After four consecutive years of adjustment, the baijiu industry is emerging from its trough.
In a mid-year research report, Goldman Sachs concluded that the toughest destocking phase for China's baijiu industry has passed and that the sector is in a very early stage of recovery.
The basis for this judgment: on the supply side, capacity clearance is accelerating; on pricing, wholesale prices of core mid-to-high-end flagship products have stabilized; and on the channel side, after proactive destocking, channel inventories have moved toward healthier levels.
At this stage, financial statement data are not the measure of a distiller's potential.
The distillers that can hold price levels, control retail endpoints, and keep channels healthy will reap the recovery dividends in the next phase.
As a leading distiller, Luzhou Laojiao Co.,Ltd. (SZ: 000568) was among the first in this adjustment cycle to shift to a "volume control and price stability, deep cultivation of retail endpoints" operating approach, proactively slowing the pace of shipments, guiding channel inventories back to a healthy range, and maintaining stable pricing for its core flagship Guojiao 1573.
In the first three quarters of this year, Luzhou Laojiao generated operating revenue of 14.668 billion yuan and net profit attributable to shareholders of 5.671 billion yuan, with year-on-year declines, but after a round of proactive adjustment, third-quarter results showed signs of sequential improvement.
Perhaps the hardest period has passed.
Anchoring Volume Control and Price Stability as the Core Operating Line, Trading Short-Term Adjustment for Channel Health and Brand Discipline
This round of baijiu adjustment differs fundamentally from previous cycles: it is a clearance adjustment after total volume peaked, driven by the overlap of the macroeconomic environment and industry transformation.
Against this backdrop, the growth logic of the baijiu industry has undergone a fundamental shift, from channel stuffing to a new model driven by end consumers.
Based on a deep understanding of these industry changes, Luzhou Laojiao laid out plans ahead of time and proposed three core directions: product premiumization, palatability and lower alcohol for categories, and market internationalization.
In marketing, it established the strategy of "not trading price for volume, not trading cross-region dumping for development," and in June this year once again designated "volume control and price stability" as a strategic choice to "realize long-term competitiveness over the next 3 to 5 years."
On one hand, the company proactively controls the pace of shipments, implements a "shipment based on sales" mechanism, and proactively guides channel destocking.
On the other hand, relying on a full-chain traceability system, it has connected data links across production, distribution, and end consumers, truly enabling consumption data to guide shipments, expense allocation, and market decisions, reshaping its operating model.
So far, Luzhou Laojiao's arrangements are beginning to bear fruit, completing channel reform during the industry trough and driving a transition in its operating logic from "dealer stuffing-driven growth" to "end-demand sell-through growth," laying the groundwork for the next phase of growth.
In the first three quarters of this year, Luzhou Laojiao continued to anchor "volume control and price stability" as its core operating line, using digital mechanisms such as quota control, shipment based on sales, and bottle-opening linkage to precisely constrain supply.
The wholesale price of its core flagship 52-degree Guojiao 1573 has consistently held above 800 yuan per bottle.
Since the start of this year, leading companies have recognized the importance of a stable price system for their brands, and volume control and price stability have become an industry consensus.
The stability of high-degree Guojiao's pricing supports the prices of lower-degree Guojiao and other products, while also reserving pricing space for the launch of subsequent ultra-high-end products.
On the channel side, Luzhou Laojiao takes inventory control and destocking and real sell-through as its anchor, using the "hundred cities, thousand counties, ten thousand stores" project to deepen penetration into county and township markets with a digital distribution model.
After straightening out channels, it uses digital profit-sharing measures to deeply link channel rebates with end-point bottle-opening scans, channeling more profit to retail stores.
In 2026, the company's product sell-through and bottle-opening situation improved, with the scan rate of core products exceeding 50%, and channel inventory pressure is gradually easing.
Cultivating Long-Term Growth Momentum through Youth and Lower Alcohol
On products and marketing, Luzhou Laojiao has played two cards: "youth" and "lower alcohol."
If "volume control and price stability" is meant to protect the base, then "youth" and "lower alcohol" represent Luzhou Laojiao's proactive breakout to cultivate future growth momentum in incremental markets.
