This year, the baijiu industry continues its bottoming-out process.
Statistics of 21 listed baijiu companies' semi-annual reports show that 15 companies experienced performance declines in the first half of this year, with only 6 maintaining positive growth. These include Kweichow Moutai, Wuliangye, Shanxi Xinghuacun Fen Wine Factory, Jiugui Liquor, and Jinhuijiu - almost all premium brands.
The high-growth baijiu stocks of recent years are nowhere to be seen this year.
However, supporters believe that the accelerated decline since the second quarter signals risk clearing and gradual bottom-building for the baijiu sector.
As the saying goes, "opportunities emerge from declines." Over the past two months, capital market holdings in the baijiu sector have gradually recovered, as after three consecutive years of decline, the overall price-to-earnings ratio of the baijiu sector has reached historically relative lows.
But not every baijiu company can emerge unscathed. With performance differentiation, competitive advantages are further concentrating toward industry, regional, and flavor category leaders.
**17 Baijiu Companies Report Revenue Decline in Second Quarter**
Among the 21 listed baijiu companies in the second quarter, only Kweichow Moutai, Wuliangye, Shanxi Xinghuacun Fen Wine Factory, and Tianyoude maintained revenue growth, while the other 17 all declined, with half of these companies experiencing Q2 declines exceeding 20%.
Anhui Yingjia Distillery Co.,Ltd., which had doubled in five years, posted double-digit declines in the first half of this year, with Q2 revenue dropping 24% and net profit attributable to shareholders falling 35%. The last time Anhui Yingjia Distillery Co.,Ltd. experienced such declines was in the first half of 2020.
Jiangsu King'S Luck Brewery Joint-Stock Co.,Ltd. seemed to hit a sudden pause button. While maintaining 9% revenue growth in Q1, Q2 saw revenue plummet nearly 30% year-over-year and net profit attributable to shareholders drop 37% year-over-year.
It's worth noting that Jiangsu King'S Luck Brewery Joint-Stock Co.,Ltd. has experienced explosive growth since 2017, with its 2024 volume nearly five times that at listing, maintaining growth even in 2020.
Shanxi Xinghuacun Fen Wine Factory, the fastest-growing among premium baijiu companies, maintained double-digit growth for eight consecutive years but has also slowed its pace this year, with growth returning to single digits. Jiugui Liquor, which added over 10 billion yuan in revenue over five years, shifted from double-digit growth to double-digit decline in just one quarter.
Companies that previously outperformed have returned to industry averages this year. Jinhuijiu, which maintained double-digit growth for three years, grew less than 1% in the first half. ZJLD, which entered the top ten listed baijiu companies in less than three years, showed significant pullback in the first half of this year.
Companies that had already begun adjusting found that adjustments have no clear bottom. Six companies in the first half saw revenue declines exceeding 20%, with Jiugui Liquor declining over 40% again. Shuijingfang, which began destocking two years ago, again posted a 30% decline in Q2.
The few growing companies managed to maintain growth through various means. Laobaigan achieved 0.48% revenue growth in the first half, due to significantly declining contract liabilities - at least 500 million yuan less than the same period in the past three years, equivalent to pre-consuming part of Q3 performance.
"The baijiu industry faced numerous challenges in the first half of this year, including industry cycles and consumption environment pressures, showing obvious overall pressure and still facing deep adjustments," commented Cai Xuefei, General Manager of Zhiqu Consulting.
Most liquor companies attributed performance declines and "reservoir shrinkage" to consumption environment pressures and proactive channel pressure relief.
Reviewing contract liabilities, most liquor companies' account balances at the end of the first half were lower than the same period last year. Only a few leading companies like Wuliangye, Shanxi Xinghuacun Fen Wine Factory, Yanghe, and Jiannanchun showed year-over-year growth in contract liabilities.
This means that unless market conditions improve rapidly starting in Q3, most listed baijiu companies are unlikely to show above-expected growth in the second half.
**New Round of Baijiu Industry Reshuffling Underway**
Despite overall deceleration and declines, the relative momentum among baijiu companies continues to shift.
The two leaders, Moutai and Wuliangye, while slowing compared to previous years, maintain their leading positions among premium brands. Moutai particularly demonstrates cycle-resistant capabilities, with first-half growth rates still leading the industry.
Competition for the top five positions is increasingly intense, with new patterns potentially emerging within one to two years.
Shanxi Xinghuacun Fen Wine Factory's first-half revenue and net profit have secured third place in the industry, establishing a leading advantage in revenue. However, Jiannanchun still led by a margin in net profit last year, leaving uncertainty about whether Shanxi Xinghuacun Fen Wine Factory can surpass Jiannanchun in annual net profit. Jiugui Liquor continues its pursuit, opening a window to enter the top five.
Non-tier-one baijiu companies are in complete disarray, with a new round of reshuffling underway. Beyond the aforementioned six companies, the future industry positions of other baijiu companies in five years remain unclear.
In the first half of this year, except for Laobaigan and Jinhuijiu, all other non-tier-one baijiu companies declined across the board. Jiangsu King'S Luck Brewery Joint-Stock Co.,Ltd., with its 10-billion-yuan scale, showed growth loosening this year. While its position among listed baijiu companies remains unaffected, its pace of catching up with other unlisted baijiu companies will inevitably be impacted.
