China baijiu 4Q25 results came under pressure, with narrower declines in 1Q26 but competition still difficult
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China baijiu 4Q25 results came under pressure, with narrower declines in 1Q26 but competition still difficult
Goldman Sachs believes that after the baijiu sector experienced broader destocking and weaker-than-expected results in 4Q25, some upper-mid-tier brands saw revenue declines narrow sequentially in 1Q26. The industry trough may emerge in 2H25, but a true recovery is more likely to be pushed back to late 2026 through 2027.
- Most covered baijiu companies delivered 4Q25 results below Goldman Sachs expectations, mainly reflecting the continued drag from anti-corruption policies since June 2025.
- 1Q26 was broadly in line with expectations. Some upper-mid-tier brands such as Yanghe, King's Luck, and Gujing saw revenue declines narrow sequentially, but they are still digesting a high base.
- Goldman Sachs maintains its view that 2H25 will be the industry trough, and expects terminal demand recovery to be more likely reflected in late 2026 to 2027.
- The sector's dividend appeal remains a supporting factor, with Gujing, King's Luck, and Laojiao likely seeing improved payout ratios or dividend commitments in 2025.
Report interpretation
Overview
This report is Goldman Sachs' initial review of 4Q25 and 1Q26 results for covered China baijiu companies. It notes that as of after the market close on April 28, most covered companies had released results. Overall, most 4Q25 results were below Goldman Sachs expectations, reflecting continued pressure from anti-corruption policies and channels; 1Q26 was broadly in line with expectations, with some upper-mid-tier baijiu companies seeing sequentially narrower revenue declines, though the industry remains in an environment of a high base, weak demand, and intensifying competition.
Core views
The core view is that the baijiu industry broadly intensified destocking in 4Q25, with some brands seeing a narrower pace of sales decline in 1Q26, and 2H25 may already have formed the industry trough, but the recovery timeline is back-end loaded. Goldman Sachs believes that as the base gradually eases after 2Q25 and demand performance in the September-October peak season will be critical, investors should focus on the recovery path from 2H26 to 2027. Meanwhile, the sector's relatively high or improving dividend commitments remain attractive.
Analysis framework
The report is primarily based on disclosed 4Q25, 1Q26, and combined 4Q25+1Q26 results from covered companies. It compares actual revenue, net profit, cash flow, contract liabilities, and adjusted sales performance with Goldman Sachs expectations and YoY trends, while also assessing the industry's cyclical position through channel destocking, wholesale price protection, banquet demand, brand competition, and dividend policy.
Methodology notes
Compare disclosed company revenue and net profit with Goldman Sachs expectations
By judging beat, miss, or in-line, identify brands that outperformed or underperformed expectations and their driving factors.
Observe the intensity of destocking in 4Q25 and whether sales declines narrowed in 1Q26
The report views broad destocking and narrowing declines as important signals for judging whether the industry is nearing a trough and whether recovery may follow.
Assess stock characteristics using growth, financial returns, valuation multiples, and composite percentiles
Goldman Sachs' factor framework is used to compare stocks on a relative basis across its global coverage universe and within industry peers, supporting the investment context.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Kweichow MoutaiCore premium baijiu name in the coverage universe
- Strengths
- Rated Buy, with strong brand power and premium baijiu positioning.
- Weaknesses
- The report notes that competition from premium brands will intensify pressure on upper-mid-tier regional markets, while industry demand remains affected by policy and a high base.
- Comparison
- Compared with upper-mid-tier and regional brands, it has stronger brand and channel resilience.
- Risks
- Demand recovery falling short of expectations, intensifying competition, and continued policy impact.
- Wuliangye YibinPremium baijiu name in the coverage universe
- Strengths
- Rated Buy and positioned within the premium baijiu coverage universe.
- Weaknesses
- The report does not elaborate on 1Q details, but it is still affected by industry destocking and the demand cycle.
- Comparison
- Along with Moutai, it is one of the premium names in the coverage universe rated Buy.
- Risks
- Recovery delayed further out, pressure on wholesale prices and channel inventories.
- Luzhou LaojiaoBaijiu company in the coverage universe
- Strengths
- 1Q26 revenue and net profit were slightly better than expected, with a strong 2025 dividend commitment.
- Weaknesses
- FY2025 and 4Q25 results were below expectations, with sharp declines in 4Q25 revenue and net profit.
- Comparison
- Compared with some upper-mid-tier brands, it still benefits from its premium Guojiao product and dividend support; however, it is rated Neutral.
