Analysis of Moat Stability and Inventory Clearance Amid Price Cycle Fluctuations in the High-End Baijiu Industry

The current high-end baijiu industry is in a deep adjustment period. Price declines do not mean the disappearance of moats; instead, they are an inevitable process of the industry returning from financial attributes to consumption attributes. To distinguish between short-term cyclical and long-term structural changes, the key lies in understanding the essential characteristics of the baijiu industry and the shift in driving factors.

According to brokerage API data, high-end baijiu prices have adjusted sharply since 2023:

• Kweichow Moutai (600519.SS)
  : A drop of 17.34% during the period, from a high of 1935 yuan to 1431 yuan [0]
• Wuliangye (000858.SZ)
  : A drop of 38.99% during the period, from a high of 219.89 yuan to 110.43 yuan [0]

:

• Brand Barrier
  : As the absolute leader in Chinese baijiu, Moutai occupies 19.6% of the market share and has an unshakable high-end market position [3]
• Financial Health
  : ROE as high as 36.48%, net profit margin of 51.51%, and extremely stable cash flow [0]
• Necessity Attribute
  : Still has a certain rigid demand attribute among high-end baijiu, with weakened financial attributes but enhanced consumption attributes

:

• Its brand moat is relatively inferior to Moutai, lacking Moutai’s financial rigidity [1]
• Between Moutai’s high-premium model and Fenjiu’s high-turnover model, Wuliangye is “hanging in the air”—losing both Moutai’s financial attributes and the cost-effectiveness of the mass business market [1]

According to KPMG’s 2025 China Baijiu Market Mid-term Research Report:

• The industry average inventory turnover days have reached 900 days, an increase of 10% year-on-year [1]
• Inventory volume increased by 25% year-on-year, and price inversion has covered 60% of enterprises [1]
• 58.1% of dealers reported continued inventory growth [1]

:

• Finished Product Inventory
  : Approximately 150-200 days (normal level: 120-180 days)
• Base Liquor Reserve
  : Moutai and others require 3-5 years of aging, which is strategic inventory
• Channel Inventory
  : The real problem lies here; channel inventory in markets like Zhengzhou Bairong is still at a high level [1]

:

According to industry research, Wuliangye is compressing inventory depth from 5-6 months to a healthy level of 2-3 months through incentive policies [2]. At this pace:

• Optimistic Scenario
  : Most clearance is completed by Q2 2025, with channel inventory dropping below 3 months
• Neutral Scenario
  : Inventory clearance is achieved by Q4 2025, with prices stabilizing and rebounding
• Pessimistic Scenario
  : Continues until 2026, requiring deeper adjustments

:

• Sales rate increases to over 80%
• Inventory turnover days drop to within 180 days
• Price inversion phenomenon reduces to within 20%

:

• Short-term price fluctuation range (within ±20%)
• Cyclical inventory adjustment (usually 12-18 months)
• Seasonal consumption changes (Spring Festival, Mid-Autumn Festival, etc.)

: Part of it belongs to cyclical adjustment, but it has exceeded the scope of normal cycles.

:

1. Structural Transformation of Consumption Scenarios
   • Family gatherings (49.11%) and friend gatherings (48.00%) have surpassed business banquets (42.22%) [2]
   • Wedding banquets and personal drinking account for 39.11% and 34.67% respectively [2]

2. Structural Migration of Price Bands
   • The best-selling price bands in 2024 are 300-500 yuan, 100-300 yuan, and below 100 yuan [2]
   • The best-selling price band will shift down to 100-300 yuan in 2025 [2]
   • The 800-1500 yuan price band has become a “disaster area” [2]

3. Fundamental Transformation of Growth Model
   • Past: Financialized cycle of “price increase—stockpiling—price increase expectation—further price increase” [2]
   • Now: Must shift to “value logic” and rely on real consumption sales [2]

