Annual Net Profit Expected to Halve: How Did Kouzijiao Fall Behind?

Kouzijiao expects its 2025 net profit attributable to shareholders to land between RMB 662 million and RMB 828 million, a year-on-year decline of RMB 828 million to RMB 993 million—equivalent to a drop of 50% to 60%.

By Dong Lin, Researcher at Investment Time, Biaodian Finance

In 2025, China’s baijiu industry entered a clear phase of structural recalibration—characterized by lower volumes, softer pricing, and compressed margins. While leading distillers managed to keep revenues relatively steady thanks to premium product mix support, overall growth momentum slowed. At the same time, as top-tier brands pushed further down the price ladder, regional players saw their market room squeezed even tighter.

Against this backdrop, Anhui Kouzi Distillery Co., Ltd. (Kouzijiao, 603589.SH) was among the first to release its 2025 earnings guidance.

According to the forecast, Kouzijiao expects 2025 net profit attributable to shareholders to reach RMB 662 million to RMB 828 million, down by RMB 828 million to RMB 993 million from the prior year—representing a year-on-year decline of 50% to 60%. After excluding non-recurring items, the company expects net profit to be RMB 645 million to RMB 811 million, a decrease of RMB 799 million to RMB 965 million, translating to a drop of 49.65% to 59.93%.

In its announcement, Kouzijiao attributed the decline primarily to intensifying market polarization and accelerated channel shifts during the reporting period. Sales of its core profit engine—premium “cellar” series products—fell sharply, pulling down operating revenue. Meanwhile, to sustain operations and maintain ongoing market investment, the reductions in administrative and selling expenses were smaller than the decline in revenue, resulting in a disproportionately large contraction in total profit.

Kouzijiao releases its 2025 annual profit warning

Source: Company announcement

Researchers at Investment Time and Biaodian Finance note that Kouzijiao’s profitability has been relatively volatile in recent years. Wind data shows that from 2020 to 2024, the company’s net profit attributable to shareholders was RMB 1.276 billion, RMB 1.727 billion, RMB 1.550 billion, RMB 1.721 billion, and RMB 1.655 billion, respectively. The corresponding year-on-year growth rates were -25.84%, 35.38%, -10.24%, 11.04%, and -3.84%.

The pressure intensified in 2025. In the first three quarters, Kouzijiao recorded revenue of RMB 3.174 billion, down 27.24% year-on-year, while net profit attributable to shareholders fell 43.39% to RMB 742 million. Performance in the third quarter was particularly weak: quarterly revenue dropped 46.23% to RMB 643 million, and net profit attributable to shareholders plunged 92.55% to RMB 26.97 million.

Based on these figures, Kouzijiao’s fourth-quarter 2025 net profit attributable to shareholders is estimated to range from approximately -RMB 79.91 million to RMB 85.59 million. In the worst-case scenario, the company could post its first quarterly loss since listing in 2015.

From a product-mix perspective, Kouzijiao’s performance divergence became more pronounced. In the first three quarters of 2025, revenue from high-end baijiu amounted to RMB 2.961 billion, down 27.98% year-on-year. Mid-range baijiu revenue came in at RMB 41.30 million, down 15.38%. Meanwhile, low-end baijiu revenue rose to RMB 114 million, up 25.09%.

Some industry observers believe Kouzijiao’s challenges are being amplified by a combination of factors: a relatively concentrated product structure that weakens resilience, a more limited regional footprint that caps growth potential, and lagging channel management that intensifies inventory and cash-flow pressure. Under the dual forces of fierce competition among Anhui baijiu brands and widening industry divergence, these issues became more visible—ultimately culminating in the sharp earnings decline in 2025.

Kouzijiao net profit attributable to shareholders and year-on-year growth, 2020–2024 (RMB bn, %)

Source: Wind

From an industry-wide view, 2025 marked a phase of cyclical weakness for baijiu, with performance polarization reaching a multi-year peak and “squeezing-style reshuffling” entering a deeper, more intense stage.

Wind data indicates that in the first three quarters of 2025, the combined revenue of 20 A-share listed baijiu companies totaled RMB 317.779 billion, down 5.90% year-on-year. Combined net profit attributable to shareholders was RMB 122.571 billion, down 6.93%. Notably, only Kweichow Moutai (600519.SH) and Shanxi Fen Wine (600809.SH) delivered positive growth in both revenue and profit. Other leading distillers collectively posted negative growth rates, ending a multi-year stretch of steady expansion.

Zooming in further, Anhui remains one of China’s most fiercely contested baijiu markets, where the “Four Golden Flowers” capture the bulk of local share. Among them, Kouzijiao—currently third by revenue scale—saw the steepest declines in both revenue and profitability.

Wind data shows that in the first three quarters of 2025, revenues for Gujing Gongjiu (000596.SZ), Yingjia Gongjiu (603198.SH), Kouzijiao, and Jinzhongzi Jiu (600199.SH) fell 13.87%, 18.09%, 27.24%, and 22.08% year-on-year, respectively. Their corresponding net profit attributable to shareholders declined 16.57%, 24.67%, 43.39%, and 0.97%.

As earnings weakened, Kouzijiao’s inventory continued to climb. From 2021 to 2024, inventory rose from RMB 3.541 billion to RMB 4.211 billion, RMB 5.067 billion, and RMB 5.854 billion. By the end of the third quarter of 2025, inventory had reached RMB 6.218 billion—accounting for 84.43% of current assets.

In today’s consumption environment, the market is clearly shifting toward more value-oriented choices. In response, on December 5, 2025, Kouzijiao opened its first direct-operated “Kouzi Liquor Workshop” in Huaibei, Anhui. Positioned as a “neighborhood old liquor shop,” the concept focuses on pure-grain bulk liquor and a community-based experience, aiming to capture repeat purchases of everyday drinking needs.

Industry analysts argue that this “manufacturer-direct + high-frequency bulk repurchase” approach is essentially a move to rebuild Kouzijiao’s terminal touchpoints—bringing pricing, shelf presence, and sell-through data back under direct control. At the same time, bulk liquor can serve as a buffer for lower-end demand, helping prevent further share erosion to popular value-focused, bottle-sold brands.

It is also worth noting that Gujing Gongjiu has already launched its first “Gujing Bulk Liquor Shop” in Bozhou, and Yingjia Gongjiu has long been active in the bulk-liquor channel. With Anhui’s three major players now converging in the same arena, the key question becomes sharper: in a period of deep industry adjustment, can the bulk-liquor track become Kouzijiao’s breakthrough lever—and help it move ahead of the pack first?