On February 28, an unexpected announcement sent shockwaves through the Chinese liquor industry. According to the Sichuan Provincial Commission for Discipline Inspection, Zeng Congqin, Party Secretary and Chairman of Sichuan Yibin Wuliangye Group Co., Ltd., and Party Secretary and Chairman of Yibin Wuliangye Co., Ltd., is suspected of serious violations of discipline and law and is undergoing disciplinary review and investigation by the Yibin Municipal Commission for Discipline Inspection.
Unlike some investigations preceded by rumors, many industry insiders noted that Zeng's investigation was particularly sudden. Just days earlier, he had presided over a company meeting following the Spring Festival holiday, emphasizing the need to "firmly uphold the bottom lines of safety, integrity, and risk."
Ironically, less than a week later, Zeng was taken away for alleged serious disciplinary and legal violations. Furthermore, just months prior, his predecessor, Li Shuguang, had been expelled from the Communist Party and removed from public office, with the official notice citing "exploiting the enterprise for personal gain and misusing public resources."
This starkly contrasting downfall, combined with the consecutive leadership failures at Wuliangye, has not only thrust the trillion-yuan market cap liquor giant into the spotlight but also exposed its underlying operational challenges.
**Performance Slowdown: Revenue Halved**
Zeng Congqin officially took over from Li Shuguang in February 2022, assuming full leadership of Wuliangye. His four-year tenure coincided with a turning point for the liquor industry, transitioning from peak performance to a period of adjustment. A review of financial reports from these years clearly shows a decelerating growth trajectory.
In 2023, Wuliangye reported operating revenue of 89.17 billion yuan, a year-on-year increase of 7.09%, and net profit attributable to shareholders of 31.85 billion yuan, up 5.4%. While these figures appeared stable, they broke Wuliangye's eight-year streak of double-digit growth.
By 2024, the slowdown intensified. Full-year revenue barely reached 89.175 billion yuan, a slight increase of 7.09%, but fourth-quarter revenue grew by only 2.53% year-on-year, and net profit saw its first decline in a decade, falling by 6.17%.
The timing of Zeng's investigation coincides with a rare cold spell for Wuliangye's performance. In October 2025, the company released a third-quarter report that stunned the market. Data showed that for the first three quarters of 2025, operating revenue was 60.945 billion yuan, down 10.26% year-on-year, while net profit attributable to shareholders was 21.511 billion yuan, a decrease of 13.72%. The third quarter alone was even more severe: revenue was just 8.174 billion yuan, a plunge of 52.66% year-on-year, and net profit was 2.019 billion yuan, a sharp drop of 65.62%.
This marks the first time since 2015 that Wuliangye reported negative revenue growth for the first three quarters of a year and represents the largest quarterly decline in nearly two decades since 2006. For context, despite industry-wide pressure, competitors like Kweichow Moutai and Shanxi Xinghuacun Fen Wine Factory maintained positive growth in the first three quarters of 2025. Wuliangye's cliff-like drop cannot be explained by "industry adjustment" alone.
Regarding the halved performance, Wuliangye attributed it in its financial report to the "liquor industry being in a period of deep adjustment and slower-than-expected recovery in effective demand." However, deeper issues likely stem from the culmination of long-standing channel conflicts.
Multiple sources indicate that in the third quarter of 2025, Wuliangye proactively chose to "hit the brakes," halting forced shipments to distributors and even suspending supplies to help channels reduce inventory. This "scraping the poison from the bone" strategy, while making short-term financial figures appear dire, essentially pays the price for years of extensive growth.
The contract liability metric, a performance "reservoir," starkly reflects the freezing point of distributor prepayment willingness. Data shows Wuliangye's contract liabilities plummeted from 11.69 billion yuan at the end of 2024 to 9.268 billion yuan by the end of the third quarter of 2025. With warehouses full and cash tight, distributors were naturally reluctant to prepay.
More alarmingly, there is widespread market suspicion that Wuliangye may be "managing profits." Some analysts suggest the sudden downturn in Q4 2024 might have been an attempt to smooth some revenue into Q1 2025 to maintain the appearance of growth. However, the sharp fluctuation in contract liabilities and high distributor inventory expose weak actual sales. During industry upswings, Wuliangye could easily grow through price hikes and capacity expansion; during downturns, its lack of a strong product mojo leaves it vulnerable, significantly reducing earnings resilience.
