In recent years, China’s economy has been slowing down, leading to phenomena such as downgrading of consumption and overall industry depression. One of the industries affected is the traditional tobacco and liquor stores that used to be ubiquitous in the streets and alleys of China. They are now collectively facing a crisis and witnessing a nationwide wave of store closures. In 2025 alone, 320,000 tobacco and liquor stores shut down, with a total of over 1.3 million closures in the past five years. However, at the beginning of 2026, the speculative product Feiteng Moutai was sold out in a flash, drawing attention to this phenomenon.
According to reports from Chinese media outlets such as 36Kr and Kandian Information, as the Chinese New Year approaches, the social media circles and chat groups of tobacco and liquor store owners are filled with information about “store transfers” even more than the advertisements for New Year goods. Many store owners of tobacco and liquor stores are now forced into a situation of “mass exodus.”
Data from the China Tobacco and Liquor Circulation Association shows that in 2025, tobacco and liquor stores decreased by 19%, leading to the closure of 320,000 stores in a year, with an average of 900 stores posting transfer messages daily. Over the past 5 years, a total of over 1.3 million stores have closed. Many in the industry believe that 2026 will be even more challenging than 2025, suggesting that traditional tobacco and liquor stores have no way out.
At the “2026 China Liquor Industry Channel Leaders Summit (Zibo Station)” held on January 29, Chairman Tian Zhuopeng of Beijing Zhuoheng Strategic Consulting Agency stated that in 2025, 20% of tobacco and liquor stores experienced an 80% drop in revenue, 40% saw a decline of 30% to 40% in revenue, 10% remained relatively steady, and another 10% slightly increased, mainly from other businesses, resulting in an overall shrinking of tobacco and liquor store channel revenue by up to 30%.
A tobacco and liquor store owner with 10 years of experience shared tearfully in a video about his struggles, stating, “In the past, I could earn a stable revenue of 5 million yuan annually through group purchases from three hospitals and two real estate companies. In 2025, the total group purchases didn’t even reach 500,000 yuan, and the payments had to be collected in installments.”
Nowadays, there is a phenomenon known as the “5-yuan rule” in the tobacco and liquor store industry, where selling an ordinary cigarette earns 5 yuan, and selling a bottle of expensive liquor also earns 5 yuan. However, with profit margins as low as 5 yuan, even basic expenses like water and electricity bills cannot be covered.
Wang Fang (pseudonym), a liquor industry observer from Anhui, told Chinese media that 2025 can be considered the “year of struggle” for tobacco and liquor stores.
Data shows that in 2025, the sales of liquor in some provinces and cities decreased by 80% compared to the previous year, with sales in economically strong regions like Jiangsu and Zhejiang dropping by over 40%.
Reports from 36Kr revealed that the long-established tobacco and liquor stores are now divided into three factions: the “stubborn support faction” who refuse to close but no longer restock, focusing on clearing their inventory; the “disheartened faction” who are hanging banners offering discounts, seemingly looking to sell while actually running at a loss to clear stock and make a quick exit; and the “survival faction,” where many owners are trying to break out of traditional thinking and exploring various ways to stay afloat.
“Many owners are looking to make some money back before the Chinese New Year this year and then transfer their stores afterward,” said Mr. Li, who is in the process of transferring his store, to mainland media. “Although it’s called a transfer, everyone understands that it means shutting down. In the industry groups, some stores have been posting transfer messages for a month without any inquiries, which is quite revealing, isn’t it?”
In China, the tobacco and liquor store business emerged in the 1990s when farmers from Henan Xuchang, Shangqiu, and other areas started operating in urban areas, later expanding nationwide with the help of fellow villagers.
For decades, owning a tobacco and liquor store was seen as a stable source of income. With a tobacco sales permit, maintaining a few corporate customers could yield annual profits in the millions, with some even establishing generational businesses.
In China, a tobacco sales permit, known as a Tobacco Retail License, is the legal document that allows individuals or entities to retail tobacco products. Many supermarkets and retail stores go to great lengths to obtain a tobacco sales permit, often relying on connections, yet not everyone can secure one. According to informed netizens, holding a tobacco sales permit can yield annual incomes of 30,000 to 40,000 yuan. The Tobacco Monopoly Bureau also prospers by issuing these permits.
Over the past two decades, while convenience stores and clothing stores changed ownership continuously, tobacco and liquor stores with few customers throughout the day managed to sustain themselves in prime locations for years.
There are many videos online revealing the lucrative secrets of tobacco and liquor stores. It’s understood that the unique survival logic of these stores lies in the intricacies of human relationships in China’s society, but more importantly, within the corrupt system of the Communist Party of China (CCP). Reports from 36Kr indicate that over 60% of the sales in most tobacco and liquor stores come from group purchases by local businesses, supporting the operations of over 5 million such stores nationwide through the purchases for annual meetings, banquets, and gifts by major local enterprises.
In reality, the biggest beneficiaries of these tobacco and liquor sales are government officials. In an environment under the CCP’s control with limited transparency and media supervision, tobacco and liquor store owners can make money through price differences and stable relationships. Some store owners not only bought cars with full payment but also managed to earn enough in two years for a down payment on a house in Shenzhen.
