As the industry enters a destocking cycle with increased sales pressure, the advantages of the big distributor system in accelerating capital recovery for liquor companies are weakening.
Ten years after going public, Anhui Kouzi Distillery Co., Ltd.'s performance decline is evident, with its deceleration becoming increasingly apparent.
The semi-annual report shows that in the first half of 2025, the company's revenue was 2.531 billion yuan, down 20.07% year-on-year; net profit was 715 million yuan, down 24.63% year-on-year. Looking at the second quarter alone, revenue was only 720.7 million yuan, plummeting 48.48% year-on-year; net profit was 104.6 million yuan, a dramatic drop of 70.91% year-on-year.
Not only did both revenue and net profit decline, but operating cash flow also turned negative, contract liabilities continued to decline, and business performance in both domestic and international markets showed downward trends.
Looking back, as early as 2022, Anhui Kouzi Distillery was overtaken by Yingjia Gongjiu, and now the gap between the two companies in terms of revenue and net profit is gradually widening.
What is the core issue behind Anhui Kouzi Distillery, which once held a significant leading position and strong growth momentum, now experiencing such a dramatic performance decline?
The key factor that once made Anhui Kouzi Distillery successful—the big distributor system—has come to the surface.
**The Key to Rise**
The big distributor system was instrumental in Anhui Kouzi Distillery's success. In this system, all sales activities in regional markets—from channel operations and team building to expense allocation—were handled entirely by powerful large distributors, while Anhui Kouzi Distillery focused on production and brand promotion, forming an early expansion path of "division of responsibilities and light, fast operations."
In fact, the binding relationship between Anhui Kouzi Distillery and distributors runs deep. As early as 2002, when the original joint-stock company was established, four distributors were among the founding members. By the company's IPO in 2015, the fourth and fifth largest shareholders still had distributor backgrounds.
Liquor industry expert and General Manager of Zhiqu Marketing Cai Xuefei analyzed that the big distributor system makes manufacturer-distributor relationships more stable, with tighter profit binding and higher overall risk resistance capabilities. It also makes it easier to control product circulation, thereby ensuring channel profits and maintaining product prices. Compared to other systems, the big distributor system has lower operating costs and helps companies focus resources during growth cycles, promoting rapid enterprise development.
Strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting Zhan Junhao also believes that big distributors control various resources in regional markets including logistics, terminals, and group purchases at all levels. Companies can leverage markets with relatively little capital, rapidly improve coverage, externalize sales pressure, and build brand awareness in the shortest time. Additionally, under the big distributor system, the price system is stable with rare instances of cross-regional sales, and distributor gross margins are stable, enabling smooth sales.
Against this backdrop, Anhui Kouzi Distillery pioneered the "market within market" model, first targeting high-end consumer groups such as government and business banquets, using restaurant terminal "small markets" to drive group purchases and retail stores in mass markets "large markets," then radiating to mid-to-low-end consumer groups.
Through the parallel implementation of the big distributor system and the "market within market" model, Anhui Kouzi Distillery revitalized the entire consumption chain. Between 1999 and 2005, it rapidly expanded to cities such as Nanjing, Xi'an, and Wuhan, quickly building brand awareness through terminal interception and exclusive promotional activities.
In 2005, Kouzi Liquor's sales revenue approached 900 million yuan, realizing profits and taxes of over 200 million yuan, rising to 8th place in the ranking of key backbone enterprises in the national brewing industry. By 2009, Anhui Kouzi Distillery's sales revenue had grown from 200 million yuan in 1997 to 2 billion yuan, a 10-fold increase.
Simultaneously, the development of Kouzi Liquor gained recognition from capital markets. In June 2015, Anhui Kouzi Distillery went public on the Shanghai Stock Exchange as the "first stock of concurrent aroma type," becoming the second-largest liquor company in the Anhui liquor sector after Jiannanchun. In its first year of listing, the company achieved revenue of 2.584 billion yuan and net profit of 605.4 million yuan. By 2018, revenue crossed the 4 billion yuan threshold, reaching 4.269 billion yuan with net profit of 1.533 billion yuan—solidifying its position as the "second in Anhui liquor."
**Channel Deceleration**
Anhui Kouzi Distillery's slowing performance growth is affected by multiple factors, including macroeconomic challenges and insufficient product competitiveness. However, from a deeper perspective, the big distributor system it has long relied upon is gradually losing effectiveness as liquor consumption scenarios undergo profound changes.
Chinese food industry analyst Zhu Danpeng believes that the core issue behind Anhui Kouzi Distillery's declining performance lies in the big distributor system model. In his view, the big distributor system is a typical sign of extensive enterprise operations, with numerous drawbacks: although it only requires interfacing with big distributors at the management level, from the perspective of market penetration and precision operations, it struggles to promote sustainable enterprise growth.
First, the big distributor system has significant shortcomings, with manufacturers having extremely weak control over channels. Big distributors pursue short-term profits, and especially when they have already obtained substantial profits, they tend to become complacent when launching new products.
Zhan Junhao points out: "This has led to prominent product aging issues at Anhui Kouzi Distillery. The newly launched concurrent aroma series is still in the cultivation period and cannot contribute incremental growth, while the original model also struggles to be effective."