In its report "Young People's Alcohol: Research Report on Innovation in China's Alcoholic Beverage Categories," Ries Consulting predicted that the potential young alcohol-drinking population in China is as high as 490 million, and the market size for young people's alcohol consumption is as high as 400 billion yuan.
According to data from the China Alcoholic Drinks Association, the market size of China's low-alcohol liquor was about 74.2 billion yuan in 2025 and is expected to climb to 172 billion yuan by 2030.
Young consumer groups and low-alcohol consumption are highly overlapping, and the factors driving growth in this market can be summarized in two aspects: first, the continued broadening of the consumer base, with the rise of female consumers and Gen Z becoming major consumer forces; second, consumption motivation shifting from a social tool to an outlet for self-pleasing emotions.
For baijiu companies, this trend both breeds considerable incremental space and implies entirely new challenges in operating logic.
Companies need to use lower-alcohol product innovation to adapt to new consumer groups' taste preferences, aesthetic expression, and health demands; on the other hand, they need to proactively break the traditional scenario constraints of baijiu, penetrate lighter and more everyday consumption scenarios, and complete a dual breakthrough from category recognition to population coverage.
Luzhou Laojiao has consistently been at the forefront in this regard.
In the exploration of lower-alcohol high-end baijiu in China, Luzhou Laojiao is a worthy pioneer: as early as 2001, when the industry generally focused on high-degree products, Luzhou Laojiao proactively launched 38-degree Guojiao 1573.
From 2015 to 2025, over ten years, sales of 38-degree Guojiao 1573 achieved a compound annual growth rate of more than 30%, growing into the industry's first and, to date, only lower-alcohol high-end baijiu flagship to enter the ten-billion-yuan club.
In its core main sales region of Hebei, the product's market share in the local lower-alcohol high-end baijiu segment has exceeded 70%, and in multiple prefecture-level cities within the province, coverage in high-end banquet scenarios has surpassed 80%, building a deep cognitive moat in local consumer minds.
Emerging markets such as East China and South China also maintain rapid expansion and are gradually becoming new growth poles.
Today, 38-degree Guojiao 1573 has become a core growth pillar for Luzhou Laojiao, forming a product structure of gradient complementarity and dual-wheel drive with the classic 52-degree version.
With the official market launch of 28-degree Gaoguang, the company's lower-alcohol product matrix extends further downward, precisely covering youth-oriented and light-social consumption scenarios.
On June 25, 2026, Luzhou Laojiao's 28-degree Gaoguang was officially launched, mainly targeting the gathering and light-drinking track, with a target audience of young people aged 25 to 35, filling the gap in daily consumption scenarios and young consumer groups, and forming a differentiated matrix with 38-degree Guojiao 1573, which focuses on high-end business banquets.
On the marketing side, Luzhou Laojiao has launched a series of innovative approaches to continuously drive product breakout and get closer to young consumer groups.
As early as 2009, the company took the lead in proposing the tasting concept of "12°C baijiu iced drinking," which later upgraded to the Ice JOYS IP, expanding scenarios to art exhibitions, concerts, livehouses, and other fields.
The company's achievements in sports marketing are equally notable.
It has previously broken the boundaries of traditional baijiu consumption scenarios through global top-tier event IPs such as the Australian Open (tennis), the ITTF World Cup (table tennis), and the WCGC (golf).
In the second half of this year, Luzhou Laojiao went further in sports marketing.
On October 8, it officially announced a multi-year marketing partnership with NBA China; during and after games, Guojiao 1573 and the innovative brand 28-degree Gaoguang received multi-faceted exposure.
The 2026 China Open, which concluded on October 11, was exclusively titled by Luzhou Laojiao·Guojiao 1573. In this event, Guojiao 1573 moved beyond the traditional model of simple advertising exposure, embedding itself deeply into the entire chain of event scenarios, cultural communication, and social experience through the "Cup of Victory" special cocktail.
Partnering with top sports events is a core lever of Luzhou Laojiao's long-term brand strategy, achieving full-circle reach from high-end to mass audiences through sports marketing and reinforcing the brand's high-end positioning.
At the same time, it breaks the fixed perception that baijiu is "only for business banquets and holiday gifting," embedding baijiu into everyday scenarios such as game-watching socializing, gatherings with friends, and leisure entertainment, reconstructing the consumption context of baijiu and cultivating momentum for long-term growth.
Comments