- Risks
- Continued shipment controls for premium Guojiao, pressure from wholesale price protection, and slower-than-expected sales recovery.
- King's LuckUpper-mid-tier and regional baijiu name
- Strengths
- Revenue and net profit declines in 4Q25+1Q26 were relatively small among upper-mid-tier peers; 1Q26 adjusted sales grew 2% YoY, and contract liabilities increased significantly.
- Weaknesses
- Its local Jiangsu market remains under pressure, with weak banquet demand.
- Comparison
- Declines were smaller than other upper-mid-tier brands, but the stock is still rated Neutral.
- Risks
- Weak banquet demand and intensified competition from premium brands such as Moutai.
- Anhui Gujing Distillery Co.Regional baijiu name
- Strengths
- Relatively high 2025 dividend amount, with a higher payout ratio than in 2024.
- Weaknesses
- Reported its first net loss in 4Q25; 1Q26 revenue and net profit were below expectations, and revenue in its Anhui home market declined.
- Comparison
- Compared with King's Luck, earnings pressure is more evident.
- Risks
- Channel destocking, goodwill impairment, and declining demand in regional markets.
- Jiugui LiquorRegional baijiu name
- Strengths
- 4Q25 revenue rose 50% YoY, showing momentum from the collaboration between "Ziyou Ai" and Pangdonglai.
- Weaknesses
- 1Q26 revenue turned negative, and net profit remained weak.
- Comparison
- Short-term revenue volatility is relatively high, and earnings quality is weaker than major covered peers.
- Risks
- Insufficient growth sustainability and weaker-than-expected earnings recovery.
Key data
- Luzhou Laojiao FY2025 revenueRmb25.7bn, YoY -17.5%Below Goldman Sachs' expectation of revenue YoY -13%.
- Luzhou Laojiao FY2025 net profitRmb10.8bn, YoY -20%Below Goldman Sachs' expectation of net profit YoY -16%; 4Q25 net profit fell 96% YoY.
- Luzhou Laojiao 1Q26 revenue / net profitRmb8.0bn / Rmb3.7bn, YoY -14% / -19%Slightly better than expectations; 4Q25+1Q26 revenue / net profit were YoY -35% / -42%.
- Anhui Gujing 1Q26 revenue / net profitYoY -19% / -31%Recorded its first-ever net loss in 4Q25, dragged by channel destocking and goodwill impairment at Yellow Crane Tower.
- King's Luck 1Q26 revenue / net profitYoY -15% / -16%Net profit was in line with Goldman Sachs expectations; 4Q25+1Q26 revenue / net profit were YoY -16% / -27%, a relatively smaller decline among upper-mid-tier players.
- Jiugui Liquor 4Q25 revenueYoY +50%Driven by collaboration between "Ziyou Ai" and Pangdonglai, but 1Q26 revenue turned to YoY -8%, and net profit remained weak.
- DividendsLaojiao 2025 total payout about Rmb8.5bn; King's Luck payout ratio 57.5%; Gujing payout about Rmb2.3bnThe sector's dividend appeal remains an important supporting factor.
Impact & implications
For the baijiu sector, weak 4Q25 results confirmed pressure on channels and demand, but narrower declines in 1Q26 imply that the worst phase may be passing for some companies. The near-term investment implication remains defensive and differentiated: premium brands and companies with stronger cash returns are relatively better supported, while upper-mid-tier and regional brands still need to prove sustained improvement in banquet demand, wholesale prices, and channel inventories.
Risks
- The anti-corruption policy impact lasts longer than expected.
- Recovery in banquet and business-consumption demand is slower than expected.
- Premium brands intensify down-market competition, pressuring upper-mid-tier and regional brands.
- Channel destocking lasts longer than expected, and wholesale price protection pressures shipments and revenue.
- Peak-season demand falls short of expectations, pushing recovery further out.
- Goodwill impairment, a rising expense ratio, or margin contraction affect earnings elasticity.
What to watch
- Whether sales declines continue to narrow after the base eases from 2Q25 onward.
- Terminal demand and wholesale price performance in the September-October 2026 peak season.
- The pace of channel inventory drawdown and changes in distributor contract liabilities.
- The intensity of competition from premium brands against upper-mid-tier and regional baijiu companies.
- Each company's 2025-2026 dividend commitments and actual payout ratios.
- Whether Luzhou Laojiao's premium Guojiao shipment-control strategy continues to affect revenue.