The decline of Anhui Kouzi Distillery Co.,Ltd. from its former glory as the second-largest Anhui-based baijiu producer has unfolded over just five short years.
Over 150 billion yuan in market value has evaporated. A decade later, the stock price of Anhui Kouzi Distillery Co.,Ltd. (ASX: 603589) has once again fallen below the 20 yuan mark. On June 19, the last trading day before the Dragon Boat Festival, its share price dropped to 19.59 yuan, hitting its lowest closing price since 2017. The total market capitalization fell below 12 billion yuan, representing a near 50 billion yuan contraction from its historical peak. As of the most recent trading session, the price has slid further to 18.77 yuan, with a market cap of only 11.215 billion yuan.
Poor financial results are clearly a primary reason investors have lost faith in the stock. Data shows that for the full year 2025, the company achieved revenue of 3.991 billion yuan, a year-on-year decrease of 33.65%, marking its lowest revenue figure since 2017. During the same period, net profit attributable to shareholders plummeted 59.32% to 673 million yuan, a figure now substantially lower than the net profit level of 783 million yuan recorded in the same period of 2016. Against the backdrop of persistently weak domestic consumer demand and an oversupply in the baijiu industry, the operating performance of listed baijiu companies has generally been poor. However, the magnitude of Kouzi's decline still places it among the worst performers in the sector. Specifically, its revenue decline ranks fourth among the 20 listed baijiu firms, while its profit decline ranks seventh.
In terms of revenue composition, Kouzi's main income derives from premium baijiu, accounting for over 90% of total revenue. Its premium products include series such as Five-Year Cellar, Six-Year Cellar, Imperial Reserve, Small Pool Cellar, Precious Reserve, Foundry Commemorative Edition, and the Jian (Blended Aroma) series, with prices ranging from 100 to 1000 yuan, predominantly concentrated between 100 and 300 yuan. Mid-range products like Old Kouzi and Kouzi Fang, and low-end products represented by the Kouzi Jiu series, each contribute less than 5% to revenue. In 2025, sales revenue from premium baijiu was 3.688 billion yuan, down 35.08% year-on-year; mid-range baijiu revenue was 54 million yuan, down 21.1%; low-end baijiu revenue, represented by the Kouzi Jiu series, was 161 million yuan, up 27.43%. However, the small scale of low-end sales failed to offset the significant contraction in premium baijiu revenue.
In fact, premium baijiu has long been the main revenue driver for Kouzi, but in recent years it has been mired in sluggish growth, posing a serious challenge to its strategic goal of becoming the "premier brand of Chinese blended aroma premium baijiu." Public information shows that in 2022, the company proposed the strategic objective of "accelerating the realization of a 10-billion-yuan Kouzi and entering the first tier of national baijiu companies." Upgrading the product mix and creating a major high-end blended aroma product became key directions for achieving this 10-billion-yuan revenue goal. To this end, Kouzi partnered with the renowned consulting firm McKinsey. Under the strategic framework of the "10-billion-yuan Kouzi," McKinsey assisted in upgrading and adjusting the company's strategy, branding, products, and organization, jointly formulating a five-year strategic plan aiming to become a leading Anhui baijiu brand in terms of sales, brand influence, and channel acceptance.
To match the new strategy, in February 2023, Kouzi held a grand new product launch in Hefei, Anhui, under the theme "Natural Blended Aroma · Extraordinary Enjoyment," officially introducing the "Jian 10, Jian 20, Jian 30" series, precisely targeting the mid-to-high-end price points of 300 yuan, 500 yuan, and 1000 yuan. This marked the formal establishment of its strategic positioning to build the "premier brand of Chinese blended aroma premium baijiu." However, subsequent market performance indicates this strategy has not yielded the expected results. Data shows that from 2023 to 2024, Kouzi's high-end product sales hovered below 5.7 billion yuan for two consecutive years, largely sustained by channel inventory loading. By 2025, premium baijiu sales saw a year-on-year decline of over 30%, indicating that growth for its high-end products has completely stalled.
Entering 2026, the company's operating performance continues to decline sharply. The latest financial report shows that in the first quarter of 2026, revenue was 1.375 billion yuan, down 24.02% year-on-year, with net profit at 329 million yuan, a 46.16% decrease. On a quarterly basis, the company has now experienced four consecutive quarters of declining revenue and net profit.
