The growth myth of the Baijiu industry has come to an end, and the Spring Festival can't save it!

White Liquor’s Big Wheel Turns, How to Find the Next Growth Station?

Original by JingShang (ID: bizwhale) | Author | Sanlun

In previous Spring Festivals, Baijiu was the “hard currency” on Chinese dinner tables and in gift exchanges. Liquor companies and distributors eagerly awaited a “good start,” but this collective effort ended in failure. By the 2026 Spring Festival, a chilling atmosphere emerged in this centuries-old consumption scene—high-end liquor sales stalled, distributors hesitant to stockpile, and young people willing to queue for co-branded milk tea rather than touch their elders’ Maotai.

This annual test meant to revive the Baijiu industry instead became a “stress test” to assess its true strength. As sales data for the Spring Festival peak season emerged: several well-known securities firms forecasted that overall Baijiu sales volume during the 2026 Spring Festival would decline by 10%-15% year-over-year.

A harsh reality is becoming clearer: the myth of high growth in Baijiu has not ended with the old year. The industry stands at a crossroads of profound change, and this “report card” may better predict the future path than the market-tightening third-quarter reports of 2025.

As of press time, financial reports from major distilleries for the first three quarters of 2025 show: 20 listed Baijiu companies collectively saw revenue decline by nearly 6%, net profit down by nearly 7%, with quarterly declines reaching their worst in a decade. Except for Guizhou Maotai and Shanxi Fenjiu, which maintained slight positive growth, giants like Wuliangye, Luzhou Laojiao, and Yanghe collectively experienced rare double declines in revenue and profit for nearly ten years.

This “report card” shatters the industry’s three-year growth inertia. Distributors worry about mountains of stock in warehouses; brands repeatedly emphasize “deep industry adjustments” in conference calls; consumers—especially young people—are quietly replacing Baijiu in their shopping carts with milk tea, sparkling wine, or trendy collectibles.

Is this just a cyclical fluctuation, or a profound industry upheaval? When the “stockpiling growth” model fails, when new regulations restrict official banquets from serving alcohol, and when young people “respect but stay away” from traditional drinking culture, has the ancient Baijiu industry reached a critical crossroads requiring thorough reflection? Behind these cold data lies a “pressure test” for survival—testing brand value, channel health, and the ability to communicate with the new generation of consumers. All eyes are on this: after the end of the myth of high growth, where does the road lead?

Giants Slow Down, Insights from Financial Reports Reveal Divergence and Anxiety

Looking at the 2025 third-quarter reports, a clear “ice-fire divergence” emerges. Industry leader Guizhou Maotai posted revenue of 130.904 billion yuan and net profit of 64.627 billion yuan in the first three quarters, still growing about 6%. Its net profit even exceeds the combined total of Wuliangye, Fenjiu, Laojiao, and Yanghe. However, this “growth” is the slowest since 2015, with third-quarter revenue growth dropping below 0.5%, hitting a multi-year low. Maotai, though not overturned, has clearly slowed its pace.

Compared to Maotai’s “slow pace,” other giants’ “loss of speed” is more striking. Wuliangye’s revenue in the first three quarters fell 10.26% year-over-year, with net profit down 13.72%. This is the first time since 2015 that its revenue for the first three quarters has contracted. More concerning is the third quarter alone: revenue halved, net profit plunged 65.62%. Luzhou Laojiao also experienced its first double decline in revenue and profit since 2015 in the first three quarters. The former “second-largest Baijiu” and “aroma-flavor pioneer” both hit the brakes.

Yanghe’s situation is even more severe. Its first three quarters saw a 34.26% plunge in revenue and a 53.66% drop in net profit, with a net loss of 369 million yuan in the third quarter—the sharpest decline among top-tier companies. In contrast, Shanxi Fenjiu became one of the few to maintain growth alongside Maotai during the industry downturn, with record-high revenue and profit in the first three quarters, though its growth rate has also hit a low not seen since 2016.

Faced with this disappointing performance, official explanations from liquor companies are highly consistent, attributing the decline to the “deep adjustment of the Baijiu industry environment.” Wuliangye explicitly states that the company is affected by “the deep adjustment period of the Baijiu industry and the slower-than-expected recovery of effective demand.” Yanghe’s explanation is more direct: “The decline in product sales volume and revenue is due to the impact of the Baijiu sales market.”

