In a striking shift within China’s alcoholic beverage market, the once-thriving baijiu industry is facing significant challenges as consumption levels decline. In the first three quarters of 2026, revenues for 19 publicly-listed baijiu companies have dropped by 7.61% year-on-year, with several prominent brands experiencing substantial reductions in profit margins. Notably, Guizhou Moutai, previously in high demand with soaring prices, has altered its sales strategy in response to a marked decrease in advance payments from distributors, moving toward regular retail sales.
Recent reports from the media indicate that Guizhou Moutai’s contractual liabilities have plummeted from 8 billion yuan at the end of last year to just over 2 billion yuan, reflecting a decrease of approximately 74%. This significant reduction in liabilities underscores the contraction in advance payment levels among dealers, revealing the evolving dynamics of the market.
On November 10, Guizhou Moutai held its third-quarter earnings briefing for 2026, where general manager Wang Li addressed the ongoing challenges in the baijiu industry. She highlighted that the sector remains entrenched in a deep adjustment phase, with soft consumer demand and a decrease in purchasing scenarios persisting as fundamental issues. Wang announced that Moutai would adapt its operational model to better align with actual sales and inventory levels going forward.
Wang explained that with the adjustment in sales strategies, contractual liabilities no longer serve as the primary indicator of market supply and demand.
Despite a revenue increase in the first three quarters of the year, Guizhou Moutai’s profit has not fared as well, as illustrated in their financial reports. The company reported a revenue of 58.56 billion yuan, marking a 3.61% year-on-year growth; however, its gross margin stood at 89.58%, a decrease of 1.71 percentage points compared to the previous year.
Moreover, Moutai’s overseas market sales saw a staggering decline, posting revenues of 1.641 billion yuan, falling by 57.85% year-on-year. The company acknowledged that its international business is under considerable pressure, indicating struggles with market penetration abroad.
Addressing previous circumstances where consumers were unable to purchase Moutai at dedicated shops without paying a premium, Wang attributed these occurrences to disruptions in supply chains and speculative hoarding, clarifying that the inability to buy products should not be equated with genuine scarcity.
The ongoing trend of declining consumer spending is impacting the entire baijiu industry, leading to a pronounced shrinkage in profit margins across various enterprises. Reports reveal that Wuliangye, another leading brand, reported revenues of 4.442 billion yuan in the third quarter, which is a decline of 37.68% compared to the same period last year. Net profit plummeted by 48.25% to 958 million yuan, as the company attributed these declines primarily to weak market demand and reduced product sales.
Yanghe Brewery, once referred to as the “third seat” in the baijiu market, also faced adversity, with third-quarter revenues of just 1.281 billion yuan—a staggering drop of 61.10% year-on-year—and a net profit loss of 771 million yuan, reflecting a 109.12% decrease.
Similarly, Shanxi Fenjiu observed a year-on-year revenue downturn of 18.11%, while net profit fell by 34.52%. In the first three quarters, the company’s net profit slid to 8.338 billion yuan, down 26.89% from the prior year.
Luzhou Laojiao reported revenues of 14.668 billion yuan for the first three quarters, which marks a year-on-year decline of 36.58%; net profit also dropped by 47.31%, while the third-quarter net profit faced a 57.03% decline.
Additionally, Shede Liquor’s revenues fell to 3.096 billion yuan, a decrease of 16.38%, while net profit plummeted by 58.76%. Jinhuijiu reported a slight revenue growth of 1.45%, reaching 2.339 billion yuan; however, a significant loss of 35.64 million yuan in the third quarter indicates a stark turn from profitability.
According to data from Wind, the cumulative revenue for 19 publicly-traded baijiu companies decreased by 7.61% year-on-year for the first three quarters of 2026, with most firms continuing to struggle with declining revenues and profits.
As profitability sharply diminishes, the stock value of baijiu companies has similarly contracted. Wuliangye’s market capitalization is now approximately 288 billion yuan, down by about 1 trillion yuan from its peak—reflecting a 78% shrinkage. Shanxi Fenjiu’s current valuation stands at 154 billion yuan, down around 310 billion yuan—67% lower than its highest point. Luzhou Laojiao’s market cap is now around 119 billion yuan, having lost roughly 361 billion yuan—down over 75%.
Similarly, Yanghe’s stock price has plummeted from its historical high of 268.6 yuan in 2021 to 38.08 yuan as of November 6 this year, with the market valuation collapsing from over 400 billion yuan to roughly 57.38 billion yuan—a staggering decline of more than 80%.
Shede Liquor’s current market cap is valued at 11.1 billion yuan, down approximately 78.2 billion yuan from its peak—a drop exceeding 87%. Jinhuijiu’s market value is roughly 9 billion yuan, having lost about 19.5 billion yuan from its highest valuation, marking a shrinkage of over 68%.
Reports from the Southern Metropolis Daily noted that some tobacco and liquor store operators in Chengdu remarked that sales are sluggish for mid-range and second-tier brands, aside from a few leading names. One group purchasing operator revealed that this year, the volume of client group purchases has decreased by more than 40% compared to previous years, with a clear shrinkage in demand for business receptions and banquet wines.
To cope with the inventory pressures, some distributors are turning to e-commerce and instant retail platforms to clear their stock, even if the selling prices aren’t ideal, as they seek to recoup funds quickly. Traditional liquor distributors are still confronted with significant challenges related to excess inventory, reflecting broader issues in the industry.