Analysis Report on Market Transformation of Kweichow Moutai After the Decline in Government Demand

Based on the above in-depth research, I now write a systematic and comprehensive analysis report for you.

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As a representative enterprise of China’s high-end liquor industry, Kweichow Moutai is facing multiple challenges such as the continuous shrinkage of government consumption demand and in-depth industry restructuring. By analyzing Moutai’s latest financial data, channel reform dynamics, price trends and changes in consumption structure, this report explores in depth whether business banquets and family gatherings can make up for the losses after the decline in government demand, and whether mass consumption demand has been effectively activated. The study found that government consumption has shrunk from nearly 100 billion yuan to less than 10 billion yuan, accounting for less than 5% of total liquor consumption[1][2]; Moutai is actively promoting market-oriented transformation through the direct sales platform iMoutai, but the activation of mass consumption demand still faces challenges such as consumer group fragmentation and weakening investment attributes caused by price declines. In the short term, the banquet market (wedding banquets, birthday banquets, etc.) will become an important support for Moutai to stabilize its performance, but in the long run, Moutai needs to achieve sustainable growth through product innovation and consumer cultivation.

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Since the implementation of the “Eight-point Regulation” in 2012, the government consumption demand for high-end liquor has continued to shrink. The newly revised Regulations on Practicing Economy and Opposing Waste was officially implemented in May 2025, further explicitly prohibiting the provision of tobacco and alcohol in official receptions[2]. The impact of this upgraded “alcohol ban” lasted throughout the year, marking a further compression of the market space for government liquor consumption.

According to industry research data, the scale of the government liquor consumption market has shrunk from nearly 100 billion yuan to less than 10 billion yuan, accounting for less than 5% of total liquor consumption[1]. This structural change means that the contribution of government consumption to high-end liquor enterprises such as Moutai has shifted from a core support in the past to a negligible marginal role.

The decline in government demand has had multiple direct impacts on Moutai. First, from the perspective of revenue structure, although government consumption accounts for a relatively low proportion of Moutai’s overall revenue, it once played an important supporting role in price anchoring and brand premium. After the shrinkage of government consumption, Moutai’s function as a “social currency” has been weakened, and prices have continued to face downward pressure.

Second, from the channel perspective, government consumption is usually completed through group purchase and special supply channels. The decline in this part of demand has put traditional dealer channels under pressure of inventory backlog and price inversion. Some dealers were forced to sell at prices lower than the purchase price, further exacerbating market price fluctuations.

From a more macro perspective, the liquor industry is undergoing an all-round structural recession from output to consumption habits. China’s liquor output peaked at 13.584 million kiloliters in 2016 and has been declining ever since, dropping to 4.145 million kiloliters in 2024, a nearly 70% drop from the peak[1]. This trend is not only a cyclical adjustment, but also a structural recession caused by the resonance of multiple factors such as population structure, consumption concepts, policy environment and economic cycle.

Notably, the acceptance of liquor among young consumer groups continues to decline. According to 2025 data from iiMedia Research, only 17% of Gen Z aged 18 to 35 list liquor as their preferred drink, and they prefer low-alcohol trendy drinks such as fruit wine and beer[1]. Liquor has been labeled as “greasy”, “toasting culture”, “drink of the father generation”, etc., and its social scenarios among young consumer groups are becoming disconnected.

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Business banquets were once another important consumption scenario for high-end liquor, but they are also facing significant shrinkage at present. After the pandemic, corporate travel budgets have been cut by more than 30%, and the trend of corporate cost reduction and efficiency improvement is obvious under downward economic pressure[1]. The main consumer group of liquor, aged 35 to 55, is facing practical pressures such as slow income growth, increased mortgage and child-rearing costs, and the rise of the “punk health preservation” concept—they stay up late while drinking wolfberry water and refuse high-alcohol liquor[1].

This series of factors has led to a sharp decline in liquor demand in business banquet scenarios. According to industry research data, the proportion of business scenarios in liquor consumption has dropped from a relatively high level in the early stage to about 25%, and it is still continuing to shrink.

