In the first half of 2026, the baijiu industry entered a new phase of accelerated market consolidation. The 19 listed baijiu companies generated combined revenue of RMB 197.894 billion, down 6.75% year-on-year, while attributable net profit fell 8.39% to RMB 73.1 billion. The downturn is accelerating sharply, with the median revenue growth rate sliding further from -12.84% in the first half of 2025 to -15.34%, and the median net profit growth rate plunging from -24.63% to -40.10%.
At the industry level, losses are widening. Only four companies posted revenue growth in the first half, and just four recorded net profit growth, while the number of firms with revenue declines exceeding 20% jumped from five in the same period of 2025 to seven this year. More notably, three baijiu companies have already fallen into half-year losses: Sichuan Shui Jing Fang Co., Ltd., Gansu Huangtai Wine-Marketing Industry Co., Ltd., and Anhui Golden Seed Winery Co., Ltd.
Overall, the baijiu sector is showing three major trends. First, the growth model is shifting from channel-push expansion centered on distributors to demand-pull growth driven by consumer consumption. Leading distilleries are accelerating this transition, with Kweichow Moutai Co., Ltd.'s direct sales channels (self-operated stores and iMoutai) already accounting for 57.3% of revenue in the first half. Contract liabilities, a key indicator of distributor prepayments, totaled RMB 32.384 billion across listed baijiu firms, down 13.6% year-on-year. Of the 19 listed companies, 13 saw contract liabilities decline, with industry bellwether Kweichow Moutai Co., Ltd. posting a sharp 42.3% drop, while Luzhou Laojiao Co., Ltd. and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. also recorded significant decreases. Meanwhile, total industry inventory swelled 12.4% from RMB 168.325 billion to RMB 189.188 billion. Three companies saw inventory growth exceed 20%, led by Wuliangye Yibin Co., Ltd. with a 27.68% surge. Notably, Jiangsu Jinshiyuan Wine Co., Ltd., Gansu Huangtai Wine-Marketing Industry Co., Ltd., Xinjiang Yilit Industrial Co., Ltd., Anhui Gujing Distillery Co., Ltd., and Luzhou Laojiao Co., Ltd. all posted double-digit inventory growth alongside revenue declines.
Second, under the dual pressure of weak demand and intensifying competition, distilleries are caught in a squeeze of falling gross margins and rising expense ratios, with net margin declines generally exceeding gross margin contractions. In the first half, 12 companies saw gross margins slip, 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 steepest net margin drop, falling from 16.35% to 6.21%. On the expense side, 13 companies saw sales expense ratios rise, and the same number reported increases in administrative expense ratios. Combined financial and administrative expense ratios rose year-on-year for 14 firms, with 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. all posting substantial increases.
Third, industry concentration is further consolidating toward the top. In the first half of 2025, Kweichow Moutai Co., Ltd. alone accounted for 43% of total revenue among listed baijiu companies; that share has climbed to approximately 47% this year. This consolidation reflects the accelerated exit of smaller players. Yet beyond Kweichow Moutai Co., Ltd., other major distilleries are not proving resilient. Wuliangye Yibin Co., Ltd.'s 20.87% revenue growth in the first half stems from a "restatement" of its 2025 financials. Prior to the restatement, Wuliangye Yibin Co., Ltd. reported revenue of RMB 52.77 billion for the first half of 2025 and RMB 50.648 billion for 2024, while the current first-half figure stands at just RMB 28.417 billion. The other four firms with annual revenue above RMB 10 billion—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 experienced double-digit revenue declines.
Turning to Anhui Yingjiagongjiu Co., Ltd., the company posted revenue of RMB 3.416 billion in the first half of 2026, up 8.08% year-on-year, with attributable net profit of RMB 1.162 billion, up 2.79%. Among the 19 listed baijiu firms, it ranked second in revenue growth and fourth in net profit growth, making it one of the rare companies to achieve simultaneous gains in both metrics. However, these results are partly attributable to a low comparison base, as the company saw both revenue and net profit decline in the first half of 2025. While the revenue scale has recovered, it still has not surpassed the level recorded in the same period of 2024.
Beyond the low base, growth has been driven primarily by the company's product strategy. In the first half, mid-to-high-end baijiu (encompassing the Dongzang, Gongjiu, and Jinyinxing series) generated revenue of RMB 2.748 billion, up 8.35% year-on-year and accounting for over 80% of total revenue, while ordinary baijiu posted revenue of RMB 485 million, up 7.23%. Anhui Yingjiagongjiu Co., Ltd.'s core product is positioned in the RMB 100-300 price band, avoiding the contraction in demand seen in the RMB 300-plus segment for business banquets and gifting. A comparison with Anhui Gujing Distillery Co., Ltd. is instructive: Anhui Gujing Distillery Co., Ltd. deploys a sales expense ratio of 30.33%, using heavy spending to break into the sub-premium segment and pursue national expansion, whereas Anhui Yingjiagongjiu Co., Ltd. maintains a sales expense ratio of just 11.24%, relying primarily on mass-price-band products and the provincial market. Whether this focus on the mass segment and local market can sustain long-term growth remains to be seen.
On the financial front, Anhui Yingjiagongjiu Co., Ltd. posted a gross margin of 74.06% in the first half, up 0.44 percentage points year-on-year, but its net margin slipped 1.78 percentage points to 34.09%. The divergence between gross and net margins is driven primarily by increased expense deployment. Sales expenses reached RMB 384 million, up 24.95% year-on-year, largely due to a significant jump in advertising and promotion spending. The sales expense ratio rose from 9.72% to 11.24%, with expense growth far outpacing revenue growth, eroding the profit gains from the improved gross margin. Notably, the company's standalone cash flow turned negative in the second quarter, at -RMB 60 million. Additionally, contract liabilities stood at RMB 532 million at the end of the first quarter, up 16% year-on-year, but plummeted to RMB 420 million by the end of the second quarter. The contraction in both cash flow and contract liabilities may signal that distributor restocking enthusiasm is waning heading into the second quarter.
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