China’s real estate crisis persists, causing consumers to tighten their wallets and industries to engage in price wars. From fast food, beverages to automobiles, the trend has now extended to the Baijiu (Chinese liquor) industry, with major Baijiu companies offering substantial discounts and warning of a slowdown in growth this year. These successive price wars highlight the ongoing deterioration of the Chinese economy.
Baijiu is China’s primary distilled spirit, accounting for over 90% of the country’s total liquor sales. Data from Morningstar indicates that there are over 8,000 Baijiu distilleries in China, some with histories spanning centuries. In 2023, the top ten Baijiu producers held a market share of 54%.
Discount activities for Baijiu are becoming increasingly common. According to a report by Nikkei Asia on May 3rd, at a liquor expo held in the renowned “liquor city” of Luzhou, Sichuan in late March, visitors flocked to purchase discounted products at various booths. One bustling booth featured Luzhou Laojiao Group’s premium Luzhou Lao brand in red bottles on promotion – two bottles for only 99 yuan (about $13.5), with an additional bottle given for free.
This is just a part of their sales strategy.
After purchase, staff would open one of the bottles for buyers to scan a QR code under the cap, leading to an online roulette game for a chance to win another bottle of Baijiu. The majority of customers were elderly men and women.
At other booths, some Baijiu sellers replaced printed price tags with hand-written lower prices or added “buy one get one free” stickers. Additionally, they offered government-supported discount coupons, with the maximum redemption per purchase reaching up to 40 yuan, depending on the customer’s spending.
As the real estate crisis persists, companies struggle to convince consumers to loosen their purse strings. The economic downturn since the pandemic has already undermined consumer confidence. In the face of potential stifling US tariffs that could impact exports, Chinese nationals are opting to tighten their belts even more.
Industry analysts note that since last year, Baijiu discount activities have become more prevalent. According to data from an industry association, Baijiu sales grew by only 5.3% in 2024, marking the slowest growth since 2020 when demand was impacted by the pandemic. Production also decreased by 1.8%.
Jennifer Song, a senior stock analyst at Morningstar, stated, “2025 may be the slowest year in terms of growth in the past decade.”
Baijiu, considered China’s premium distilled spirit, commands over 90% of the national liquor market. The top ten Baijiu producers in 2023 held a collective market share of 54%. The high-end Baijiu market, where bottles can sell for over 1000 yuan each mainly for gifting purposes, is dominated by three major players – Kweichow Moutai, Wuliangye, and Luzhou Laojiao.
Kweichow Moutai’s main product retails for over 2000 yuan, but in the past two years, subdued consumer and corporate confidence have impacted its sales. Lingering market pessimism has led to a decline in both Kweichow Moutai’s stock price and the prices consumers are willing to pay. Since hitting a historic high in 2021, the company’s value has dropped by nearly half, with the market price of a 500ml bottle of Feitian Moutai decreasing by 22% from early 2024.
On April 29th, Kweichow Moutai projected a slower annual revenue growth of 9%, down from 15.7% in 2024.
Luzhou Laojiao saw a drastic slowdown in net profit growth in 2024, only at 1.7% compared to the previous year’s 28%.
Lower-end Baijiu products are more susceptible to industry headwinds. With the economic slowdown and businesses cutting expenses, Baijiu demand has dwindled. Reportedly, the flagship product of Shedai Liquor, priced at around 500 yuan, saw an 80% plunge in net profit in 2024.
Shedai Liquor remarked, “Industry competition has intensified, Baijiu sales are under pressure, and consumer confidence is still in the recovery stage. The demand for semi-premium products especially awaits recovery.”
Hunan Jiugui Liquor Co., Ltd disclosed a 97.7% year-on-year drop in net profit in 2024 due to a significant decline in sales, leading to losses in the latter half of the year.
Major Baijiu distributor Vats Liquor Chain Store Management acknowledged in their annual report that the Baijiu industry is in a “deep adjustment period.”
However, looking ahead, the Baijiu industry faces various challenges such as competing with whiskies and attracting younger consumer groups. Ben Cavender, Managing Director at Shanghai-based China Market Research Group, told Reuters that Moutai also faces demographic challenges. “Baijiu traditionally appeals to older consumers; most under 35 really don’t like it,” he said.
“I rarely drink, even when going out with friends,” said Mr. Wang, a 26-year-old graduate student from Luzhou. “Some of my friends occasionally enjoy a drink, but not Baijiu.”
To attract younger consumers, Moutai has collaborated with several companies to launch affordable products like lattes and ice cream. However, Cavender noted that these strategies have not had a significant impact.