In contrast to the shrinkage of business banquets, the banquet market (wedding banquets, birthday banquets, etc.) has shown strong resilience. According to CICC research report data, the scale of the banquet market is about 250 billion to 300 billion yuan, accounting for about 40% of total liquor sales[3]. Among them, wedding banquets account for the highest proportion, about 50%, followed by birthday banquets, college admission banquets, business banquets, etc.

During the 2026 New Year’s Day period, the banquet market recovered significantly, especially in the peak season before the Spring Festival. Feedback from the terminal market shows that mid-to-high-end products in the 300-500 yuan price range became the main sales force during the holiday, with active sales of products such as Jiannanchun, Shede, and Xijiu Cellar 1988[3]. This trend indicates that consumption upgrading in the banquet market is still continuing, providing certain performance support for liquor enterprises.

As one of the daily scenarios of liquor consumption, family gatherings have relatively low penetration rate for high-end liquors such as Moutai. The unit price of Moutai is usually more than 1,500 yuan, which sets a high consumption threshold for ordinary family gatherings. Therefore, the contribution of family gatherings to Moutai is more reflected in scenarios such as festival gift-giving rather than daily drinking.

However, the launch of 1,499 yuan parity Moutai on the iMoutai platform has provided ordinary consumers with more opportunities to access Moutai. Some consumers have begun to choose Moutai for special family gatherings (such as Spring Festival reunions, important anniversaries), which creates conditions for Moutai to explore the mass consumer market.

Overall, business banquets cannot fully make up for the losses in government demand, mainly due to the following reasons: First, business banquets themselves are shrinking; Second, the grade and frequency of liquor used in business scenarios are generally lower than those in government receptions; Third, corporate customers are more price-sensitive, and Moutai needs to provide more competitive prices to obtain this part of the orders.

The banquet market is currently the most potential compensation channel, especially the wedding banquet market. Moutai still has brand advantages in the high-end wedding banquet market, but it needs to make adjustments in product portfolio (launching small-capacity packages, gift boxes, etc.) and pricing strategies (moderate discounts). The potential of family gatherings is limited, and it is more of an incremental contribution rather than a substitute role.

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Starting from January 1, 2026, Kweichow Moutai officially launched 53% ABV 500ml Feitian Moutai on the iMoutai platform, priced at 1,499 yuan per bottle. This move marks an important breakthrough for Moutai in the mass consumer market[4][5]. Data shows that since Feitian Moutai was launched on iMoutai, the platform has added more than 2.7 million new users and exceeded 400,000 transaction users within 9 days[4].

The daily “instant sell-out” phenomenon on the iMoutai platform reflects consumers’ strong demand for parity Moutai. Moutai adjusted the purchase limit from 12 bottles per person per day to 6 bottles to cope with the situation of supply falling short of demand[4]. In this wave of panic buying, there are both real consumers and scalpers trying to arbitrage, but overall, mass consumption demand is being effectively activated.

The development of the iMoutai platform is reshaping Moutai’s channel structure. Data shows that the cumulative sales of iMoutai have exceeded 60 billion yuan since its launch three years ago[6]. In 2023, iMoutai achieved sales revenue of 22.374 billion yuan, a year-on-year increase of 88.29%; in 2024, it achieved sales revenue of 20.024 billion yuan[6].

With the development of iMoutai, the proportion of Moutai’s direct sales channel revenue has continued to increase. In the first quarter of 2025, the proportion of direct sales revenue was about 45.89%, compared with 43.88% in 2024 and 44.65% in 2023[6]. This channel transformation allows Moutai to bypass traditional dealers, directly reach consumers, and retain more profits within the listed company.

Moutai is connecting young and middle-aged consumer groups through iMoutai. According to industry analysis, Moutai’s core consumer groups have gradually expanded from the post-60s and post-70s to the post-80s and post-90s, and even some post-95s and post-00s have a demand for trying new things[7]. Among the newly developed group purchase customers of a provincial sales company of Moutai, more than 60% have provincial high-tech enterprise qualifications, and direct sales customers show obvious younger characteristics[6].

