A staff member sorts Guizhou Moutai wine at a supermarket in Yongnian district, Handan city, northern China’s Hebei province, on January 9, 2025.
Photo | Future Publishing | Getty Images
BEIJING — Walk down most streets in China and you’ll see liquor stores advertising the premium spirits brand Moutai and posters listing resale prices by vintage year.
This is a testament to how the red-and-white-labeled bottle has been linked to China’s economy in recent decades. Moutai’s stock has become a market leader, as the 53% alcohol baijiu has long been a staple for toasting and closing deals at government and business banquets.
But the spirits company is currently struggling as China’s business world adapts to a technology-heavy age of artificial intelligence.
Guizhou Moutai store In this month’s first-half report, net profit fell 1.95% to 44.5 billion yuan ($6.6 billion), a rare decline. This is the first decline in the first half of the year since 2014, according to Wind Information data, and only the second decline based on data since 2002.
The latest results follow a 4.5% decline in net profit for the full year 2025, the first annual decline on record, data shows.
Ba Luo Fund fund manager Ye Yuhua said it all has to do with changes in the economic environment. According to CNBC’s Mandarin translation:
China’s economy expanded in the second quarter at the weakest pace since the fourth quarter of 2022, with urban fixed asset investment, including real estate development and infrastructure projects, falling 5.7% year-on-year in the first half.
Ye said that as the real estate sector flourished, the number of scenarios involving the consumption of high-end baijiu naturally increased. Now, with the economic shift toward high-end technology, people involved in this emerging industry are less inclined to drink baijiu, he noted.
“This is an irreversible trend,” he said. “Baijiu has become a saturated market.”
China’s crackdown on corruption has tightened in recent years, weighing on retail sales. In 2020, Chinese authorities also tightened restrictions on the ability of property developers to borrow heavily for growth, squeezing a construction-heavy sector that has come to define a quarter of the economy.
decline in inventory
According to data from Wind Information, Moutai became mainland China’s largest listed company by market capitalization from 2020 to 2023.
Shares fell briefly on Monday after the release of its semi-annual financial report over the weekend, bringing the year-to-date loss to 5.7% as of Tuesday. Stock prices have fallen on an annual basis for four consecutive years.
The semi-annual report also showed that Chinese state funds Central Huijin and China Securities Finance, also referred to as part of the “national team,” are no longer among the 10 largest holders of Moutai shares.
Citi lamented in a report that institutional investor sentiment has likely bottomed out, given that Huijin and China Securities Finance dropped out of the top 10 shareholders in the second quarter.
Independent equity analyst Li Dongfang said the most important sign from Baijiu companies’ latest financial reports is that Moutai’s value in business deals is shrinking.
However, he pointed out that Moutai’s high gross profit margin of 90%, profitability and stable dividend continue to attract institutional investors. Lee expects allocations to institutional investors to continue.
Citi analysts blamed the decline in sales on the company’s shift from wholesale to direct-to-consumer sales, rather than weak demand. The bank maintained its rating on Maotai at “buy.”
They expect Moutai to benefit from the recent return to China’s consumer sector, as global long-only investors cautiously return to high-quality large-cap consumer staples.
Morningstar similarly said in a report that while a mix shift to direct-to-consumer sales is likely to distort Moutai’s payment lines, underlying demand appears to be stronger than reported revenue growth. More broadly, Moutai is the preferred choice in China’s baijiu sector, citing its competitiveness and deepening market-oriented reforms.
notable shift
Looking ahead, both City and Morningstar newspapers mentioned the upcoming Mid-Autumn Festival in their reports. Citi said Moutai Motors may have been motivated to shift some of its inventory supply from the second quarter to the third quarter, which coincides with the Mid-Autumn Festival, to take full advantage of the second round of price increases that took effect on July 18.
Meanwhile, Morningstar said recent price increases and seasonally strong Mid-Autumn Festival sales will support a gradual revenue recovery from the second half of the year. Maotai’s net income is expected to grow at a compound annual growth rate of 8% from 2025 to 2030.
Moutai has raised the prices of its main alcoholic beverages twice this year.
Meanwhile, Wenjie Ding, investment strategist for global capital investment at China Asset Management, said investors are still waiting for the baijiu market to recover before making strategic actions.
He noted that ETF data shows net outflows from baijiu-focused food and beverage companies for much of this year, although sentiment may have improved slightly this month.
As the Chinese government pursues technological development and leaves real estate behind, will Moutai be replaced by other brands as well, signaling a change in the old guard for good?
Li pointed out that since the beginning of the year, several Chinese high-tech companies have surpassed Moutai Motors in market value at various points. He pointed out that the market capitalization of memory chip company CXMT, which went public last month, is about 2.5 times that of Moutai.
“The market is shifting from the traditional economic logic of steady growth to high growth potential and global competitiveness brought about by technological innovation,” he said in Chinese, according to a CNBC translation.
