Jinhui Liquor, long the dominant force in Northwest China’s spirits market, has reported its first dual decline in revenue and net profit since its 2016 listing. The 2025 annual report paints a sobering picture for the Gansu-based producer, which saw revenue slide 3.4% to 2.92 billion RMB and net profit drop by nearly 9%. This marks the second consecutive year the company has failed to meet its internal performance targets, signaling a stalling of its once-aggressive growth trajectory.
The company’s struggles highlight a widening rift in China’s alcohol consumption patterns, often described as a 'K-shaped' recovery. While Jinhui’s premium and mid-range offerings—those priced above 100 RMB—saw modest growth, the entry-level segment collapsed entirely. Sales of products priced under 100 RMB plummeted by nearly 37%, suggesting that the brand is losing its grip on the mass-market consumers who were historically its most loyal base.
Expansion beyond its home turf of Gansu has proven increasingly difficult for the firm. The company saw a net loss of 91 distributors outside its home province during the reporting period, with 171 partners exiting the fold. On average, a distributor outside Gansu generates only about 1.07 million RMB in revenue—merely one-sixth of what a local distributor produces—indicating that Jinhui's national ambitions are hitting a formidable ceiling.
Financially, Jinhui is walking a precarious tightrope between capital expansion and shareholder returns. To fund its massive 'Ecological Wisdom Industrial Park' project, the company’s interest-bearing debt surged by a staggering 934%, while total liabilities rose by 45%. Despite this mounting pressure and weakening liquidity, the board has actually increased dividend payouts, a move that some analysts fear may jeopardize the company's long-term financial stability during a period of rising inventories.
This downturn is not an isolated incident but reflects a broader 'deep adjustment' phase within the Chinese baijiu industry. As national giants like Kweichow Moutai and Wuliangye accelerate their 'downward' expansion into mid-range price points, regional players are being squeezed from both ends. For Jinhui, the challenge is no longer just about moving upmarket; it is about surviving a market where national titans are now hungry for the market share once held by local champions.