Only down 3.4%! "Northwest King" Jin Hui Liquor, navigating through the cycle

Ask AI · How Do Capital Operations Affect Jinhuijiu’s National Expansion Strategy?

The turning point in the liquor baijiu industry hasn’t arrived yet.

Earnings decline has already become a problem that baijiu companies can’t get around.

Of course, there are always exceptions. Among listed liquor companies, Jinhuijiu—praised as the “Northwest King”—has shown remarkably resilient performance.

According to financial reports disclosed earlier, in 2025 Jinhuijiu generated revenue of RMB 2.92B, down 3.4% year over year; net profit was RMB 354.4 million, down 8.7% year over year.

Overall, although both revenue and net profit for Jinhuijiu in 2025 declined, the drop wasn’t large. And when looking across a longer period, Jinhuijiu’s performance in 2023 and 2024 was positive growth. In 2024, it achieved revenue of RMB 3.02B and net profit of RMB 388.1 million, with year-over-year increases of 18.59% and 18.03%, respectively.

Data shows that Jinhuijiu is a regional baijiu enterprise. It is one of the largest baijiu production companies in Gansu Province by production scale and among the best performers in operating results.

Against the backdrop of intensifying industry competition, industry leaders are penetrating lower-tier markets. For regional liquor companies, it’s already quite difficult to defend their basic market. And to achieve positive growth is even harder.

So in such a market environment, why—despite being a regional liquor company as well—has Jinhuijiu not seen a significant earnings slump? What has Jinhuijiu done right behind its resilient performance?

The “Northwest King” Behind the Spotlight

The history of Jinhuijiu can be traced back to the Western Han Dynasty.

In 1951, several old workshops such as Kangqingfang and Yongshengyuan were organized into a public-private joint venture, forming Jinhuijiu’s predecessor—the Gansu Huixian Local State-Owned Liquor Factory. Over the following decades, from the Longnan Chun Liquor Factory to the Longnan Chun Liquor Industry Group Co., Ltd., the company underwent multiple renamings, yet Jinhuijiu quietly grew through these changes.

In 2006, Jinhuijiu reached a key turning point. That year, Gansu Aite Investment Group took action, investing several hundred million yuan to restructure this long-established liquor plant. Li Ming, the head of Aite Investment Group, is a native of Huixian County in Longnan. After resigning and going into business in the 1990s, he made his first fortune through operations in the mining sector, and then began extending his business reach into the baijiu sector. After taking over Jinhuijiu, Aite Investment Group clearly set the goal of “making it into China’s top 10 baijiu brands,” and Jinhuijiu began a “second round of entrepreneurship.”

In 2016, Jinhuijiu successfully listed on the A-share market, becoming the first listed baijiu company in Gansu; in 2020, Yu Garden Shares under Fosun Group acquired a 30% stake in Jinhuijiu from Aite Investment Group for RMB 1.84B, and Guo Guangchang became the actual controller. However, two years later, the Fosun-related entities sold back the 13% stake they held in Jinhuijiu to Aite Investment Group for RMB 1.94B on the grounds of “resolving potential horizontal competition in the liquor business segment.” Li Ming became the actual controller again.

Although the actual controller ultimately returned to its original position, capital operations over those years had a significant impact on Jinhuijiu. On one hand, although Fosun-related entities only entered for two years, it was precisely during this period that Jinhuijiu’s development approach shifted from “deepening the Northwest” to “building a nationwide presence, deepening the Northwest, and achieving breakthroughs with focus,” steadily accelerating its progress toward national expansion. On the other hand, Fosun-related entities’ entry brought Jinhuijiu greater market attention, which positively supported brand image building and the increase of market value.

Perhaps it was influenced by that development and deployment in those years that Jinhuijiu now demonstrates such resilient performance. When breaking down the financial report data, the key supporting Jinhuijiu’s performance lies in optimizing and upgrading its product structure. In 2025, Jinhuijiu’s revenue was RMB 2.92B, down 3.4% year over year, but revenue from high-end products priced above RMB 300 increased by 25.21% against the trend, reaching RMB 709 million. Meanwhile, revenue from low-end products priced below RMB 100 fell sharply by 36.88%. This rise-and-fall pattern shows that Jinhuijiu has achieved good results in its transition toward higher-end products.

In fact, long before Fosun took over, Jinhuijiu had already started to lay out the high-end market. Data shows that Jinhuijiu’s year-series products such as “Jinhuijiu Eighteen Years” and “Jinhuijiu Twenty-Eight Years” are its flagship offerings for high-end branding. Among them, “Jinhuijiu Eighteen Years” is positioned in the RMB 400 price band, mainly targeting banquet consumption scenarios; “Jinhuijiu Twenty-Eight Years” targets the thousand-yuan price segment.

