Kouzi Liquor, once the second-largest liquor producer in Anhui, has reported a severe earnings decline. On April 22, the company released its 2025 annual report, revealing annual revenue of 3.991 billion yuan, down 33.65% year-over-year. Net profit attributable to shareholders plummeted 59.32% to 673 million yuan, returning to levels last seen in 2016.
Although the results were within the upper loss limit forecasted earlier in the year, the scale of the decline—30% in revenue and nearly 60% in net profit—still came as a shock. This marks the worst performance since Kouzi Liquor went public.
Amid the ongoing downturn, executive compensation has continued to fall. Chairman and General Manager Xu Jin saw his salary drop from over 3.5 million yuan to 2.644 million in 2024, and further to 1.55 million in 2025—a reduction of over one million for two consecutive years. Salaries for four other vice presidents also declined, with the board secretary’s pay falling from 1.9 million to 1.178 million yuan, reflecting the company's operational challenges.
In contrast, co-founder Liu Ansheng, who retired six years ago, continued to reduce his stake. In August last year, he cashed out 330 million yuan, bringing his total divestment over the past eight years to nearly 1 billion yuan.
Kouzi Liquor’s decline has been evident for some time. In the Anhui liquor sector, the company was once part of the "Big Three" alongside
By 2025, the gap widened further. The third quarter saw a steep drop, with revenue falling 27.24% to 3.174 billion yuan in the first nine months, and net profit down 43.39% to 742 million yuan. In the third quarter alone, revenue dropped 46.23% to 643 million yuan, while net profit collapsed 92.55% to just 26.97 million yuan.
The fourth quarter performance was even more dismal. According to the annual report, Q4 revenue fell 50.58% to 816.9 million yuan, and the company posted a net loss of 68.68 million yuan—its first quarterly loss since going public in 2015.
For the full year, Kouzi Liquor achieved only 60% of its revenue target of 6.616 billion yuan set in its 2025 budget plan.
The company attributed the poor results to weak consumer demand in the liquor market and declining sales of high-end products. High-end liquor revenue, which accounts for over 90% of total sales, fell 35.08% to 3.688 billion yuan, though it still represented 94.5% of liquor revenue. Mid-range liquor sales also dropped 21.1% to 53.978 million yuan. Gross margin for high-end products declined 4.19 percentage points to 71.46%.
Kouzi Liquor’s high-end products include its five-year, ten-year, and Jian series, priced between 300 and 1,000 yuan. As early as 2024, management had indicated that sales of the premium Jian series were below expectations.
Of greater concern is the erosion of its home market in Anhui. The province contributes the bulk of Kouzi Liquor’s revenue, but sales there fell 34.51% to 3.246 billion yuan in 2025, still accounting for 83% of total revenue. Sales outside Anhui declined 28.58% to 657 million yuan.
The downturn continued into the first quarter of 2026, with revenue down 24.02% to 1.375 billion yuan and net profit falling 46.16% to 329 million yuan.
Beyond declining sales, Kouzi Liquor faces a severe inventory overhang, putting pressure on liquidity. Over the past four years, inventory as a percentage of total assets has risen steadily—from 37.38% in 2022 to 50.77% in 2025, with inventory value reaching 6.455 billion yuan. Inventory now represents 85.84% of current assets, indicating that over 80% of the company’s liquid assets are tied up in unsold stock.
This situation stems from a mismatch between capacity expansion and weakening demand. Despite industry-wide destocking efforts, Kouzi Liquor has continued to invest in production capacity as part of its "10-billion yuan revenue" goal. The company has invested over 5 billion yuan in the Kouzi Industrial Park, with Phase I already operational. Annual base liquor production capacity is expected to exceed 50,000 tons, with storage capacity surpassing 400,000 tons. Phase II facilities are also gradually coming online.
However, actual production in 2025 was only 30,756.80 kiloliters, with capacity utilization falling from 49.38% in 2024 to just 38%, indicating worsening idle capacity.
In addition, consulting fees have surged over the past four years, further squeezing profits. Since 2022, the company has paid over 100 million yuan to McKinsey & Company as part of its growth strategy, yet this investment has failed to reverse the decline.
Amid the operational struggles, co-founder Liu Ansheng’s continued share sales have further shaken investor confidence. Liu played a key role in Kouzi Liquor’s corporatization in 2002 and the development of its blended-aroma liquor series. After retiring in 2020, he continued to reduce his stake—cashing out 93 million yuan in 2018, 435 million in 2019–2020, 216 million in 2024, and 329 million in 2025, totaling over 1 billion yuan in eight years.
According to reports, Liu has relocated to Shanghai with his family. He remains the second-largest shareholder with an 8.94% stake.
Since 2023, Kouzi Liquor’s performance has deteriorated sharply, and following Liu’s sell-off in August last year, the stock price has continued to slide. As of April 27, shares traded at 24.30 yuan, down 66.22% from the peak of 71.93 yuan in March 2023.
With only one year left in its three-year plan to double sales, Kouzi Liquor is facing declining revenue, halved profits, and challenges including high inventory and a shrinking core market. Finding a way forward has become an urgent priority for the company.
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