At the 2026 interim results briefing for Kweichow Moutai held on August 21, an investor queried the sharp 21.8% surge in first-half operating costs, asking whether this reflects a one-off increase or signals a longer-term trend. Kweichow Moutai Co.,Ltd. Director and Acting General Manager Wang Li responded by outlining the strategic context behind the rise.
Wang explained that by late 2025, amid a deep industry correction and softening consumer demand, the company's flagship products encountered considerable market headwinds. After a thorough assessment, management initiated a market-driven reform in early 2026, centering on consumer needs and aligning with actual demand patterns.
During the first half, these reform and transformation measures delivered the expected results. Sales of Moutai liquor remained stable, while the sauce-flavored series held its ground in the market. A pricing framework tailored to real consumption, characterized by "flexible pricing aligned with market conditions, relative stability, supply-demand matching, and volume-price equilibrium," has been established and is operating effectively.
The uptick in total product sales volume during the first half naturally led to higher operating costs. Additionally, as unit prices adjusted to better reflect genuine consumer value, revenue per ton declined year-on-year, causing operating costs to grow at a faster pace than revenue. Notably, the cost-to-profit ratio for the first half of 2026 remains within a reasonable range when compared to historical averages over the past decade.
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