Kweichow Moutai profits fall as China alcohol demand softens

Kweichow Moutai has reported its first annual decline in profits and revenue in more than two decades, highlighting weakening demand for alcohol in China. The results reflect economic pressures, shifting consumer habits and tighter government controls on spending.

If any more evidence were needed that demand for alcohol in China is subdued, it has come from the biggest domestic producer, Kweichow Moutai.

Last year, the baijiu distiller suffered its first annual drop in profits and revenue since it listed on the Shanghai stock market in 2001.

Net profit last year fell 4.5% to Y82.32 billion (US$12.07 billion) with revenue declining 1.2% to Y168.84 billion, both well below market expectations and short of the company’s own guidance.

Core brand remains dominant

Moutai’s core baijiu brand contributed the bulk of its revenue last year, generating Y146.50 billion while subbrands fell 9.8% to Y22.27 billion.

The falling sales and profitability reflect Chinese consumers being more cautious as the economy cools and a deep mortgage debt crisis persists.

Baijiu, which still accounts for about 94% of spirits consumption in China, has long been central to Chinese culture and prized as a luxury gift, but the evidence is that cachet is waning among the younger generation.

Government austerity measures hit premium sales

In addition, Beijing’s strict austerity rules curbing spending by civil servants, following measures that banned alcohol and tobacco at official functions, have also dealt a heavy blow to demand for premium baijiu.

The Wall St Journal reports that results from other baijiu companies, including Wuliangye Yibin and Luzhou Laojiao, point to similar pressures. Wuliangye’s revenue for the first nine months of 2025 dropped 10% from a year earlier, while Luzhou Laojiao’s sales fell 4.8% in the same period.

Market position slips

Once the largest quoted company by value in China, Kweichow Moutai has slipped to become the fifth-largest behind two state banks, battery giant CATL and oil refiner Sinopec.

Kweichow Moutai has moved to combat the declining demand through restructuring its portfolio, broadening its sales channels and implementing a dynamic pricing mechanism for its direct retail route to market.

It enjoyed better-than-expected demand ahead of the Lunar New Year, and its e-commerce platform registered 6.28 million new users after it accelerated the rollout of its flagship Feitian Moutai product on the app.

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