Luzhou Laojiao’s investor hotline staff said industry adjustments may continue for some time. Companies like Gujinggong and Shuijingfang also attribute their performance declines to the macro environment, compounded by strategies to “actively control speed and digest market inventory.”

Brand explanations focus on external “industry adjustments” and internal “proactive regulation,” which are partly factual but also serve as standard responses for the capital market.

If we shift our focus from the final numbers to another key leading indicator—contract liabilities (prepaid distributor payments)—more intriguing clues emerge. This “reservoir” of performance, often called the “water storage” of liquor companies, has decreased across all five giants compared to the start of the year: Fenjiu and Yanghe down over 30%, Maotai and Wuliangye around 20%, Luzhou Laojiao down 3.52%.

This clearly indicates that distributors’ willingness and motivation to pay are waning, and the “fuel” for the channel engine is diminishing. The brands’ talk of “active destocking” is directly reflected in the channel as “reluctance to restock.”

Meanwhile, leading companies are collectively “cutting costs.” Except for Fenjiu, sales expenses for Maotai, Wuliangye, Laojiao, and Yanghe have decreased, with Wuliangye’s sales expenses down nearly 15% year-over-year. Management expenses have also fallen across the board. This is undoubtedly a collective effort to “control costs and weather the winter,” aiming to preserve profits amid shrinking revenues.

Overall, the third-quarter reports reveal more than just performance declines. They show a fierce divergence among top players after the “myth of growth” ended: Maotai relies on its unparalleled brand moat to barely maintain positive growth but shows signs of fatigue; Fenjiu, with its clear national reach and product structure, is a bright spot amid turbulence; Wuliangye and Luzhou Laojiao face deep challenges in channel inventory and pricing management, requiring painful adjustments; Yanghe faces even more severe tests of brand and channel.

This “loss of speed” and “anxiety” among giants reflect the entire Baijiu industry entering a phase of deep “value re-evaluation” and “model restructuring.” Official “industry adjustment” rhetoric cannot hide the fundamental issues of channel confidence erosion and growth model failure.

Root Causes: High Inventory, Price Inversion, and Disillusioned Young Consumers

Attributing the third-quarter slowdown solely to macroeconomic or cyclical factors is superficial. Beneath the surface, three deep-rooted “symptoms” bind the industry tightly: high channel inventory “dam lakes,” market-disrupting price inversion, and long-term concerns over the structural gap in core consumer groups.

First, high inventory is a “boulder” pressing on the industry’s chest. During the past few years, especially amid the craze for sauce-flavor liquor, many companies adopted an aggressive “push inventory” growth model, transferring products from factories to distributors’ warehouses as if sales were complete. This created apparent prosperity on financial statements but accumulated enormous social inventory. Industry estimates suggest it could take a year or longer to clear this stock.

High inventory directly strains distributors’ cash flow, making them reluctant or unable to purchase anew. This confirms the earlier decline in contract liabilities, creating a vicious cycle: unsold stock prevents cash flow, which keeps company performance under pressure. In other words, the products are not truly consumed but are stuck in the channel.

Second, price inversion is a “cutting sword” that shatters confidence. To recover funds, distributors are forced to sell products at prices below or far below factory prices, causing retail prices (actual transaction prices) to fall below purchase prices—“price inversion.” Reports indicate that about 60% of companies face this issue, especially in the 800-1500 yuan mid-high-end segment.

Price inversion is destructive: it destroys the carefully maintained pricing system, damages brand value; it causes compliant distributors to suffer huge losses, undermining their confidence and loyalty; and it sends a wrong signal to consumers—if a product priced at 1,000 yuan can be bought for 600-700 yuan, who will believe in its value? The sharp decline in major brands’ performance is closely linked to this channel destabilization caused by price inversion.

Third, severe homogenization erodes industry vitality. Whether in packaging with bright reds and golds, promotional stories about “millennia-old cellars” and “master brewing,” or price competition in the 300-800 yuan segment, Baijiu products give a “one-size-fits-all” impression. When all brands tell similar stories and compete for the same business banquet customers, the competition becomes a zero-sum game of resource consumption. Lack of genuine product differentiation and emotional connection makes consumers more price-sensitive, further fueling price wars and inversion.

Finally, the most fundamental issue is the “disconnection” of consumer groups. Traditional Baijiu consumption centers on government and business banquets, which have shrunk under ongoing policies. More critically, young people are distancing themselves from Baijiu.