Niulanshan (Shunxin Agriculture), which once approached 10 billion yuan in annual revenue, continues declining, facing dimensionality reduction attacks from premium brands. Its lagging stock performance already indicates investor concerns about its prospects.
ZJLD, which just entered the top ten, also showed significant performance pullbacks this year, indicating insufficient brand power to resist cycles. Consequently, it proposed new channel models to bind dealer interests this year. Jinsha Liquor has declined for two consecutive years, with relatively weaker investment scale and brand momentum, requiring time to stabilize and recover. However, both companies' common advantage lies in still benefiting from sauce-flavor category dividends, providing opportunities.
Other non-tier-one baijiu companies, even with national layouts, cannot rest easy during this adjustment period. Shede Spirits and Shuijingfang, already nationalized, continue fluctuating with market conditions without signs of recovery. While Laobaigan maintained growth, it also faced Q2 impacts, with unclear prospects for industry position improvement.
Wang Chuancai, Chief Expert of Chuancai Strategic Think Tank, believes current leading baijiu patterns remain unchanged, while regional baijiu faces critical differentiation, continuously concentrating toward production areas, brands, and categories, with industry cycle impacts becoming decisive factors in changing baijiu competitive landscapes.
In several regional markets, concentration toward leading brands is most evident. In Anhui, severely affected by external factors in Q2, Jiugui Liquor's advantages over Anhui Yingjia Distillery Co.,Ltd. and Kouzi Liquor continue expanding. Anhui Yingjia Distillery Co.,Ltd.'s growth advantages disappeared, while the already slow Kouzi Liquor faced serious impacts. Jinzizi Liquor completely fell behind, requiring longer recovery time.
In the Northwest market, Jinhuijiu continues leading, while Elite, Tianyoude, and Huangtai Liquor have completely fallen behind. Future performance will highly depend on respective provincial economic and demographic structures. Hunan's Jiugui Liquor continues bottoming out, with market expectations mainly centered on collaboration with Pangdonglai bringing imagination space.
"Under current differentiation trends, national and regionally strong liquor companies based on category representation, production area famous wines, and leading brands continue strengthening. These companies with brand, scale, channel, and market advantages continuously penetrate downward into glass bottle wines and more price segments, persistently pressuring regional small and medium liquor companies. Strong differentiation trends will persist," Cai Xuefei told reporters.
Some liquor companies are gradually exiting. The China Alcoholic Drinks Association recently revealed that in the first half of 2025, the number of above-scale national baijiu enterprises was 887, over 100 fewer than the same period last year, with corresponding revenue showing slight year-over-year growth of 0.19%.
**Can the Second Half Rebound?**
The market has long anticipated performance weakness, with considerable funds betting on baijiu stock rebounds since Q2.
The CSI Baijiu Index began rebounding in July, rising 11% in August alone, with multiple baijiu stocks hitting consecutive daily limits. In August alone, ZJLD's stock price rose over 51%, Jiugui Liquor rebounded over 45%, Shede Spirits rose over 30%, and Jinhuijiu rose over 20%. Shanxi Xinghuacun Fen Wine Factory and Jiannanchun both achieved double-digit gains this year.
Does this indicate the baijiu sector has bottomed out?
Liquor industry commentator Xiao Zhuqing believes the second half of this year may mark a turning point, with the Mid-Autumn Festival and National Day peak season potentially becoming a window for premium liquor price bottoming and rebounding.
However, analysts generally believe observation is still needed regarding when the downturn will end.
Multiple securities firms expect that Mid-Autumn Festival and National Day channel dealers' primary appeal remains destocking, with conservative cash collection expectations. Some views suggest recent gains represent market front-loading rather than prosperity improvement.
"Except for leading premium brands possibly facing weak bottom rebounds in the second half, discussing bottoming for the entire baijiu industry may still be premature," Cai Xuefei believes.
Liquor industry commentator Xiao Zhuqing believes this round of deep adjustment may show initial bottoming signals by late 2025, continuing through the second half of 2026, ultimately achieving "U-shaped" recovery.
Inability to rapidly restore growth isn't necessarily negative. Liquor companies can "exchange time for space" through destocking and price stabilization.
The CICC Food & Beverage team believes that if the Mid-Autumn Festival and National Day peak season can significantly reduce current channel inventory, pressure on baijiu price systems will be notably relieved.
Recent baijiu sector rebounds also stem from first-half risk releases - so-called "opportunities emerging from declines."
Research reports indicate that baijiu industry fund holding ratios in Q2 have dropped to 2017 levels, at historically relative valuation lows, with "market expectations of mid-term industry prosperity improvement showing company growth potential."
Looking back, every adjustment period has actually benefited leaders.
Wang Mingfu, Chairman of Hejun Group, stated in a July speech that current liquor industry difficulties will accelerate elimination of "small, scattered, chaotic, weak" players, clearing excess capacity and yielding market share. After this survival competition accelerating survival of the fittest during the industry winter, "survivors become kings, strong become stronger" patterns will emerge across all price segments.
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