China’s longest-standing domestic winemaker, Yantai Changyu (Zhangyu A, 000869), has told investors it expects net profit for 2025 to tumble by roughly three quarters, highlighting how a softer consumer market and a sharp fall in mid-to‑high‑end wine purchases are squeezing even the sector’s incumbents.
The company’s January 29 performance forecast set attributable net profit for 2025 at RMB55–75 million, a drop of 75.4–82.0% year‑on‑year. Excluding non‑recurring items, the projected net profit is RMB30–40 million, down 69.5–77.1%. Zhangyu attributed the decline primarily to weak overall wine demand and an especially steep reduction in sales of its mid and premium brands, which have historically carried higher margins.
The profit warning follows a year in which Zhangyu realised a one‑off gain from selling its Laizhou vineyard, booking RMB127 million from the disposal in 2024; the company says one‑off asset disposal gains will be much smaller this year. Zhangyu also disclosed a fresh trademark‑infringement court case added in December 2025, underscoring ongoing legal noise around brand rights that can complicate marketing and distribution strategies.
Market reaction was immediate but measured: Zhangyu’s shares fell 4.25% to RMB20.97 at the close on January 30, leaving the company with a market capitalisation of about RMB13.78 billion. The stock’s exclusion from key Shenzhen indices in June 2025 has likely reduced passive buying pressure, a structural headwind for liquidity and valuation as index trackers rebalanced away from the name.
Analysts point to a broader consumption re‑rating. Cai Xuefei, a sector analyst, cited a more cautious macro backdrop and shifting preferences among younger consumers toward low‑alcohol and craft beverages as key drivers. He also highlighted structural weaknesses in the traditional red‑wine model: heavy reliance on channel distribution, low channel efficiency, and a slow pace of consumer education for wine as a beverage category.
For the wider industry the Zhangyu warning is a canary in the coalmine for premiumisation strategies that depended on rising household spending and sustained channel margins. Domestic rivals and international brands that compete on value and novelty may find opportunity, while incumbents face pressure to diversify products, sharpen direct‑to‑consumer and e‑commerce channels, and shore up margins through cost control or portfolio pruning.
Operationally, Zhangyu will need to balance short‑term cash preservation with long‑term brand investment: cutting marketing and vineyard upkeep risks further damaging premium positioning, yet failing to react to changing consumer tastes risks market share erosion. Investors will watch the company’s next steps on pricing, channel strategy and whether further asset disposals or restructurings are used to stabilise earnings.