Dimension	Short-term Cyclical	Long-term Structural
Duration	6-18 months	3-5 years or longer
Impact Depth	Price and inventory adjustment	Changes in consumption habits and competitive landscape
Recovery Path	Natural rebound	Need to reshape business model
Investment Logic	Timing operation	Re-valuation and industry allocation

:

• Requires five years of aging: one year of production, three years of aging, one year of blending, one year of inspection
• Rigid production capacity: Approximately 56,000 tons in 2025, cannot expand rapidly
• Geographic constraint: Only the 15.03 square kilometers core production area in Maotai Town can produce authentic Moutai

:

• Relatively shorter production cycle, usually 1-3 years
• Relatively larger production capacity elasticity
• But also faces constraints of high-quality base liquor reserves

The industry generally faces:

• Scarcity of High-quality Base Liquor
  : High-end baijiu has extremely high requirements for base liquor quality
• Environmental Capacity Limitation
  : Brewing has strict environmental requirements, and expansion is restricted by environmental protection
• Technical Inheritance Barrier
  : Traditional processes are difficult to replicate quickly

Inventory turnover days are indeed an important leading indicator for the baijiu industry:

• Early Warning Function
  : Rising turnover days usually indicate downward price pressure
• Cycle Positioning
  : Helps judge the stage of the industry cycle
• Investment Guidance
  : Provides quantitative reference for investment decisions

:

1. Statistical Caliber Issue
   : Differences in inventory definitions among different enterprises
2. Interference from Base Liquor Reserves
   : Base liquor reserves of enterprises like Moutai affect data comparability
3. Hidden Channel Inventory
   : Dealer inventory is difficult to accurately count

:

• Channel research data
• Terminal sales rate
• Price inversion amplitude
• Dealer cash flow status

:

• Moat remains solid, with the ability to navigate cycles
• Current valuation is reasonable, PE 19.91x [0]
• Recommendation: Hold long-term, lay out on dips

:

• Undergoing a painful channel “deleveraging” process [2]
• Brand position is facing challenges, needs repositioning
• Recommendation: Observe inflection point signals in Q2-Q3

:

• Mid-to-high-end brands face the risk of being squeezed out
• Cost-effective mass brands have opportunities

: Observe inventory clearance progress and price stabilization signals
: Verify sales situation during the consumption peak season
: Evaluate the overall recovery trend of the industry

1. Economic Downturn Risk
   : Consumption capacity recovery is less than expected
2. Policy Risk
   : Adjustments in policies like consumption tax
3. Generational更迭 Risk
   : Younger groups’ acceptance of baijiu declines
4. Channel Risk
   : Credit risk may occur during the restructuring of the dealer system

The high-end baijiu industry is undergoing a profound transformation from financialization to consumer goods. Price declines are an inevitable manifestation of this transformation, but the stability of moats varies significantly among different enterprises. Moutai’s moat remains solid due to its unparalleled brand position and product scarcity; while brands like Wuliangye need to find new growth paths through active adjustments.

The key to distinguishing between short-term cyclical and long-term structural changes lies in understanding the essential shift in driving factors: from “price increase expectation + financial attributes” to “real consumption + value recognition”. Investors need to view this transformation from a longer-term perspective and seek structural opportunities in the increasingly differentiated industry pattern.

---

[0] Jinling API Data - Stock Prices and Financial Data of Kweichow Moutai (600519.SS) and Wuliangye (000858.SZ)
[1] KPMG - 2025 China Baijiu Market Mid-term Research Report
[2] Sina Finance - “Moutai and Wuliangye ‘Price Drop’: How Can the Baijiu Industry Navigate the Ultra-long Cycle?”
[3] Weikehao - “Wuliangye Takes Initiative to ‘Cut Prices’: Is the Real Inflection Point of the Baijiu Industry Here?”
[4] 36Kr - “Even Moutai Can’t Hold On: How Long Will This Round of Baijiu Winter Last?”