Research shows that 25-35-year-olds generally lack interest in Baijiu. They dislike its spicy taste and reject the associated social rituals, hierarchy, and “paternalistic” tone. Maotai’s chairman has expressed helplessness: “Young people don’t dislike drinking Baijiu; they dislike participating in drinking banquets.” Their consumption preferences are shifting toward low-alcohol drinks, craft beers, coffee, new-style teas, and social or emotional products like trendy toys and e-sports. In 2024, Pop Mart’s revenue surged 106.9% year-over-year to over 13 billion yuan, a figure that prompts deep reflection for Baijiu companies: where is the money of the younger generation flowing?

Connecting these four core issues reveals a vicious cycle: short-term performance pressure leads to channel stockpiling → high social inventory results → distributor sell-offs and price inversion → market chaos and damage to brand and channel relationships → all occurring amid aging core consumers and a lack of new generation buyers. Therefore, the performance decline in the third quarter is not just seasonal but a systemic “internal disease” of the industry. It signals the failure of old growth models and forces a shift from “channel inventory shifting” to “real consumer opening bottles.”

Seeking New Paths: Light-Flavor Liquor, Low-Alcohol, and Channel Coexistence

Winter has arrived, but Baijiu companies are not passive. From the details of the third-quarter reports and recent industry trends, it’s clear they are actively exploring ways to break through along several paths: product downscaling to embrace “folk liquor,” flavor innovation to attract young consumers, and reshaping channels toward mutual growth.

First, product structure is moving downward, focusing on “folk liquor” markets. As high-end banquet scenarios shrink, genuine mass-market demand becomes a valuable “ballast.” Sharp companies are already shifting strategies. Yanghe’s chairman Zhang Liandong explicitly states that Yanghe aims to be both a “famous liquor” and a “folk liquor,” and has announced a partnership with JD.com to promote 59-yuan light-flavor bottles.

This sends a strong signal: top brands are lowering their stance to compete in the broad 100-yuan price segment. Data confirms this trend: in the first half of 2025, the most active sales segment shifted downward to 100-300 yuan. In populous provinces like Shandong and Henan, products in the 100-yuan range are seeing sustained growth. Brands like Gujinggong and Shunxin Agriculture, long focused on mass markets, show stronger resilience during this adjustment period. This indicates that future Baijiu competition will not only be about high-end branding but also about the scale and efficiency of mass-market segments.

Second, flavor and category innovation are reaching out to young consumers. Recognizing the gap with young people, companies are seeking breakthroughs in product itself. “Low-alcoholization” and “mild flavor” are key directions. Wuliangye executives have mentioned considering a 29-degree product after their 39-degree line. Luzhou Laojiao also plans to accelerate new beverage formats and develop 28-degree Guojiao 1573.

These measures aim to lower the drinking threshold of Baijiu, catering to young people’s preference for relaxed, slightly intoxicating drinks. Many companies are also experimenting with fruit-flavored Baijiu, sparkling variants, and integrating with coffee, tea, and cross-border mixed drinks, trying to embed themselves into young people’s lifestyles. Although still in early stages, these efforts mark a shift from “educating consumers” to “catering to consumers.”

Third, channel deepening must transform from “push inventory” to “mutual growth.” This is key to solving core problems. Past relationships were “competitive,” with brands pushing inventory and distributors bearing inventory risks. Now, a healthy channel ecosystem must become a “community of shared destiny.”

Many brands are taking action, proactively helping to de-inventory. Gujinggong emphasizes “active control of speed,” and Shuijingfang focuses on “active de-inventory and stock control,” sacrificing short-term performance to restore channel health. Additionally, brands are using technology to monitor terminal sales more precisely, shifting from “pushing to distributors” to “servicing the end,” avoiding another inventory buildup.

To address price inversion, brands are employing buybacks, subsidies, and strict penalties against gray-market sales to protect distributors’ reasonable profits and rebuild channel confidence. Industry experts say companies need to abandon “push-based sales” and establish “interest communities” with distributors.

In summary, this deep industry adjustment is fundamentally a “value return” journey. It requires companies to shift from chasing channel bubble growth to solidifying brand value; from relying on a few high-end scenarios to serving broader mass consumption; from competing with distributors to fostering industry chain symbiosis.

High-end banquets may see less Maotai, but the ordinary household glass still awaits a pour. The future winners may not be those with the fastest growth, but those with the strongest brand foundation, healthiest channels, and the deepest understanding of the new generation’s needs. The Baijiu story is far from over; it has only entered a more rational and skill-testing new chapter.