This intergenerational expansion is of great significance to Moutai’s long-term development. When young consumers are willing to try new products and gradually transform from trial consumers to rigid demand consumers, Moutai’s consumer base will be further consolidated.

However, the activation of mass consumption demand is also accompanied by the pain of price decline. The wholesale price of Feitian Moutai has dropped from 2,800 yuan per bottle in 2022 to about 1,490 yuan per bottle in 2025, a decline of nearly 50%[8][9]. The average terminal retail price even fell for 9 consecutive days, with a cumulative decline of 23.59%[8].

Price decline is a double-edged sword for Moutai. On the one hand, more affordable prices help activate mass consumption demand and expand the consumer base; on the other hand, continuous price decline is weakening Moutai’s financial attributes and social investment value. In the past, Feitian Moutai was regarded as a “hard currency” that could continue to appreciate and be cashed out at any time; but when parity Moutai can be easily purchased on the iMoutai platform, the digestion of social inventory will slow down, and investment demand will face shrinkage[8].

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On December 28, 2025, Kweichow Moutai announced at the dealer conference that it would no longer use the “distribution method” to wholesale non-standard products to downstream[6]. This decision is regarded as Moutai’s most thorough channel revolution in 20 years, and its core logic is to establish a new division of labor where “dealers provide services and the distillery sets prices”, and transfer spread income back to the listed company.

Moutai’s channel reform includes three core objectives: First, as a price anchor, through the daily limited-time release of 1,499 yuan Moutai on iMoutai, establish an official psychological price for Feitian Moutai, weaken the dealer premium space, and force the wholesale price to fall[6]; Second, as a user precipitation pool, the number of registered users of the iMoutai APP has reached 76 million, with 11.7 million monthly active users, forming the largest private domain traffic pool of high-net-worth liquor consumers in China; Third, as a channel rebalancing tool, complete the redistribution of channel interests.

Moutai is building a “pyramid-shaped” product system: with the classic series (Feitian Moutai) as the base, the premium Moutai series and zodiac wine series as the middle, the aged series and cultural series as the top, and supplemented by the low-alcohol series to be closer to consumers[6].

In January 2026, the Year of the Horse Zodiac Moutai was released, with the official retail price rarely reduced to 1,899 yuan per bottle, a sharp cut from the previous price of 2,499 yuan[5]. This price adjustment reflects Moutai’s pragmatic attitude towards market reality—against the background of weak demand, lowering its profile, stabilizing prices, and expanding sales have become priority options.

Facing the pressure of continuous price decline, Moutai adopted a volume control strategy to protect prices. In December 2025, rumors spread in the market that Moutai would control cargo and reduce non-standard products, which pushed Moutai’s price to rebound, with the wholesale price once surging to 1,600 yuan per bottle[8].

Chen Hua, Chairman of Moutai Group, clearly stated, “We must do everything possible to prevent price speculation, which is not only responsible to consumers, but also responsible to Moutai itself”[6]. The theme of the 2026 Moutai National Dealer Conference is “Adhere to Consumer-centricity, Fully Promote Market-oriented Transformation of Moutai Liquor Marketing”, with the core of “adapting to market conditions” and “promoting volume-price balance.”

Moutai continues to innovate in digital marketing. In July 2025, Guizhou AiMoutai Digital Technology Co., Ltd. was established with a registered capital of 600 million yuan, wholly owned by Kweichow Moutai[6]. This marks the upgrade of iMoutai from a simple sales platform to a comprehensive digital marketing platform.

Research report from Caitong Securities pointed out that Kweichow Moutai is consumer-centric, and through iMoutai, it improves the convenience of consumers’ purchase and authenticity verification, which will further expand Moutai’s mass base. It is expected that the sales revenue of online direct sales channels will grow significantly in 2026, and iMoutai may become an important brand promotion platform for the company[6].