Faced with the continuous operational decline, management has decisively abandoned the previously stated "10-billion-yuan goal." Instead, according to the company's 2026 financial budget plan, the revenue target for this year is set at only 4.3 billion yuan, representing approximately 8% year-on-year growth. However, judging by the "reservoir" indicator of contract liabilities, achieving this annual target still faces significant pressure. As of the end of March 2026, the latest contract liability balance was a mere 201 million yuan, down 40% from the end of 2025, indicating distributor confidence in placing orders remains at rock bottom.
Beyond the sharp decline in operating performance, continuous share reductions by the actual controller have also been a significant factor in the stock's weakness. Since 2019, co-founder Liu Ansheng has cashed out over 1 billion yuan through multiple share reductions and transfers. Notably, in August 2025, Liu reduced his holding by 10 million shares via block trades, cashing out approximately 329 million yuan, further exacerbating the stock's breakdown.
In the late 1990s, building on traditional techniques and after years of research, Kouzi launched the epoch-making "blended aroma" baijiu, successfully differentiating itself from the traditional baijiu competitive landscape. Following this, through over 20 years of continuous exploration and process evolution, the company gradually formed its core "One-Step Blending" process system centered on "Three Multiples, One High, Two Longs." In 2003, Kouzi baijiu was officially recognized as a "Blended Aroma" type baijiu by the China Baijiu Standardization Committee, becoming a distinguished representative and national standard-setter for Chinese blended aroma baijiu. As the acknowledged "King of Blended Aroma Baijiu," Kouzi once firmly held the second position among Anhui baijiu producers, even briefly surpassing Gujing Gongjiu to become the largest by scale in Anhui. However, due to a strategic absence in the sub-premium price segment and gaps in its product matrix, Kouzi missed the sub-premium boom and was ultimately overtaken by Yingjia Gongjiu. Simultaneously, slow adaptation in channel reforms further constrained the space for upgrading its product structure.
In the competitive landscape of Chinese baijiu, the position of Anhui-based producers is significant. Among them, Gujing Gongjiu, Kouzi, Yingjia Gongjiu, and Jinzhongzi Jiu are known as the "Four Golden Flowers" of Anhui baijiu. In terms of historical depth and heritage, Kouzi stands out even among its peers. Public reports trace the brewing history of Kouzi Jiu back to the Spring and Autumn and Warring States periods. However, as a time-honored baijiu brand with over 2700 years of brewing heritage, Kouzi never received the title of "China Famous Liquor" across five official national appraisals. A key reason was the ambiguity of the participating entity due to the split of the "two Kouzi" operations. In 1970, with the establishment of Huaibei City, the originally unified state-owned Suixi People's Distillery was split into two entities due to the fiscal system at the time: "Huaibei City Kouzi Distillery" and "Suixi County Kouzi Distillery," which became competitors. A prolonged and intense dispute over ownership of the core "Kouzi" trademark ensued, later humorously referred to in the industry as the "War of the Two Kouzi." This internal conflict not only dealt a heavy blow to both distilleries but also caused Kouzi to miss multiple historical windows for the "China Famous Liquor"评选. In 1989, during the fifth and final official appraisal held in Hefei, the still-embroiled trademark dispute led the appraisal committee to avoid controversy by not listing either entity as a "Famous Liquor," instead awarding both the title of "National Quality Liquor." Thus, Kouzi missed its final opportunity to be included among the "Seventeen Great Chinese Famous Liquors."
In 1997, driven by provincial and municipal government coordination, the two entities were merged to form Anhui Kouzi Group Company, ending the over-two-decade-long conflict. To further integrate resources, Liu Ansheng, then Party Secretary of Lieshan District in Huaibei, was transferred to serve as General Manager and later Chairman of Kouzi Group. Xu Jin, then District Head Assistant, was also tasked with overseeing the group's marketing. However, mere equity consolidation did not resolve issues like institutional rigidity and management chaos, and the enterprise's development stagnated. In 2002, Anhui Kouzi Group underwent restructuring, establishing Anhui Kouzi Distillery Co., Ltd., introducing external capital from entities like Jiangsu Tiandilong Industrial and Shaanxi Tianju Commerce, transitioning from a purely state-owned enterprise to a mixed-ownership structure. Subsequently, as the group faced operational difficulties and funding shortages, it began transferring its shares in the distillery, while Xu Jin and Liu Ansheng gradually increased their holdings. By 2008, state-owned capital had completely exited, and through their shareholdings, Liu and Xu gained de facto control, becoming the company's joint actual controllers.