If you break it down further, you can see that Jinhuijiu’s success in high-end branding stems from its differentiated layout for both the local market and markets outside the province.

In its home market in Gansu, Jinhuijiu’s high-end strategy aligns precisely with the pace of consumption upgrades. In recent years, the mainstream consumption price bands for baijiu in Gansu have gradually moved from below 100 yuan to between 100-300 yuan. Business banquets have upgraded from around 200 yuan and above. Jinhuijiu, through products such as “Soft H3” and “Soft H6,” has accurately locked into the 100-300 yuan band, becoming the biggest beneficiary of consumption upgrading in the province. For markets outside the province, in regions around Gansu such as Shaanxi, Ningxia, Qinghai, and Xinjiang, Jinhuijiu mainly promotes large single-product items in its “Positive Energy” series priced at RMB 100-400. In East China markets such as Jiangsu and Zhejiang, it mainly markets the “Jinhuijiu Laojiao” series priced at RMB 300-900, positioned as high-end and mid-to-high-end.

Concerns Hiding Behind the Glow

In today’s deep industry adjustment, no liquor company can stand alone unaffected.

Jinhuijiu is no exception. Although its 2025 performance is resilient, there are still operational risks underneath.

For example, in terms of its nationwide expansion strategy, although Jinhuijiu proposed “building a nationwide presence, deepening the Northwest, and achieving key breakthroughs” as early as the period when Fosun entered, to date, its earnings still heavily depend on the market within Gansu Province. Financial report data shows that in 2025 Jinhuijiu’s revenue from the provincial market was RMB 2.11B, accounting for 72.38% of total revenue. Revenue from outside the province was RMB 665 million, or 22.79%, with the remainder coming from other businesses and channel adjustments.

It’s worth mentioning that in expanding the outside-province market, Jinhuijiu not only failed to make breakthrough progress, but has even seen dealers shrink in number.

By the end of 2025, Jinhuijiu had a total of 941 dealers, a net decrease of 60 compared with the end of the previous year. Among them, dealers outside the province decreased net by 91, while dealers inside the province increased net by 31. Additionally, during the same period, the average revenue contribution per dealer inside the province was about RMB 6.62 million, while the average for dealers outside the province was only about RMB 1.07 million. With the same dealer resource allocation invested in the outside-province market, the output efficiency is only one-sixth of that in the provincial market, indicating that Jinhuijiu’s channel development outside the province has not yet formed a scale effect.

Besides the slow pace of nationwide expansion, like most liquor companies, Jinhuijiu is also facing sustained inventory buildup and relatively low capacity utilization.

Financial reports show that as inventory gradually increases, Jinhuijiu’s carrying value of inventories has reached a historical high.

By the end of 2025, Jinhuijiu’s carrying value of inventories was as high as RMB 2B, accounting for 37.93% of total assets. From 2022 to 2024, Jinhuijiu’s carrying value of inventories was RMB 1.51B, RMB 1.62B, and RMB 1.69B, accounting for 36.93%, 36.80%, and 36.71% of total assets, respectively.

Looking at specifics, the inventory volume of finished liquor rose from 5,351.42 thousand liters at the end of 2024 to 7,445.59 thousand liters at the end of 2025, a year-over-year increase of 39.13%. Among them, inventory volume of high-end products priced above RMB 300 grew by 30.59%, inventory volume of mid-tier products priced at RMB 100-300 grew by 39.80%, and inventory volume of low-end products priced below RMB 100 grew by as much as 40.60%. These figures indicate that while Jinhuijiu’s high-end transition has optimized its product structure, it—along with improving structure—also faces the risk of inventory accumulation due to the pace of market sell-through.

Driven by the continuous rise in inventories, Jinhuijiu’s capacity utilization has shown a slight decline, and idle capacity remains relatively prominent.

Data shows that in 2025, Jinhuijiu’s designed production capacity for its packaging workshop was 35,000 thousand liters, while actual production capacity was only 20,573.13 thousand liters, for a capacity utilization rate of 58.78%. From 2022 to 2024, Jinhuijiu’s capacity utilization rates were 45.76%, 54.41%, and 59.13%, respectively, remaining at a relatively low level for a long time.

It’s undeniable that by proactively pushing its high-end transition and continuously exploring markets outside the province, Jinhuijiu—a regional liquor company—has managed to defend its basic base during the downturn cycle of the industry. In the harsh winter when the liquor industry is collectively under pressure, Jinhuijiu has used an anti-downturn performance to prove its “Northwest King” foundation. However, problems such as slow nationwide expansion, high inventory levels, and idle capacity still remain. Resilient performance doesn’t mean it can relax. For Jinhuijiu, its steady performance in 2025 is only a phased result. In increasingly fierce market competition, the real test may only be just beginning, and its path ahead is still long.

Author’s statement: Personal views only, for reference