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From the perspective of financial data, Moutai’s revenue and net profit growth rates have fallen from double digits to single digits. In the third quarter of 2025, Moutai’s revenue was 39.81 billion yuan, a year-on-year increase of 0.35%; net profit was 19.22 billion yuan, a year-on-year increase of 0.48%, marking the first time since Moutai’s listing that the growth rates of revenue and net profit fell below 1%[1].

Year	Revenue (100 million yuan)	Revenue Growth (%)	Net Profit (100 million yuan)	Net Profit Growth (%)
2022	1271	16.9	627	19.6
2023	1477	16.2	747	19.0
2024	1665	12.7	862	15.4
First three quarters of 2025	1309	6.3	646	6.3

This slowdown in growth reflects the impact of the industry adjustment period on leading enterprises. Although Moutai still maintains positive growth, the continuous decline in growth rate indicates that the gap caused by the decline in government demand has not been fully filled by other consumption scenarios.

Despite the slowdown in growth, Moutai’s profitability remains robust. The latest financial data shows that Moutai’s ROE is 36.48%, net profit margin is as high as 51.51%, and operating profit margin reaches 71.37%[10]. These indicators are still in a leading position in the liquor industry, showing Moutai’s strong brand premium ability and cost control ability.

In addition, Moutai’s financial situation is very healthy, with a current ratio of 6.62 and a quick ratio of 5.18, and its debt risk is rated as “low risk”[10]. High cash reserves provide sufficient ammunition for Moutai to cope with industry adjustments.

Moutai’s stock price has continued to fall from the 2022 high of about 2,200 yuan per share to the current about 1,373 yuan per share, with a 1-year decline of 6.87% and a 3-year decline of 26.15%[10]. Technical analysis shows that Moutai is currently in a downward trend, and both KDJ and RSI indicators are in the oversold zone[10].

From the valuation perspective, Moutai’s current P/E is 19.11 times and P/B is 6.69 times, both in the historical low range[10]. Low valuation not only reflects the market’s concerns about the prospects of the liquor industry, but also provides a good margin of safety for long-term investors.

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The current liquor industry shows an obvious “Matthew Effect”. In the first three quarters of 2025, among the 20 listed liquor enterprises, only Moutai and Fenjiu achieved double growth in revenue and net profit, while the other 18 all declined, with many experiencing cliff-like falls or losses[1].

Specifically, Wuliangye’s revenue in the first three quarters fell by 52.66% year-on-year, and net profit fell by 65.62%; Yanghe’s single-quarter revenue plummeted by 35%, resulting in its first single-quarter loss; regional liquor enterprises such as Kouzijiao and Laobaigan also face severe challenges[1]. In contrast, relying on brand advantages and channel reform, Moutai has shown strong risk resistance in the industry winter.

During the 2026 New Year’s Day period, mid-to-high-end liquor showed signs of recovery first. Products in the 300-500 yuan price range had active sales and became the main sales force during the holiday[3]. This trend reflects the following:

First, under the trend of rational consumption, consumers pay more attention to cost-effectiveness rather than blindly pursuing high-end products;
Second, the rigid demand in the banquet market supports the sales of mid-to-high-end products;
Third, the mid-to-high-end price range is highly competitive, and various liquor enterprises have increased investment to seize market share.

For Moutai, the recovery of the mid-to-high-end market is both an opportunity and a challenge. Moutai needs to stabilize its position in the ultra-high-end market while appropriately extending its product line downward to cover a wider range of consumer groups.

Looking forward to 2026, the liquor industry is expected to usher in a weak recovery. From the perspective of price range repair order, consumer-grade liquor products will stabilize first by virtue of rigid demand and the advantage of lowest inventory; high-end products will oscillate to build a bottom and repair slowly relying on the volume control and price protection strategies of Moutai and Wuliangye[3].

