In the first half of 2026, the Chinese baijiu industry entered a new phase of accelerated market consolidation. During this period, 19 listed baijiu companies generated combined total revenue of RMB 197.894 billion, a year-on-year decrease of 6.75%, while their aggregate net profit attributable to shareholders reached RMB 73.1 billion, down 8.39% year-on-year. The pace of decline has intensified, with the median revenue growth rate falling further from -12.84% in H1 2025 to -15.34%, and the median growth rate for attributable net profit plunging from -24.63% to -40.10%.
At the industry level, the scope of losses is widening. In the first half of the year, only four companies recorded positive revenue growth and four saw net profit growth, while the number of firms with revenue declines exceeding 20% surged from five in the same period of 2025 to seven. More notably, three baijiu companies have already slipped into half-year losses: Sichuan Swellfun Co., Ltd., Gansu Huangtai Wine-Marketing Industry Co., Ltd., and Anhui Golden Seed Winery Co., Ltd..
Overall, the baijiu sector is exhibiting three major trends. The first trend is a shift in growth models, moving away from the previous "dealer-centric inventory-push growth" toward "consumer-centric sell-through growth." Leading distillers are accelerating this transition. In the first half, Kweichow Moutai Co., Ltd.'s direct sales channels, including self-operated stores and the i-Moutai app, accounted for 57.3% of its revenue. Looking at advance receipts, the total contract liabilities of listed baijiu companies stood at RMB 32.384 billion, down 13.6% year-on-year. Among the 19 listed companies, 13 reported declines in contract liabilities. As an industry bellwether, Kweichow Moutai Co., Ltd. saw its contract liabilities drop sharply by 42.3%, with Luzhou Laojiao Co., Ltd. and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. also experiencing significant decreases. In terms of inventory, total industry stock levels rose from RMB 168.325 billion to RMB 189.188 billion, a 12.4% year-on-year increase. Three companies posted inventory growth exceeding 20%, with Wuliangye Yibin Co.,Ltd. leading the pack at 27.68%. Meanwhile, companies like Jiangsu King's Luck Brewery Joint-Stock Co., Ltd., Gansu Huangtai Wine-Marketing Industry Co., Ltd., Xinjiang Yilite Industry Co., Ltd., Anhui Gujing Distillery Co., Ltd., and Luzhou Laojiao Co., Ltd. all saw revenue decline alongside double-digit inventory growth.
The second trend is that, amid weak demand and intensifying competition, distillers are caught in a double squeeze of falling gross margins and rising expense ratios, with net margin declines generally exceeding those of gross margins. In the first half, 12 companies saw their gross margins decrease, including Kweichow Moutai Co., Ltd., Shanxi Xinghuacun Fen Wine Factory Co., Ltd., Luzhou Laojiao Co., Ltd., and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd.. Net margins declined for 16 companies. Excluding loss-making firms, Shede Spirits Co., Ltd. recorded the largest drop in net margin, falling from 16.35% to 6.21%. Regarding expense ratios, 13 companies saw increases in selling expense ratios, and an equal number reported higher administrative expense ratios. When combining financial and administrative expense ratios, 14 companies experienced year-on-year increases. Notable rises were seen at Anhui Golden Seed Winery Co., Ltd., Gansu Huangtai Wine-Marketing Industry Co., Ltd., Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., and Anhui Kouzi Distillery Co., Ltd..
The third trend is that industry concentration is further shifting toward the top players. In H1 2025, Kweichow Moutai Co., Ltd. alone accounted for 43% of total revenue among listed baijiu companies, a figure that has climbed to approximately 47% in the first half of this year. This increased concentration is driven by the accelerated exit of other distillers. Aside from Kweichow Moutai Co., Ltd., other major players are not proving resilient. Wuliangye Yibin Co.,Ltd.'s 20.87% revenue growth in the first half is actually the result of a "restatement" of its 2025 financials. Before the restatement, Wuliangye Yibin Co.,Ltd.'s H1 2025 revenue was RMB 52.77 billion, compared to RMB 50.648 billion in H1 2024, whereas its current half-year revenue stands at only RMB 28.417 billion. Additionally, the other four companies with revenue exceeding RMB 10 billion, namely Shanxi Xinghuacun Fen Wine Factory Co., Ltd., Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., Luzhou Laojiao Co., Ltd., and Anhui Gujing Distillery Co., Ltd., all posted double-digit revenue declines.