**Strategic Instability and Brand Erosion**
Wuliangye's performance slowdown is not solely due to the industry's "deep adjustment" but also stems from its own operational issues. The year 2025 has been described by the industry as "extremely unusual, difficult, and arduous," plagued by four major ailments: overcapacity, high inventory, price inversions, and reduced consumption occasions.
Data shows that by the end of 2024, inventory held by A-share listed liquor companies reached 168.389 billion yuan, with inventory cycles extending to a staggering 900 days. In the first half of 2025, over 58% of distributors reported increasing inventory. For Wuliangye, its core product, the "Eighth Generation Wuliangye," competes in the fiercely contested 1,000-yuan price segment. On one hand, Moutai is squeezing the market with its series of lower-priced products; on the other, competitors like Luzhou Laojiao and Fenjiu are grabbing market share, leading to severe price inversion—where wholesale prices fall below factory prices.
Price inversion directly erodes distributor margins, causing a collapse in channel confidence. During the 2025 Mid-Autumn Festival and National Day holidays, the liquor market performed poorly, with high-end demand estimated to have shrunk by 30-40%. In this environment, Wuliangye's attempts to strengthen direct sales through initiatives like "three stores and one unit" (flagship stores, experience stores, specialty stores, and corporate sales) proved insufficient against its vast traditional distributor network. To recoup funds, distributors resorted to dumping stock at low prices, further disrupting the price system and creating a vicious cycle.
Additionally, a generational shift in consumer base poses a long-term concern for Wuliangye. Younger consumers show less acceptance of baijiu, and reduced business banquet occasions are fundamentally shaking the market foundation for strong liquor. While Wuliangye has experimented with lower-alcohol and youth-oriented products, it has yet to establish a new growth driver.
Wuliangye previously attempted to expand its product line by developing numerous sub-brands, seeking economies of scale. However, this led to brand dilution and a lack of focus. Although a streamlining plan was later proposed to concentrate on the core brand, execution has yet to fully resolve the issues of a cluttered product portfolio and proliferation of low-end offerings.
Furthermore, Wuliangye started late and lacked strength in building digital marketing and direct sales channels. Despite establishing online platforms like "Cloud Store," it has struggled to effectively balance interests with traditional distributors. When severe price inversions occur, the company lacks strong measures to control channels, leading to frequent market price instability.
Simultaneously, under the dominant shadow of Moutai, Wuliangye's high-end image has always seemed somewhat strained. To maintain sales volume, it has resorted to disguised price cuts or increased promotions, further damaging its premium brand attributes. Long-term, Wuliangye risks falling into a "volume up, price down" trap, with continuously declining brand premium capability.
**Anti-Corruption Pressure and Leadership Turmoil**
Zeng Congqin's downfall is not an isolated incident but part of a pattern of recent leadership instability at Wuliangye. His predecessor, Li Shuguang, was investigated in October 2025. The consecutive fall of two top leaders, both at critical junctures for the company, exposes serious deficiencies in corporate governance and internal controls.
Zeng, a native of Yibin, had deep roots in local politics for over thirty years, having served as Director of the Yibin Development and Reform Commission and Party Secretary of Cuiping District. While this strong local background initially helped him coordinate resources and deepen Wuliangye's integration with the local economy, it may have also entangled him in problematic利益输送 (interest conveyance).
Industry observers note that in the liquor sector, areas like marketing expenses, advertising placements, and distributor approvals are often prone to corruption. The marketing reforms promoted during Zeng's tenure involved significant fund allocations, which, without transparent oversight, could easily foster graft.
Moreover, an internal "circle culture" at Wuliangye may have exacerbated the spread of corruption. The successive downfalls of Li and Zeng suggest potential collective or connected cases. If senior management普遍 lacks a sense of敬畏 (awe), privatizing public power, even the best strategic plans cannot be effectively implemented. This anti-corruption storm may unveil more hidden issues within Wuliangye.
Whether Zeng Congqin's case becomes a footnote marking the end of the liquor industry's golden era remains to be seen.
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