Net profit drops over 65%! "Remote Moutai" Zhenjiu Lidu falls into a cyclical dilemma

The test at the bottom of the white liquor industry cycle has reached its most difficult stage.

As slowdown and decline become common industry phenomena, even the once-promising industry dark horse, known as the “Moutai of other regions,” Zhenjiu Lidu, has not been spared.

According to the profit warning disclosed by Zhenjiu Lidu on February 27, it expects to achieve revenue of 3.55 billion to 3.7 billion yuan in 2025, a decrease of 47.7% to 49.8% year-on-year; net profit attributable to shareholders of 520 million to 580 million yuan, down 56.1% to 60.6%; and adjusted net profit of 520 million to 580 million yuan, a decline of 65.5% to 69%.

Looking at the longer cycle, this is already the second consecutive year of performance decline for Zhenjiu Lidu. In 2024, the company achieved a net profit of 1.324 billion yuan, a decrease of 43.12% year-on-year.

Regarding the reasons for the performance decline in 2025, Zhenjiu Lidu attributes it to external factors.

Indeed, reduced external demand is a major factor affecting Zhenjiu Lidu’s performance, but in the short term, demand in the white liquor industry may continue to be sluggish. Against this background, Zhenjiu Lidu, which has experienced two years of performance decline, faces significant challenges in achieving a recovery in 2026.

Industry “Dark Horse”

Zhenjiu Lidu is also known as the “Moutai of other regions” within the industry.

Its association with Moutai indicates a strong background, and it indeed has a development history different from most white liquor companies.

The history of Zhenjiu Lidu began with an “off-site Moutai” experiment. In 1975, based on the national scientific research strategy of “relocating Moutai production,” Guizhou Province organized efforts to establish the Guizhou Moutai Off-site Experiment Factory in Donggongsi Town, Zunyi City, attempting to replicate Moutai’s brewing process in other regions.

Reports indicate that this “off-site Moutai” experiment gathered key technical personnel from the original Moutai distillery, including former factory director Zheng Guangxian and Zhang Zhiyun, among 28 technical experts. These core members brought complete Moutai brewing techniques, cellar mud, and even some equipment, aiming to produce a “second Moutai” off-site.

The experiment lasted nearly 10 years, culminating in a final appraisal in 1985. A national expert panel led by the renowned liquor authority Zhou Henggang conducted strict evaluations of the experimental product.

The experts’ assessment was that it “basically has the style of Moutai, close to the level of commercially available Moutai,” which was a very high praise. Since it was not a complete replication and was located in Zunyi, this liquor was named “Zhenjiu,” meaning “a treasure among wines.”

In 1986, the experimental factory was officially renamed “Guizhou Zhenjiu Factory,” and the “Zhenjiu” brand was born. In 1988, at the Fifth National Liquor Tasting Conference, Zhenjiu won the National Quality Award (Silver Award), and was ranked alongside Guizhou Moutai and Xijiu as one of the “Three Major Sauce Aroma Brands of Guizhou,” enjoying great prestige at the time.

However, Zhenjiu’s glory did not last long. In the late 1990s, like many state-owned distilleries at the time, Guizhou Zhenjiu faced decline during the market economy transition due to rigid management mechanisms and heavy historical burdens, eventually becoming insolvent and entering bankruptcy liquidation in 2009.

This brand, once carrying national missions and possessing top-tier sauce aroma genes, nearly disappeared. Fortunately, Zhenjiu soon experienced a second turning point, rescued by Wu Xiangdong, known as the “Godfather of Baijiu.”

In 2009, Wu Xiangdong outperformed competitors including Guizhou Moutai and Tongjitang Pharmaceutical, acquiring the nearly bankrupt Zhenjiu in full through Huazhi Liquor Store for 82.5 million yuan.

Wu Xiangdong is chairman of Huazhi Liquor Store, the first listed company in the A-share liquor distribution sector. As early as the late 1990s, he entered the liquor industry as a Wuliangye distributor, later founding the well-known “Jinliufu” brand.

Before acquiring Zhenjiu, Wu Xiangdong had already consolidated multiple distilleries through his Huazhi Group: in 2001, he acquired Hunan Shaoyang Distillery (later “Xiangjiao”); in 2003, Anhui Linshui Distillery. In 2009, besides purchasing Zhenjiu, he also acquired Jiangxi “Lidu.”

