On April 29, Shanxi Xinghuacun Fen Wine Factory Co.,Ltd. officially released its first-quarter report for 2026. During the reporting period, the company achieved an operating revenue of 14.923 billion yuan and a net profit of 5.383 billion yuan. Revenue from the domestic Shanxi market reached 6.087 billion yuan, representing a slight increase of 0.06% year-on-year. The core Blue and White series products maintained their growth momentum, while inventory decreased by 742 million yuan, indicating a healthy and optimal channel status.
Examining this report alongside the recently disclosed 2025 annual report provides a clearer picture of Fenjiu's current position. Focusing on core elements reveals that Fenjiu's "market stability," "product stability," and "confidence stability" are interlinked, reinforcing its foundation during a period of deep industry adjustment.
Market Stability: "Stable Domestically, Optimized Nationally" as National Expansion Enters Refinement Phase Annual report data from 2025 shows that Fenjiu's revenue in its home Shanxi province decreased slightly by 0.81%, while revenue from markets outside Shanxi surged by 12.64%. This divergence highlights the long-term effect of Fenjiu's "Nationalization 2.0" strategy—the company has successfully reduced its reliance on the local Shanxi market through continuous national expansion. Brand penetration has been consistently increasing, particularly in economically developed regions such as areas south of the Yangtze River, the Yangtze River Delta, and the Pearl River Delta.
In the first quarter of 2026, the domestic Shanxi market saw a 0.06% year-on-year increase. Amidst intense competition in markets like Eastern China, Fenjiu successfully defended its core home base. Expansion outside the province has shifted from rapid advancement to a phase of meticulous cultivation, focusing on deepening penetration in key areas and enhancing efficiency per unit rather than pursuing blind, high-speed growth. The annual report had previously indicated this strategic deepening, stating plans for 2026 to build a four-tier national market network, including fortress markets exceeding 2 billion yuan, key markets over 1 billion yuan, county-level model markets above 100 million yuan, and premium township markets surpassing 10 million yuan.
Product Stability: "Pyramid Structure" Solidifies Foundation, Core Products Show Steady Growth In a challenging industry environment marked by deep adjustment and increasing divergence, a rational and healthy product structure is key for renowned brands to maintain operational stability. Fenjiu's resilience during this period is largely attributable to its long-established "pyramid" product matrix.
The premium Blue and White series at the top spearheads brand elevation. The mid-tier Lao Bai Fen and Panama series precisely target the mass banquet and casual dining markets, serving as stable pillars for performance. The foundational, popular Bo Fen product remains a volume leader, deeply rooted in the mass consumer market. Fenjiu's strategy of "promoting Blue and White, strengthening the mid-tier, and stabilizing Bo Fen" allows products at different price points to function effectively, creating a virtuous cycle.
As the core vehicle for brand premiumization, the Blue and White series continues to demonstrate strong market performance. Feedback from market research indicates that frontline distributors observe more pronounced growth: Blue and White 20 grew by 20%-30%, maintaining a strong position in the sub-premium mainstream segment. Blue and White 25 shows even greater growth momentum, potentially achieving doubled growth. Particularly in the Shanxi market, distributors report that both high and low alcohol variants of the Blue and White series are experiencing rapid sell-through, with steady increases in penetration for business and banquet occasions.
Concurrently, the Bo Fen series prioritizes stability, strictly controlling product supply to avoid flooding the market and chasing short-term spikes. This approach helps stabilize terminal prices and safeguard its base in the mass consumption market.
Confidence Stability: Deepening Reforms to Reduce Excess, Enabling Channels to Operate Efficiently The adage "confidence is more important than gold" holds particular significance in the current baijiu industry.
High inventory levels and slow sell-through have become common challenges across the sector. The "votes" cast by distributors with real capital are a telling indicator of the underlying situation.
The Q1 financial report shows that Fenjiu's contract liabilities increased from 7.007 billion yuan at the end of the previous year to 7.904 billion yuan, signaling growing willingness among distributors to make advance payments. Additionally, channel collections are healthy, and cash flow remains stable. During a period of generally weak industry confidence, this growing confidence among Fenjiu's distributors is, in some respects, more noteworthy than the revenue growth itself.
What underpins this distributor confidence? On one hand, Fenjiu continues to deepen the optimization and upgrading of its distributor structure, supporting high-performing distributors and focusing on major partners, while systematically streamlining and improving the quality of the channel system. On the other hand, Fenjiu is proactively reducing excess and destocking, avoiding short-term tactics like pressuring channels to boost quarterly results. Instead, it employs refined management to allow channels to operate more efficiently, genuinely alleviating inventory pressure and giving distributors visibility into long-term development prospects.
The year 2026 is designated as Fenjiu's "Year of Business Model Transformation." From the top-level "1234" strategic framework to the marketing path of "Four Promotions, Five Persistences," it is evident that Fenjiu is undergoing proactive change. Measures include deepening channel flattening reforms and cultivating high-quality core terminals; strengthening full-chain market control via the integrated "Five Codes in One" traceability system; optimizing the "Fenjiang Privileges" mechanism to incentivize distributors to focus on sell-through services; and strictly implementing inventory control, adhering to a "production based on sales" principle. The Q1 report reflects these efforts, showing an orderly reduction of 742 million yuan in overall market inventory, with channel stock maintained at an ideal level.
These initiatives not only alleviate the significant pressure of high inventory for distributors but also demonstrate Fenjiu's sincerity and capability in market management. At a deeper level, 2026 marks the second phase of Fenjiu's revitalization, a period explicitly focused on "element adjustment"—slowing down, stabilizing, and shifting from "acceleration" to "steady progress" for deeper development. This is not a passive slowdown but a strategic choice.
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