Traditional tobacco and liquor stores used to be seen everywhere in the streets and alleys of China, but this year they are facing a life-and-death crisis, ushering in a nationwide wave of closures. Industry insiders attribute this wave of closures sweeping the nation to factors such as alcohol and tobacco bans, the rise of live streaming e-commerce, infiltration of other businesses like fruit shops, and declining consumer spending, leading to industry consolidation, plummeting profits, and widespread closures.
According to a recent report by Time Finance, the retail industry for tobacco and alcohol has seen severe consolidation this year, with the profit margins from Baijiu sales quickly diminishing, leading tobacco and liquor stores into a “micro-profit era.”
A person from a chain of liquor industry revealed that many tobacco and liquor stores, while able to maintain stable revenues, have experienced profit declines ranging from 30% to 50% compared to previous years. Dong Liang, who has operated a tobacco and liquor store in Beijing for 20 years, mentioned that the comprehensive profit margins of most stores in the industry are now below 10%, with some small stores even operating at a profit level of less than 5%.
Store owner Huang Jing mentioned that the daily rent alone is over 600 yuan, and if the daily revenue doesn’t reach a thousand yuan, it’s basically working for the landlord. Customers habitually request rounding down on prices, leaving almost no profit margin. She carefully calculated all costs, including purchase costs, utilities, and labor expenses, for her 50-square-meter tobacco and liquor store.
An owner of a tobacco and liquor store in Henan expressed regret, stating that they are now reluctant to turn on the air conditioning in the summer, as it would increase costs by hundreds of yuan per month.
According to the China Tobacco and Alcohol Circulation Association, it is predicted that by 2025, the number of tobacco and liquor retail stores nationwide will decrease by 17%-22%, with individual small stores being the hardest-hit by the wave of closures.
The liquor retail brand “Jiujia Jiu” has over 200 franchised tobacco and liquor stores. Jiang Feiyong, the e-commerce director, observed that well-funded distribution giants choose to tough it out even if prices flip, while businesses with more limited funds clear high inventories at or close to cost within their means.
Smaller street corner tobacco and liquor stores, with weaker resistance capabilities, are now in a passive position, trying to quickly clear inventory to avoid a financial breakdown.
As reported by the Liquor Industry Journal, in 2023, there were approximately 4.9 million tobacco and liquor stores in China (data source: National Bureau of Statistics, State Tobacco Monopoly Administration). Additionally, according to Yunjiu Big Data combined with third-party data, by the end of 2023, there were 9.05 million individual retailers specializing in food, beverages, and tobacco products in China.
However, the media outlet “Wine Industry” founded in 2014 released a video on social media stating that in 2025, tobacco and liquor stores are facing a crisis, with 7 out of 8 stores in a neighborhood closing down, and no takers for transfers for a month, marking the end of an era where tobacco licenses lay dormant.
Recent surveys have indicated that the wave of tobacco and liquor store closures is sweeping across the country, with closure rates exceeding 30% in traditional tobacco and liquor stores in Hefei this year. More tobacco and liquor stores in Shenzhen are being transferred or leased, with over 10% of stores in concentrated areas of tobacco and liquor stores already closed, leaving some unattended or with signs saying “Call if needed” inside. This situation is similarly observed in liquor consumption-heavy provinces such as Shandong, Henan, and Hubei.
Several store owners have reported varying degrees of revenue decline this year. Du Yubao, the head of Huazi Liquor and Tobacco Store in Nanjing, stated that their store, spanning over 200 square meters, typically achieved monthly sales of over two million yuan outside of the Chinese New Year period, but this year, the best-selling month barely reached a hundred thousand yuan.
Price inversion in Baijiu has become a common phenomenon in the industry, particularly affecting high-end liquor in the thousand yuan range. Huang Jing mentioned that these thousand-yuan luxury liquors are now difficult to move, with even popular brands facing losses just to make a sale.
For a single product of luxury liquor with an annual sales exceeding billions, Huang Jing revealed that the wholesale price from suppliers that used to be 900 yuan per bottle has now dropped below 800 yuan in the market, which were previously sold at 1300 yuan a bottle.
On June 18th, the China Alcoholic Drinks Association released a mid-term study report on the 2025 Baijiu market, indicating that in the first half of this year, the Baijiu market is seeing a decrease in demand for banquets and gifts, alongside price inversion issues, with over 40% of distributors and retailers facing cash flow pressures, leading to extended inventory cycles for some distributors.
In recent years, various emerging channels like live streaming e-commerce and instant retail have rapidly risen. Although online sales currently make up less than 10% of the Baijiu market, the trend of diverting traditional tobacco and liquor store customers is intensifying.
Blogger “Super Brother of Wine” stated in a video that 2025 is the year of closures for tobacco and liquor stores. During the downturn of Baijiu consumption, liquor producers can survive by selling products online to consumers, rendering the role once played by traditional tobacco and liquor stores as distribution hubs obsolete.
The downgrade in consumer spending is another major influencing factor. Dong Liang noted that as we enter 2025, some private and institutional customers are tightening budgets, resulting in a decrease in group purchases, along with a shift to lower-tier Baijiu brands. Businesses are now selling more affordable varieties.
The crossover infiltration of other businesses also has a significant impact. Blogger “Drunken Excellence” stated that the wave of tobacco and liquor store closures is not due to direct competition within the industry, but rather the surreptitious actions of outsiders. Businesses are being drawn into price wars, with operating at a loss becoming the norm, squeezing profit margins, and disrupting market boundaries.
Previously, businesses such as phone stores, fruit shops, lottery kiosks, hardware stores, and restaurants have encroached on the territory of tobacco and liquor stores, relying on tobacco licenses to attract customers, placing traditional tobacco and liquor stores under immense pressure, forcing many to withdraw.
Blogger “Short Business Talk” provided a more in-depth and long-term analysis, stating that the losers in the food delivery battle will undoubtedly be the husband-and-wife tobacco and liquor stores. The traditional tobacco and liquor stores had depended on their channel advantages and information disparities for their success, which are now rendered ineffective due to large investments made by delivery platforms like Meituan and JD.com.
The most fatal blow comes from the dual impact of the Chinese government’s alcohol and tobacco bans. Many tobacco and liquor businesses rely on group orders, which used to make up to 70% of their sales, with only 20-30% being personal customers. However, the alcohol ban wipes out the gift-giving culture, changing the dynamics significantly.
Like the disappearing newsstands, tobacco and liquor stores primarily rely on location and foot traffic and are easily replaceable. Moreover, with young people comparing prices online and opting for the lowest prices, tobacco and liquor stores are gradually becoming less essential and heading towards decline.