CITIC Construction Investment: Spring Sugar and Wine Fair Experiences "Hot and Cold" simultaneously; Focus on four key initiatives by wine companies

CITIC Securities’ research report states that this year’s Chun糖 fair is taking place during a deep adjustment phase in the liquor baijiu industry, and during this round of adjustment the industry is undergoing an in-depth industrial restructuring—shifting from the B-end to the C-end and from channels to consumers. Therefore, this year’s Chun糖 fair shows a coexistence of “cool” and “hot” conditions. CITIC Securities believes that this stage is not only about clearing out inventory and earnings; the measures that distilleries take now and the strategic directions they choose will affect the industry landscape 3–5 years later. Key focus is on four major dimensions of initiatives: price positioning, category innovation & new channel layout, product line layout, and adjustments to nationwide strategy.

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CITIC Securities’ food and beverage: “Cold and hot” coexist at Chun糖—watch distilleries’ four key dimensions of initiatives

This year’s Chun糖 fair is taking place during a deep adjustment phase of the baijiu industry, and during this round of adjustment the baijiu industry is undergoing an in-depth industrial restructuring—shifting from the B-end to the C-end and from channels to consumers. Therefore, this year’s Chun糖 fair shows a coexistence of “cool” and “hot” conditions. We believe that this stage is not only about clearing out inventory and earnings; the measures that distilleries take now and the strategic directions they choose will affect the industry landscape 3–5 years later. We will focus on the following four dimensions of initiatives: price positioning, category innovation & new channel layout, product line layout, and adjustments to nationwide strategy.

On March 28, 2026, the 114th National China Wine, Food and Liquor Commodities Fair (2026 Chun糖) officially concluded in Chengdu.

This year’s Chun糖 fair shows a coexistence of “cool” and “hot.” Hotel exhibitions—centered on attracting business—are experiencing “coolness,” while distilleries’ confidence, new product launches, and C-end transformation are still “hot.”

1）Hotel exhibitions meet with a chill: Before hotel exhibitions at the Chun糖 fair were launched, Kweichow Moutai announced that it would withdraw from hotel exhibitions. In addition, Luzhou Laojiao also stopped large-scale activities at hotel exhibitions. Leading liquor brands such as Wuliangye and Yanghe Co., Ltd. also did not release information about holding marketing activities during the China Wine, Food and Liquor Commodities Fair. Some media reports said there were more exhibitors than buyers at this year’s Chun糖 fair. We believe that behind this phenomenon is that the baijiu industry is undergoing systematic industrial restructuring. Because the channel system of leading baijiu brands is very mature, with stable team of agents and scarce distributorship rights, there is no need to use the hotel exhibition at the Chun糖 fair for business attraction. Previously, the hotel exhibition’s value was more oriented toward brand promotion. Against the backdrop that the industry is shifting from the B-end to the C-end, distilleries are moving from “large-scale招商” to “targeted, tiered-layer marketing.” As a result, hotel exhibitions aimed at the general public are cooling down, but industry exchanges that are not public and are limited to small circles have not decreased.

2）Distilleries’ confidence, new product launches, and C-end transformation remain “hot”: Before and after this year’s Chun糖 fair, many distilleries launched new products, including Luzhou Laojiao’s Jiao 3 and Jiao 5, the Fifth-generation Zhen Shijiu 15, 42-degree Qinghua Fenjiu Longzun, and three new liquor beverage lines under Tanggou—“Er Jiu Wei Li,” “Hou Lang,” and “Gui Ye.” In addition, Langjiu stated that it will accelerate the layout of 39-degree Qinghua Langjiu. Moreover, distilleries such as Luzhou Laojiao, Shede Liquor, and Jinhui Liquor released investor relations activity record sheets, and all said they will maintain strategic focus, ensure healthy channels and stable price bands, and convey positive confidence.