In 2021, Zhenjiu Lidu Group was officially established as a platform dedicated to going public, integrating Wu Xiangdong’s four core white liquor brands: Guizhou Zhenjiu, Jiangxi Lidu, Hunan Xiangjiao, and Kaimianxiao.

Leveraging Huazhi Liquor Store’s nationwide sales network, Zhenjiu Lidu entered a rapid growth phase, with the number of distributors reaching 7,635 by 2024.

In April 2023, Zhenjiu Lidu reached its peak development, officially listing on the Main Board of the Hong Kong Stock Exchange.

For the entire white liquor industry, Zhenjiu Lidu’s listing is a milestone. Since Jin Hui Liquor’s IPO in 2016, there has been no successful listing of a white liquor company in the A-share market for seven years, with well-known brands like Langjiu and Guotai facing IPO obstacles. Zhenjiu Lidu not only broke the deadlock but also became the first truly white liquor stock in the Hong Kong market.

Challenges and Opportunities

According to previous profit warnings, Zhenjiu Lidu expects 2025 revenue of 3.55 billion to 3.7 billion yuan, a decrease of 47.7% to 49.8% year-on-year; attributable net profit of 520 million to 580 million yuan, down 56.1% to 60.6%; and adjusted net profit of 520 million to 580 million yuan, a decline of 65.5% to 69%.

Looking at the longer cycle, this marks the second consecutive year of declining performance for Zhenjiu Lidu. In 2024, net profit was 1.324 billion yuan, down 43.12%.

In fact, Zhenjiu Lidu’s difficulties go beyond revenue and net profit declines.

First, high inventory levels. As of mid-2025, Zhenjiu Lidu’s inventory reached 8.07 billion yuan, while current assets totaled 13.96 billion yuan, with inventory accounting for 57.8%.

Second, decreased dealer enthusiasm for procurement. As of mid-2025, the company’s contractual liabilities (prepayments from distributors) showed a significant decline. Coupled with channel destocking pressures, this indicates a notable weakening in dealer payments and procurement willingness.

Regarding the performance decline, Zhenjiu Lidu explained that it was mainly due to weakened market demand, especially in business, social banquets, and gift-giving scenarios. Additionally, the company took proactive measures in the second half of 2025 to further reduce channel inventories, which also impacted short-term performance.

Looking ahead to 2026, the company stated it will continue to promote the “Wanshang Alliance,” optimize channel inventories, and explore new consumer demands to counteract market downturns and restore business.

Moreover, Kanjian Finance believes that product positioning for Zhenjiu Lidu also needs further refinement.

In 2025, white liquor consumption showed a clear “K-shaped” divergence: ultra-premium products like Feitian Moutai remained strong; mass-market products priced between 100–200 yuan, driven by rigid household demand, performed steadily; but the mid-range 300–800 yuan segment, the “vacuum zone,” faced the most pressure. This price range is the core focus of Zhenjiu Lidu’s layout. Coupled with high channel inventories and insufficient brand premium capability, multiple factors have intensified performance pressure.

Financial reports show that Zhenjiu, Lidu, Xiangjiao, and Kaimianxiao are the company’s four major brands, with Zhenjiu and Lidu being the main revenue sources.

In the first half of 2025, Zhenjiu brand revenue was 1.492 billion yuan, down 44.8%, accounting for 59.7% of total revenue; average selling price dropped from 389,800 yuan/ton in the first half of 2024 to 323,400 yuan/ton.

Lidu brand revenue was 611 million yuan, down 9.4%, accounting for 24.5%; average price fell from 492,000 yuan/ton to 348,900 yuan/ton.

Faced with ongoing performance decline and operational pressures, Zhenjiu Lidu is attempting to break through through channel innovation.

The company previously launched the “Wanshang Alliance” model, setting entry thresholds, clarifying profit-sharing mechanisms, and establishing “Alliance Merchant Rights Payment Plans” to build a community of interests with distributors and rebuild trust.

As of the end of 2025, the company reported that the “Wanshang Alliance” had held over 80 “Wealth Creation Forums,” attracting 12,000 participants and signing 4,000 alliance supermarkets.