Cai Xuefei states that the big distributor system is relatively inflexible with insufficient manufacturer influence, meaning that during periods of intensifying market competition, industry downturns, or corporate reform, it faces obstruction from vested interest groups. The existence of the big distributor system may also lead to internal friction and counteraction in areas such as channel penetration, consumer services, and strategic implementation.
Second, distributors lack motivation for new product promotion, making it difficult for Anhui Kouzi Distillery to advance product structure upgrades, missing market opportunities brought by consumption upgrades.
After 2017, the 300+ yuan sub-premium market became a new industry growth point, but Anhui Kouzi Distillery's response was slow. According to Founder Securities research reports, the Kouzi vintage series has not been updated for a long time and suffers from serious product aging. The company failed to timely shift strategies to focus on sub-premium price points, only launching the concurrent aroma 518 to target the 500+ yuan price range in 2021, gradually losing its former leading advantages.
In contrast, longtime rival Yingjia Gongjiu fully committed to its ecological cellar series as early as 2015, with Dong 16 and Dong 20 targeting 300 yuan and 500 yuan price points respectively, quickly gaining momentum.
Relevant research data shows that the mainstream consumer price point for Anhui liquor has risen to 200-300 yuan, while banquet consumption is moving toward the 300-400 yuan range. Competition is particularly fierce in the 200 yuan price segment, where core products such as Jiannanchun's Gu 8, Anhui Kouzi Distillery's Jian 8, and Yingjia Gongjiu's Dong 9 compete.
Industry insiders point out that Anhui Kouzi Distillery's statistical criteria for "premium liquor" is too broad, covering the 100-600 yuan price range, which to some extent masks the actual problem of product structure imbalance. The real volume drivers—five-year and six-year cellar products—remain stuck at 100-130 yuan, disconnected from mainstream price segments.
Third, big distributors typically lack brand operation capabilities and local market resources, often struggling with sales momentum when expanding into external markets.
Industry observer Wang Ze indicates that as the industry enters a destocking cycle with increased sales pressure, the advantages of the big distributor system in accelerating capital recovery for liquor companies are weakening. Facing declining capital turnover efficiency among large distributors, Anhui Kouzi Distillery has been forced to increase channel support, such as relaxing payment policies to incentivize distributor purchases.
In the first half of this year, contract liabilities fell 46.74% year-on-year to 298 million yuan. Looking back to 2020, this indicator still reached 770 million yuan, reflecting changes in channel confidence and capital turnover conditions.
Additionally, the core problems of the "market within market" model parallel to the big distributor system are becoming increasingly prominent. Zhan Junhao points out that this model over-relies on advertising communication while neglecting deep cultivation of consumer needs, and continuously rising terminal marketing costs reduce model effectiveness. Given Anhui Kouzi Distillery's current financial strength and brand influence, the previous "terminal interception" strategy is no longer sustainable.
**Channel Reform**
In fact, Anhui Kouzi Distillery has long recognized the lag in its channel model and has been continuously promoting channel reform since 2019, gradually transitioning from "big distributor system" to "1+N small distributor transformation" and then to "platform operations."
Particularly in adjusting large distributors, Anhui Kouzi Distillery has adopted a segmentation strategy, dividing agency rights by category, region, and channel, aiming to transform from a distributor-dominated marketing model to a manufacturer-led model. The company has significantly introduced group-purchase and exclusive distributors to assist big distributors with small distributors, filling previous market gaps and channel blind spots.
Specific measures include three aspects: first, splitting big distributors into multiple distributors with separate brand agencies; second, establishing a Hefei marketing center to actively explore group purchase channels and county-level market penetration; third, setting up platform companies to attempt direct sales promotion of concurrent series products.
The reform progress can be intuitively seen from changes in distributor numbers. In 2024, Anhui Kouzi Distillery added a net 68 distributors; in the first half of this year, it added another net 63 distributors. However, the effects of channel reform have not yet supported new growth.
In direct sales, the semi-annual report shows that the first half of this year achieved revenue of 133 million yuan, up 44.57% year-on-year. Although direct sales (including group purchases) revenue growth was significant, it is still far from sufficient to offset the decline in wholesale agency channels.
In external markets, despite the company's goal of "building model external markets" and external distributors accounting for more than half of the total, their revenue contribution is only 15.46%, indicating relatively low channel efficiency.
Compared to peers, Anhui Kouzi Distillery's transformation pace appears relatively slow—Anhui's leading company Jiannanchun deeply cultivates terminals through "human wave tactics," while longtime rival Yingjia Gongjiu has completed "1+1+N" channel iteration.
Jinshiyuan, which also started with the big distributor system, launched a "big distributor cultivation plan" as early as 2014, constructing a channel system with 30 core big distributors as the backbone through equity binding and regional exclusive agencies, enhancing control over big distributors.
"From the overall industry development trend, current liquor companies have generally shifted to intensive cultivation models, with many companies extending channel penetration to county and even township levels, building refined distributor networks," Zhu Danpeng states.
Some market views suggest that due to the past success of its marketing model, Anhui Kouzi Distillery has some resistance to complete transformation, preferring to seek breakthroughs at lower costs based on original experience, thereby missing the optimal window for reform.
Zhan Junhao points out that the current liquor industry faces overall pressure, consumption scenarios are changing, and market recognition and consumption habits for concurrent aroma liquor still need cultivation. Anhui Kouzi Distillery faces severe challenges. Only by firmly promoting reform, optimizing product structure, and strengthening brand building can it win opportunities for performance recovery in the future.
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