China’s Baijiu Market Slumps as New Year Sales Loom

China’s baijiu industry is in a sharp slowdown, with analysts noting that overall baijiu sales fell roughly 15% in 2025. Leading distillers like Kweichow Moutai, Wuliangye Yibin, Luzhou Laojiao and others have all seen steep volume declines amid cautious consumer spending and a weaker economy. For example, Anhui Kouzi Distillery (Kouzijiao) warned its 2025 net profit would drop 50–60% year-on-year as core product sales plunged. Even Maotai – China’s top baijiu brand – is grappling with this downturn: AP News reports a 36% drop in Maotai’s retail price in 2025 and forecasts that national baijiu output will fall for the eighth straight year. In short, diminished banquets and gift-giving due to austerity campaigns and health awareness have taken a toll on premium spirits. As the Lunar New Year – traditionally the peak sales period for alcohol – approaches, baijiu producers are urgently rethinking strategy.

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Wholesale Strains and Glutting Inventory

Industry data show growing strain on distribution channels. A mid-2025 report by the China Alcoholic Drinks Association found 58.1% of liquor companies faced rising inventory pressure, and over half of distributors reported unusual price inversions between channels. Many retailers are under cash-flow stress due to unsold stock. In practice, distillers had continued shipping volumes even as consumer demand waned, so by late 2025 the sector’s average inventory turnover had ballooned to 1,424 days (nearly four years’ worth) – 65% higher than 2024. This glut has forced aggressive price-cutting: for example, Maotai’s premium Feitian spirit briefly traded below its official price after an online launch. In the first three quarters of 2025, 20 leading listed liquor companies saw combined revenue fall 5.9% and net profit drop 6.9% year-on-year. In short, excess supply and shrinking demand have collided, eroding margins.

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Major Brands Overhaul Distribution

To cope, major groups are changing how they sell baijiu. Maotai’s new chairman Chen Hua has pushed a direct-to-consumer model – moving hot SKUs to the company’s own “iMoutai” e-commerce platform and phasing out traditional dealer networks. In early January 2026 Maotai debuted its 500ml, 53° Feitian Maotai on iMoutai; within nine days the platform had attracted 2.7 million new users and over 400,000 transactions, largely from previously unreachable real consumers. (By May 2025, iMoutai had already registered over 76 million users.) Maotai has also revoked many distributor quotas since 2018 and says it will end classic channel selling in 2026. Wuliangye Yibin, Maotai’s closest rival, likewise throttled supply to stabilize prices: it piloted direct-to-retail distribution and cracked down on cross-regional arbitrage and fakes. These measures have already helped Wuliangye recover the price of its flagship spirit. In effect, China’s top brands are pulling back on promotions and tightening supply in order to halt inventory bleed and protect brand value.

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Changing Consumer Trends and the Digital Pivot

Long-term shifts in drinking culture are reinforcing the slowdown. Younger Chinese are drinking more moderately and for social enjoyment rather than show. One market report describes a “less but better, less but happier” mindset – consumers want quality and connection, not forced banquet-style overconsumption. Anti-graft rules (banning alcohol at official events) and health consciousness mean the “banquet” occasions that once drove baijiu volumes are shrinking. For instance, less than 12% of baijiu is now consumed as gifts, while casual home or friend gatherings account for over 70%. Meanwhile, digital commerce has surged as a bright spot: in the first five months of 2025 Chinese online channels sold over 60 million baijiu bottles (about RMB 30 billion in sales) – a new e-baijiu era. Nearly half of baijiu producers report rising online sales share, even though average prices have dipped due to platform discounts. To capture this shift, brands are bundling products, using livestreaming, and focusing marketing on home and leisure occasions rather than only on traditional banquets.

Modern nightlife scenes in Beijing illustrate baijiu’s transformation. Bartenders now serve baijiu in flavored cocktails and casual settings (above), as makers target younger consumers and off-duty occasions to counter the decline in formal banquet drinking.

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Implications and Strategic Moves for Baijiu Brands

The combined effect of weaker demand and high inventory means baijiu makers must adapt on several fronts. Key actions include:

• Adjust sales channels. Top brands like Maotai and Wuliangye are limiting distributor shipments and expanding direct or e-commerce sales to regain pricing control. Others should similarly restrain channel floods and cultivate digital touchpoints (KOLs, social commerce, mini-programs) where growth is occurring.
  
  
• Recalibrate product mix. With consumers more price-sensitive, many distillers are shifting emphasis to mid-tier offerings and small-format bottles. Industry analysts note that the 100–300 RMB price band could exceed 200 billion RMB in sales and will be a new growth driver. Brands should therefore consider lighter or flavored baijiu variants, travel-friendly formats, or blended products that appeal to younger palates and lower-intensity drinking occasions.
  
  
• Emphasize brand value and authenticity. Many companies have launched campaigns to remind consumers of quality and heritage. For example, Maotai’s strategy of clear pricing (“drink it, don’t speculate”) and Wuliangye’s focus on genuine regional ingredients aim to rebuild trust and prestige. Such moves can reinforce brand moats even as volumes shrink.
  
  
• Leverage festive promotions wisely. With the Lunar New Year looming, baijiu brands should plan promotions that drive genuine consumption. Rather than overstocking distributors (which previously led to deep price cuts), they can run timed sales on official apps, gift sets for home entertaining, or co-branded events that highlight social occasions. Data-driven pricing (dynamic discounts to move stale inventory) and targeted marketing (e.g. on short-video platforms) can help match supply to real consumer demand.
  
  

In summary, China’s baijiu industry is navigating a tough transition. The decline in volumes and the inventory hangover mean brands must act fast. Those that control channel supply, deepen e-commerce presence, and retool products for changing tastes – while leveraging their strong brand heritage – will be better positioned to revive sales during the New Year season and beyond. If domestic demand can be stimulated (through lifestyle marketing, tourism, or new occasions), the sector may begin a turnaround; but it will likely be a measured recovery, with prices and volumes stabilizing to new norms aligned with consumers’ “less but better” preferences.

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