Driven by Liu Ansheng and Xu Jin, Kouzi launched the blended aroma Five-Year Kouzi baijiu, paired with the pioneering "Plate-in-Plate" marketing model. By strongly promoting the product in core hotel outlets, they quickly opened the market, establishing Kouzi's leading position in the sub-premium market and pioneering a new landscape for blended aroma baijiu in China. The core of the "Plate-in-Plate" model involved using the "small plate" to drive the "large plate"—concentrating resources to conquer high-end A-category餐饮 hotels (small plate) and leveraging the示范 effect of political and business opinion leaders to辐射 and drive the mass consumer market (large plate).攻坚 high-end hotels, especially those used for government and business banquets, was a key环节, requiring strong personal networks. To advance this model, Kouzi introduced the so-called "Major Distributor Model," entrusting capital垫付, team building, and terminal公关 in regional markets entirely to powerful major distributors, while the manufacturer focused on production and brand promotion. This enabled rapid,轻资产, high-efficiency expansion.
In 2015, Kouzi listed on the Shanghai Stock Exchange as the "first blended aroma baijiu stock," becoming the 17th national and 4th Anhui baijiu listed company. That year, its revenue reached 2.584 billion yuan, ranking third in Anhui behind Gujing Gongjiu and Yingjia Gongjiu. Post-listing, the company maintained rapid growth. In 2017, with revenue of 3.602 billion yuan, it successfully overtook Yingjia Gongjiu (3.188 billion yuan) for the first time to become the second-largest Anhui baijiu producer. It maintained this revenue lead over Yingjia for four consecutive years. In 2019, its net profit exceeded 1.7 billion yuan, nearly double that of Yingjia (930 million yuan), marking the peak of its领先优势.
Since 2020, with the incursion of out-of-province brands like Wuliangye and Yanghe, competition within Anhui's baijiu market has intensified. Simultaneously, facing the rapid rise of a new wave of sub-premium baijiu, series like Gujing's Year Original Pulp and Yingjia's Ecological Cave Storage saw rapid volume growth. However, Kouzi's mainstay products like the 5-Year and 6-Year remained concentrated in the 100-200 yuan price band, failing to及时 meet sub-premium market demand. In 2020, both revenue and profit declined, marking the initial signs of operational downturn. By 2022, Yingjia surpassed Kouzi in both revenue and profit, and Kouzi彻底 lost its position as the second-largest Anhui baijiu producer.
Facing nationwide消费升级, Kouzi launched the Jian 10, 20, 30 series starting in 2023, covering the 300, 500, and 1000+ yuan price points. In the first half of 2024, it launched the Jian 8, targeting the mainstream 200 yuan price band in Anhui. However, due to late market entry and insufficient brand power, the new Jian series did not achieve the expected results. Furthermore, long-term reliance on the "Plate-in-Plate" and Major Distributor models exposed weaknesses in terminal control during new product promotion. Particularly, some major distributors, having secured丰厚利润 from existing product lines, were often unwilling to take risks on新品, lacking the incentive to push them. Therefore, conservative distributor strategy became a core factor hindering Kouzi's premiumization efforts.
To enhance channel精细化 operation capabilities, Kouzi has recently focused on implementing "1+N" channel reform. The core logic is to retain key major distributors while introducing more functional smaller distributors to分散 channel power and increase terminal coverage depth. Annual reports show that by the end of 2025, the number of distributors within Anhui reached 564, while out-of-province distributors numbered 570, totaling 1143 distributors, an increase of 140 compared to the same period in 2023. Despite increasing the total number by splitting major distributor territories and introducing smaller ones, the new distributors did not带来 substantive sales growth. In 2025, domestic (within Anhui) sales revenue was 3.246 billion yuan, down 34.51% year-on-year, accounting for 81.33% of revenue. Sales from markets outside Anhui were 657 million yuan, down 28.58%, accounting for less than 20% of total revenue. Calculated, the average annual sales per distributor outside Anhui was only about 1.15 million yuan, an extremely low level within the baijiu industry. It is evident that both domestic and out-of-province markets show a pattern of "increased quantity but reduced quality," indicating that channel reforms remain in a stage of无效扩张. Particularly, the百万级 output per out-of-province distributor suggests that the nationalization strategy has陷入 "extensive cultivation with meager harvests." In other words, the national strategic goal of a "10-billion-yuan Kouzi" has substantively failed, and the corporate vision of "entering the first tier of national baijiu companies" has become increasingly distant.
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