Analyzing the recent wave of closures in tobacco and liquor stores, Chinese media experts attribute it to the strictest ban on alcohol imposed by the CCP regime in May 2025. The stores, which formerly relied on the demand from corporate and business group purchases, found their customer base cut off, leading to an instant crisis due to a lack of individual consumer base.
Another significant factor is the downgrading of consumption. In recent years, private and institutional clients have tightened budgets, leading to a decline in group purchases, resulting in lower consumption of premium liquor. Even traditional occasions like weddings and school celebrations have reduced their consumption of alcohol.
High-end liquors like Moutai are primarily used for corporate gifting. Industry insiders revealed that in some sectors related to massive infrastructure projects, including real estate, the demand for Moutai has diminished. Previously, it was common for a party to give high-end Moutai to another, but due to recent difficulties, this practice has significantly declined.
In recent years, the rise of livestreaming e-commerce, real-time retail, and similar trends have diverted customers away from traditional tobacco and liquor stores. A Chinese blogger pointed out that platforms like Alibaba’s Hungry? and Meituan, along with JD.com, have heavily invested in the instant retail of alcoholic beverages, posing a challenge that traditional tobacco and liquor stores cannot resist.
Furthermore, stores that previously sold mobile phones, fruits, lottery tickets, hardware, and restaurants have also encroached on the market by using tobacco sales permits to their advantage.
Changes in consumer habits alongside the economic downturn have also impacted the operation of tobacco and liquor stores. Many young people, faced with unemployment and financial challenges, not only reject the drinking culture but are starting to adopt collective sobriety, further reducing the customer base for tobacco and liquor stores.
Research by Wuliangye reveals that among young people aged 20 to 35, only 19% prefer white liquor, with over half choosing beer, Western spirits, or fruit wine instead. This shift implies that more than half of the premium liquors on shelves at tobacco and liquor stores are losing potential future consumers.
Additionally, data shows that the smoking rate among post-2000s generation hovers around 10%, while for the post-1990s and post-1980s generations, it stands at approximately 15% and 20% respectively, with even some individuals from the post-1980s cohort quitting smoking. The declining smoking rates among young people indicate an irreversible social trend.
Professor Xie Tian from the Darla Moore School of Business at the University of South Carolina commented to NTD News that the wave of closures in tobacco and liquor stores, similar to the closure of numerous retail enterprises, should be primarily attributed to economic recession and a downturn in consumer spending.
He elaborated, “Products like tobacco and alcohol are only consumed by people who have the money to spare. If they don’t have the money, they will downgrade or even stop consuming them. I have noticed that many Chinese smokers nowadays realize that cigarettes in China burn faster, a result of the CCP tobacco companies tampering with them to make people spend more without getting the real product. This has led many people to quit smoking as they cannot afford it anymore amid tough economic times. Tobacco and alcohol are monopolized by the CCP, and the tax revenue generated from tobacco supports a vast amount of the CCP regime’s operations. Seeing people collectively quitting smoking and drinking is detrimental to them as well because it directly impacts the government’s tax revenue.”
It is noteworthy that in China, while consumer goods are left unsold, speculative products are being snapped up in seconds.
The digital marketing platform “iMoutai” App, owned by Guizhou Moutai, launched the Feiteng Moutai priced at 1,499 yuan on January 1 this year, with each person limited to purchasing 12 bottles per day. Within three days of the launch, the product was sold out almost instantly each day, with over 100,000 users collectively buying about 300 tons of liquor.
Regarding the buying frenzy for Moutai contrasting with the closures of tobacco and liquor stores, American economist Davy J. Wong told NTD News, “The bulk purchases of Moutai are hoarding and arbitrage, not a sign of a general consumption recovery. These people aren’t deciding whether or not to drink but rather saving money. In a low-interest and highly uncertain environment, people regard some familiar, tradable goods with a clear supply-demand dynamic as pseudo-assets. Moutai has a strong brand, national circulation, and long-term expectations for preservation of value, making it a substitute as a deposit tool rather than a consumer product.”
Xie Tian added, “In functioning societies of developed countries, such consumables are not considered store-of-value assets. While aged liquor might improve in taste and value over time, it’s not particularly effective as an investment tool. China’s peculiar phenomenon can only be explained by the lack of other legitimate, valuable investment tools or opportunities, which are becoming increasingly scarce or practically nonexistent. People are looking at other options that are not as suitable or convenient as store-of-value tools.”
In recent years, China has witnessed the massive closure of many industries. Industry data shows that in 2024, 39,000 pharmacies nationwide were shut down, with an average of 107 closures daily; from 2022 to 2025, over 60,000 optical shops across the country faced challenges, with a closure rate of up to 40% in first-tier cities.
China affairs expert Li Lin told NTD News that Chinese media dare not disclose the truth behind the widespread industry depression and store closures but instead mask it with the influence of the global environment and China’s industrial renewal and transformation. However, it’s evident that behind these closures post the COVID-19 pandemic, there is a clear demonstration of the comprehensive deterioration of the CCP’s politics, economy, and society.