According to a research report released by CITIC SEC, the fundamentals of the baijiu industry are gradually stabilizing at the bottom, showing characteristics such as wholesale prices stabilizing under supply control measures, sales momentum remaining rigid despite reduced promotional spending, and inventory steadily being destocked. As channel pessimism regarding Mid-Autumn peak season sales has eased, moderate positive expectations can be given to the subsequent New Year and Spring Festival peak seasons. The report is bullish on the recovery rally in the baijiu sector and recommends buying leading liquor companies on dips. The beer sector is facing dual challenges of declining sales volume and insufficient consumer spending power, and with full-year scale pressure ahead, the report recommends focusing more on players with market expansion capabilities. The main points of the CITIC SEC report are as follows:
Baijiu: K-Shaped Divergence During Mid-Autumn Peak Season, Channel Inventory Reasonable
Batch prices remain stable, and sales momentum during the dual holidays appears more rigid against a backdrop of shrinking sales expenses. The industry is undergoing three fundamental changes: 1) The industry is developing healthily, channels are no longer being force-fed inventory, and liquor companies have not assigned excessively high payment collection targets or quotas; 2) Inventory is beginning to be destocked, with distributor inventory levels already at within six months, and the market is gradually shifting from chaos toward manufacturer-led "2C" end development, with reporting-side pressure lagging behind sales improvement; 3) Under manufacturers' contraction of expenses and flexible incentives, true demand fundamentals are more evident, with pre-holiday sales expected to decline slightly but driven more by rigid demand rather than sales expense stimulation.
Product Price Band Divergence, Moutai Outstanding
Before the Mid-Autumn and National Day holidays, high-end liquor and regional liquor performed slightly better than expected. Kweichow Moutai and Wuliangye showed strong overall market sales momentum, with self-operated channel proportions increasing significantly, while distributors have yet to fully perceive the prosperity of market demand. The sub-high-end segment continues to see relatively rapid sales decline, with companies finding it difficult to find operational levers, and revenue declines making expense investment more restrained. Regional liquor in the 100-300 yuan price range sees relatively rigid demand.
Beer: Significant Sales Pressure in July-August, Industry Entering "Volume Preservation and Price Stabilization" Phase
Affected by weather and consumer demand, according to the National Bureau of Statistics, China's beer production by enterprises above designated size totaled 26.128 million kiloliters in January-August 2026, down 2.1% year-on-year. It is expected that the overall industry focus in the second half will be on "appropriately preserving volume." From a channel structure perspective, as of September 2026, the non-on-premise proportion of leading enterprises has mostly dropped below 40%, with restaurant and nightlife channels overall weak, and non-on-premise channels placing greater demands on companies' sales team fundamentals.
Consumers: Focus on AI Development, Liquor Companies Still Need to Return to Building Differentiation
According to recent data from Accenture and iiMedia Research, consumers are returning to a more rational state, with good products and strong price promotions becoming the top two ways new brands attract consumers. According to Accenture's 2025 survey data, with the high degree of information diversification and fragmentation, consumers are making more rational decisions and relying on AI, search engines, and other tools for rapid analysis, with higher demands for quality or differentiation. 77% of consumers already have high-frequency AI usage habits, and 59% of consumers consult AI tools when making consumption decisions (only 35% consult family and friends). In a recent Funda.ai survey of Muse by Meta that has drawn market attention, shopping and food ordering needs have ranked among the top ten demands, placing higher requirements on how products express themselves.
Risk Factors
Macro consumption demand falling short of expectations; intensified competition in the baijiu industry; market performance of core baijiu products falling short of expectations; risk of high channel inventory; risk of rising raw material costs for beer; food safety issues, etc.