On January 29 the A‑share market staged a dramatic one‑day rebound in liquor stocks: 18 listed baijiu firms rallied, led by Guizhou Moutai’s 8.6% jump and a near‑10% rise in Shunxin Agriculture, while 16 other producers hit daily limits. The spike rekindled memories of the sector’s previous bull runs — but it came against a gruelling 2025 in which most producers saw revenues and profits slump sharply.
The burst of buying coincides with a wave of year‑end profit forecasts. One‑third of listed baijiu companies have already published 2025 previews. Among the six that have reported, five expect profit declines exceeding 50% and one remains in the red, underscoring that the market’s exuberance is not yet matched by fundamentals.
Yanghe Distillery, long a top‑tier producer, supplied a stark example. Its 2025 net profit attributable to shareholders is estimated at RMB 2.12bn–2.52bn, a drop of roughly 62–68% year‑on‑year, and its adjusted net profit after exceptions is down by nearly 67–73%. Faced with collapsing earnings and sharply weaker operating cash flow — net operating cash for the first nine months fell to RMB 966m, down about 72% — Yanghe scrapped a high‑profile pledge to maintain annual cash dividends of at least RMB 7bn.
That promise had been part of a wider industry response to Beijing’s 2024 guidance to strengthen cash‑dividend practices. In August 2024 Yanghe had committed to an annual dividend of not less than 70% of attributable net profit and not less than RMB 7bn for 2024–26. Its revised plan raises the minimum payout ratio to 100% of net profit while removing the RMB 7bn floor — a technical change that, given Yanghe’s much smaller 2025 profit, implies a drastic cut in absolute dividends.
Investors reacted badly. Some have filed complaints with regulators alleging the revision violated the earlier pledge, and exchanges have seen renewed scrutiny of dividend commitments across the sector. The incident punctures a comforting narrative that high, recurring cash returns would prop up valuations while companies weathered a temporary downturn.
The capital strength of peers varies. Wuliangye retained a pledge similar to Yanghe’s original one — a minimum of 70% payout and a RMB 20bn floor for 2024–26 — and sits on a far larger cash buffer (about RMB 136.3bn at end‑September 2025). Guizhou Moutai and several other leaders continue to pay mid‑year dividends at prior levels, but most smaller and mid‑tier producers are struggling with both sales and channel saturation.
Industry dynamics explain much of the pain. After years of robust expansion, downstream distributors’ capacity to absorb inventory is reaching its limits. To preserve channel health, producers have in many cases throttled shipments and accepted short‑term revenue declines. Major houses are talking publicly about balancing price and volume and shoring up distributor resilience rather than chasing rapid growth.
Looking ahead to 2026, the sector appears set for a period of consolidation and a recalibration of investor expectations. Brokerage research indicates leaders will target steadier, lower‑growth outcomes and invest in consumer engagement, while mid‑tier brands may compete on price to clear inventory, and weaker players could exit or curtail production. For investors, the era when generous dividend promises could paper over weakening operations may be over.