Moving to specifics, Wuliangye Yibin Co.,Ltd. appeared to "lead the pack" in the first half with 20.87% revenue growth and 89.3% growth in attributable net profit, but this is a consequence of retrospectively adjusting its first three quarters of 2025 performance. Prior to the adjustment, Wuliangye Yibin Co.,Ltd.'s H1 2025 revenue was RMB 52.771 billion with attributable net profit of RMB 19.492 billion, both figures being pre-adjustment data. In the current half-year, the company achieved revenue of RMB 28.417 billion and attributable net profit of RMB 8.752 billion, both representing substantial declines compared to the pre-adjustment figures. By product segment, the core Wuliangye product line, which mainly includes the Eighth Generation Wuliangye, 39-degree Wuliangye, Classic Wuliangye, and 29-degree Wuliangye (and was the primary focus of the prior restatement), generated RMB 23.632 billion in revenue. This scale is not only below the adjusted H1 2025 level but also falls short of the H1 2021 figures, indicating that the company's core product revenue has shrunk rather than grown over the past five years. Simultaneously, the gross margin for Wuliangye products decreased by 4.06 percentage points year-on-year to 87.91%, and the per-ton price of these products fell by 8%.
Meanwhile, revenue from other liquor products, including Wuliangchun, Wuliangchun, Wuliangtequ, and Jianzhuang, dropped to RMB 3.235 billion, a sharp 60.17% year-on-year decrease. Production volume and sales volume for these lines fell by 59.08% and 63.75%, respectively. The company attributed this to intensifying competition in the mid-to-low price segment, leading to reduced sales and corresponding production cuts. Despite this significant contraction in revenue scale, Wuliangye Yibin Co.,Ltd.'s expenses have not been trimmed in tandem. In the first half, its selling expenses surged to RMB 6.322 billion, with the selling expense ratio jumping from 14.89% in the prior-year period to 22.24%. In fact, among the top-tier distillers with revenue above RMB 10 billion, including Kweichow Moutai Co., Ltd., Wuliangye Yibin Co.,Ltd., Shanxi Xinghuacun Fen Wine Factory Co., Ltd., Luzhou Laojiao Co., Ltd., Jiangsu Yanghe Brewery Joint-Stock Co., Ltd., and Anhui Gujing Distillery Co., Ltd., Wuliangye Yibin Co.,Ltd.'s selling expense ratio ranks second highest, just behind Anhui Gujing Distillery Co., Ltd..
From a cash flow perspective, Wuliangye Yibin Co.,Ltd.'s operating cash flow plummeted from RMB 31.137 billion in the same period of 2025 to -RMB 2.154 billion, marking the first time it has turned negative since 2014. This outflow ranks last among the 19 listed baijiu companies, and the company is the only one at the RMB 10 billion revenue scale with negative operating cash flow. Even more striking is the cash-to-revenue ratio, which stood at 89.68% in the first half, ranking 13th among the 19 listed firms, signaling a weakening in channel collection capabilities. In simple terms, after the one-time cleanup last year, Wuliangye Yibin Co.,Ltd. remains in an adjustment phase. Core product revenue has been significantly reduced compared to previous years, the secondary liquor lines have experienced a cliff-like contraction, and while revenue has fallen rapidly, expenses have not been curtailed, resulting in a substantial decline in net margins relative to prior years. Whether Wuliangye Yibin Co.,Ltd. can emerge from this adjustment period remains to be seen and warrants continued monitoring.
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