisis has affected internal operations. While company representatives publicly stated that "fundamentals remain unchanged" and denied operational crisis "explosions," they offered no explanation for the enforcement actions, further fueling market concerns.
Originally established in 1983 as Renhuai County Moutai Town Dukou Distillery, Wuyou Liquor was restructured and renamed in 2002. Ranking among Moutai Town's top ten producers with annual revenue around 1 billion yuan, its core business involved private-label liquor production, supplying base spirits to other brands while branding itself as Moutai Town's "Second Legend."
Industry insiders noted, "The broader liquor environment is challenging, but Wuyou's excessive investment in new facilities significantly increased financial pressure."
The baijiu sector's downturn has persisted for three years, marked by shrinking capacity, price inversions, and capital flight. Data from Quantu Baijiu Studio shows 2024 baijiu production fell 13.3% year-on-year, with Renhuai distilleries halving in three years.
Defying the trend, Yuan Mingquan pursued expansion. In 2023, Wuyou Liquor invested in three major production zones (Wuyouyuan, Wuyoushan, Wuyougu) spanning 350+ acres with 7,000+ ton annual capacity of premium Daqu baijiu, aiming for "overtaking on curves."
In 2025, the company doubled down on its "manufacturer-distributor community" strategy and partnered with Huajun Media for airport advertising campaigns across 40+ major hubs, attempting to buy growth during the "baijiu winter."
However, these efforts backfired. Industry commentator Xiao Zhuqing observed, "The baijiu 1.0 era's reckless growth relied on 'private labeling + distributor recruitment,' which eroded small distilleries' credibility. Wuyou's predicament epitomizes this model's flaws."
He explained Wuyou's "pre-sale + financialization" model—using high-return "liquor storage investment" schemes to raise distributor capital—essentially mortgaged future sales.
Xiao predicts the industry has transitioned from "chaotic 1.0" to "oligopoly 2.0," where competition hinges on private traffic, capital access, brand equity, and supply chain scale. Only two options remain: contract production for giants or exit brewing entirely to become brand services.
"As baijiu fever fades, rational consumers and inventory gluts make price inversions inevitable, dooming weak cash flows," Xiao added.
Though Yuan claims 30,000+ tons of base liquor remain the company's "hardest asset" and has suspended non-core investments while pledging nationwide distributor visits to clear inventory, the brutal market reality persists.
Major brands are slashing prices to dominate: Cellar 1988 below 300 yuan, Abstract under 400 yuan, creating a "bloodbath" in the 100-400 yuan segment. This price erosion directly crushes Moutai Town's small producers, already eliminating many subpar private-label operators, with more speculators and small distilleries facing extinction.
In this industry shakeout, smaller players lack even the means to fight back.
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