Yang Guang, Chairman of Beijing Zhengyitang Strategic Consulting Agency, believes that the essence of “weak demand” in China’s liquor industry will not change in 2026, the contradiction between supply and demand structure in the industry will become more prominent, and competition logic outweighing operation logic will become the mainstream of the industry[2]. Against this background, the leading advantages of head liquor enterprises will be further expanded, while small and medium-sized liquor enterprises will face greater survival pressure.

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Government consumption has shrunk from nearly 100 billion yuan to less than 10 billion yuan, accounting for less than 5%. The direct impact on Moutai is limited, but it has caused indirect pressure on price anchoring and brand premium[1][2].

Business banquets cannot fully make up for the losses in government demand, because business banquets themselves are shrinking and customers are more price-sensitive[1].

The banquet market has a scale of about 250 billion yuan, accounting for 40% of liquor sales, with wedding banquets accounting for the highest proportion. The banquet market will become an important support for Moutai to stabilize its performance, but Moutai needs to adjust its product strategy to better match the needs of banquet scenarios[3].

The iMoutai platform has effectively activated mass consumption demand, with more than 2.7 million new users added within 9 days, but continuous price decline is weakening Moutai’s financial attributes, which is a mixed blessing in the long run[4][8].

Moutai is promoting market-oriented transformation through multiple measures such as channel reform (iMoutai direct sales), product strategy (pyramid-shaped product system), volume control and price protection, and digital marketing. The 2026 dealer conference clearly defined the transformation direction of “consumer-centricity”[6].

In view of Moutai’s brand advantages, channel reform effects and robust financial performance during the industry adjustment period, the “Overweight” rating is maintained. The current valuation is at a historical low, with sufficient margin of safety.

Unexpected economic downturn, slower-than-expected recovery of consumer demand, intensified price wars, food safety incidents, raw material price fluctuations, etc.

Everything has a cycle, and the liquor industry is no exception. As the “top liquor enterprise”, Moutai may be the first enterprise to end the liquor industry adjustment cycle under the influence of strong consumer demand[7]. However, this process takes time and depends on the pace of macroeconomic recovery, the process of consumption upgrading, and the implementation effect of Moutai’s own strategy.

For Moutai, the worst period may be passing. During the in-depth industry adjustment period, Moutai’s determination and execution in market-oriented transformation have laid a good foundation for its future development. The activation of mass consumption demand and the support of the banquet market will become the key forces for Moutai to traverse the cycle.

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[1] Tencent News - “Fenjiu Shifts from Government and Business Consumption, Giving a Lesson to Moutai and Wuliangye?” (https://news.qq.com/rain/a/20251217A026VS00)

[2] Yicai Global - “Forecast 2026 | After a Tougher Year for Liquor, the Reconstruction of Consumers and Scenarios Has Just Begun” (https://www.yicai.com/news/102993699.html)

[3] Sina Finance - “Mid-to-High-End Liquor Takes the Lead, Recovery Signs Appear in the Liquor Market” (https://finance.sina.com.cn/jjxw/2026-01-07/doc-inhfkwsf6883925.shtml)

[4] Nanfang Plus - “People Who Set Alarms to Snatch Moutai: Snatching 1,499 Yuan Feitian to Earn Money for a Cup of Milk Tea” (https://www.nfnews.com/content/X3RvnE1D3P.html)

[5] The Paper - “Moutai Takes a Bold Measure” (https://m.thepaper.cn/newsDetail_forward_32334998)

[6] Jiemian News - “[In-depth] iMoutai Reshapes Kweichow Moutai” (https://m.jiemian.com/article/13870647.html)

[7] Eastmoney - “Proactive Moutai: Will It Be the First to End the Liquor Adjustment Cycle?” (https://caifuhao.eastmoney.com/news/20260120105123817446640)

[8] 21st Century Business Herald - “Feitian Moutai’s Wholesale Price Breaks the 1,499 Yuan Mark Again! The Average Terminal Retail Price Has Fallen for 9 Consecutive Days” (https://www.21jingji.com/article/20260104/herald/f8f4cfca18e2eb8d6a2825ac93cab6aa.html)

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