In the first quarter of 2026, the baijiu industry continued its trend of deep consolidation and structural differentiation. Data from the National Bureau of Statistics showed that the total profit of the alcohol, beverage, and refined tea manufacturing industry from January to February decreased by 17.2% year-on-year, indicating significant overall pressure on the sector. Against this backdrop, Shanxi Xinghuacun Fen Wine Factory Co.,Ltd. released its first-quarter operational data on April 29th. The company did not pursue aggressive growth, instead focusing on channel management, structural optimization, and customer operations, demonstrating a distinct emphasis on stabilizing operations, controlling risks, and strengthening internal capabilities. During the reporting period, the company achieved revenue of 14.923 billion yuan and a net profit of 5.383 billion yuan. The domestic Shanxi market saw slight growth, maintaining its fundamental position. Inventory decreased by 742 million yuan, while contract liabilities increased by 897 million yuan, indicating gradual improvement in channel cash flow and turnover, thereby creating room for long-term development.
Industry-wide pain points, such as channel stuffing, price inversion, and unauthorized cross-regional sales leading to price chaos, are fundamentally caused by excessively long distribution chains and misaligned incentive mechanisms, resulting in high transaction costs. Fenjiu is proactively moving away from scale-driven growth towards an ecosystem-first approach, utilizing institutional design and digital tools to reduce internal friction and enhance efficiency across the entire chain.
Channel transformation was Fenjiu's most critical action in the first quarter. Using the quarterly report as a milestone, the company firmly advanced three key tasks: reducing inventory, stabilizing prices, and optimizing structure, shifting the channel focus from "hoarding for arbitrage" to "serving actual sales." Leveraging the upgraded "Five-Code Integration" digital traceability system, Fenjiu achieved full traceability from production to consumption, using technological means to standardize market order, reduce unauthorized sales and price chaos, and stabilize the pricing system. Concurrently, the company promoted channel flattening by phasing out inefficient distributors and concentrating resources on high-quality major distributors and core terminals, thereby shortening the policy transmission path and improving terminal responsiveness.
Regarding incentives, Fenjiu deepened its "Fen Xiang Li Yu" program, directly linking rebates to the stability of wholesale prices, sales progress, inventory health, and bottle-opening rates. This incentivizes distributors to focus on end-customer service rather than hoarding for profit. The company adheres to a production-based-on-sales model, abandoning short-term practices of channel stuffing to inflate reports, allowing the distribution channels to operate more nimbly. As a result of these multiple measures, channel inventory has returned to a reasonable range, distributor orders have become more rational, and contract liabilities have grown steadily, reflecting restored channel confidence. From an industry comparison perspective, Fenjiu's channel reforms align with the direction of leading distilleries reclaiming pricing power and advancing direct distribution to terminals, collectively signaling the end of the old growth model.
Product structure is a key support for resisting market cycles. Based on the Q1 report and market commentary, Fenjiu's pyramid matrix strategy—"Focus on Blue and White, Strengthen the Mid-Range, Stabilize Bofen"—demonstrates strong resilience. The domestic Shanxi market remained stable with slight growth, providing a stable foundation for national expansion. Outside Shanxi, the focus shifted from broad coverage to deep cultivation, with precise investments concentrated in 12 core regions, marking a transition into a phase of quality and efficiency improvement in national expansion. According to market research and feedback from front-line distributors, the Blue and White series products currently perform exceptionally well in the market. Blue and White 20 achieved year-on-year growth of 20-30%, while Blue and White 25 nearly doubled, securing a mainstream position in the high-end light-aroma baijiu segment. Mid-range products like Laobaifen and Panama serve as a bridge between segments and possess growth potential. Bofen maintains controlled volume and stable pricing, consolidating the mass-market base as an entry-level light-aroma product and preserving price rigidity. The year 2026 is a turning point for the baijiu industry. Light-aroma baijiu, with its health attributes and appeal to younger consumers, has become a relatively certain growth driver for the sector. Fenjiu's product structure clearly covers all price segments, facilitating both structural upgrades and maintaining mass-market consumption, thereby continuously enhancing its ability to withstand market cycles.
With the era of consumer sovereignty arriving, the industry's focus is shifting from channel dominance to consumer-centricity. 2026 is seen as a crucial year for the baijiu industry's comprehensive breakthrough towards the consumer end. Younger consumer groups place greater emphasis on personalized, scenario-based, and emotional experiences and show higher acceptance for low-alcohol, refreshing, and lighter beverages. Light-aroma baijiu, characterized by its clean body, smooth entry, low irritation, and easy after-effect, naturally aligns with the preferences of younger groups who dislike harshness and seek lighter drinking experiences. The proportion of consumers under 35 within the light-aroma category has significantly increased. Fenjiu has seized this trend by entering the new "self-indulgence consumption" segment, launching the 28-degree low-alcohol "Fen Xiang Qing Chun" series to lower the barrier for young people to access traditional baijiu. Simultaneously, the company elevated the creatively popularized osmanthus-infused Fenjiu drinking method from social media into a brand co-creation event. Through its "Guan Fen" small bars, Fenjiu creates a composite experience of "dining + drinking + cultural creativity + socializing," transforming baijiu from a tool for business entertainment into a lifestyle. While this user co-creation model may not directly contribute to short-term performance, it enhances brand loyalty and builds long-term differentiated barriers.
In the first quarter, Fenjiu completed a transitional phase, forgoing short-term surges during the industry's deep adjustment period to focus on channel quality improvement, structural optimization, and user connection. Its transformation direction is clear and steadfast. Analyzing through the lens of transaction cost theory and industry trends, Fenjiu is reducing circulation costs through channel flattening, digital governance, and incentive restructuring, improving profit quality through product matrix upgrades, and capturing the minds of young consumers through C-end operations. As channel health improves, nationwide deep cultivation yields results, and the user system matures, Fenjiu is poised to steadily build long-term competitiveness amidst the wave of light-aroma baijiu revival.
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