Industry expert Wang Chaoceng stated that China’s baijiu industry is currently in an adjustment phase driven by inertia, but the second half of 2026 is expected to see marginal improvements. On March 24, 2026, Wang Chaoceng, chairman of Shengchu Group, said at the “Twenty-Third Wine Industry Marketing Trend Summit Forum” that: 1）Although China’s baijiu industry has been affected by the misalignment of the Spring Festival calendar, the data showing that retail sales of tobacco and alcohol categories grew 19.1% in January–February is eye-catching, but actual sell-through still shows a decline driven by inertia; 2）Moutai’s new policies, such as direct sales at 1,499 yuan through “i Moutai,” have led to a short-term rise in both volume and price, but investors should be wary that an oversupply may weaken the price advantage. The long-term effect of its “balancing market-oriented reform and high-end positioning” remains to be tested; 3）Wuliangye is expanding market share with “buying volume by adjusting prices,” and Luzhou Laojiao is “protecting prices to defend channels”—both are realistic choices under brand strength. 4）He judged that the industry will still remain in an inertia-driven adjustment period, mainly due to the high base effect, the Moutai Hongxi (siphoning) effect, and the inertia of government and business consumption policies, but marginal improvement is expected in the second half of 2026—low base, consumption reaching a bottom, and the clearing out of weaker brands through pressure from advantaged brands will help leading companies stabilize. 5）During the adjustment period, enterprises need to use price-for-volume at the “second-tier high-end,” focus on core areas, and have manufacturers and sellers jointly bear inventory burdens. They should also shift toward decentralized brand communication such as short-form videos to adapt to the logic of new consumption.

We believe that this stage is not only about clearing out inventory and earnings; the measures that distilleries take now and the strategic directions they choose will affect the industry landscape 3–5 years later. We will focus on the following four dimensions of distillery initiatives:

1）Price positioning: Since last year, high-end liquor wholesale prices represented by Moutai and Wuliangye have fallen significantly. After this year’s Spring Festival, the Puputu wholesale prices have remained stable at around 1,600 yuan, and the Wupu wholesale prices have remained stable at around 800 yuan. The 1935 wholesale price has dropped to 600–650 yuan, and the wholesale prices of traditional high-end liquors such as Qinghua Lang and Junpin Fenjiu have fallen to 630 and 588 yuan, respectively. In addition, the price levels of low-alcohol Wupu and low-alcohol Guojiao are also in the range of 600–650 yuan, and the 10-year Honghu Lang wholesale price has dropped to around 225. Therefore, we believe that the downward pressure on high-end liquor prices will lead to a re-segmentation of the baijiu price bands. Previously, we generally believed baijiu price bands are divided into mid-to-low-end (below 100 yuan), mid-to-high-end (100–300 yuan), second-tier high-end (300–800 yuan), and high-end (above 800 yuan). Now, baijiu price bands may change to mid-to-low-end (below 100 yuan), mid-to-high-end (100–200 yuan), second-tier high-end (200–600 yuan), and high-end (above 600 yuan). With changes in price band layout, distilleries’ volume-and-price strategies and product layout also need to be adjusted accordingly.

2）Category innovation & new channel layout: ① Reviewing history, during adjustment periods the baijiu industry often has category innovations. For example, after the previous adjustment period, categories represented by non-standard Moutai and old liquor products emerged, catering to the baijiu investment and collection demand at that time. Currently, categories such as low-alcohol liquor, loose liquor & “light-bottle liquor” (sells-to-pour shop), and health liquor are emerging, catering to current consumers’ demand for drinkability and value-for-money. Category adjustments and updates are to match changes in consumers’ liquor drinking needs and consumption scenarios. Although the short-term contribution of newly emerged categories is limited, there is potential for major single products in the medium to long term. ② In addition, with the rise of online liquor channels, leading distilleries are embracing new channels such as instant retail. According to the China Alcoholic Beverages Circulation Association’s release of the 2025 fourth-quarter China alcoholic beverage market prosperity index (ACI), the prosperity indexes of online terminal, supermarket terminal, tobacco-and-alcohol shop terminal, and comprehensive retail terminal were 83.98, 51.14, 41.45, and 42.92 respectively. Behind the online channel’s high prosperity index of 83.98 is the fundamental transformation of the ecommerce role. Female consumers are becoming a core driving force of diversified consumption online, and new liquor beverages such as low-alcohol liquor and pre-mixed drinks are highly favored (prosperity index 53.71).

3）Product line layout: With the reconfiguration of price bands + changes in government-business consumption demand, distilleries need to optimize their volume-and-price strategies and product line layout. For instance, they can make the 100–600 yuan price range more closely covered; or explore new high-end consumption scenarios to activate price points above 300 yuan; or layout new liquor beverage categories to meet new demand. Currently, distilleries’ mainstream strategies can be divided into two categories: ① High-end-line products hold their price to maintain values, while mid-end and low-end products scale up volume (e.g., Luzhou Laojiao and regional brands such as Gujing Gongjiu); ② Strong-brand main products appropriately cut prices to increase market share (e.g., Feitian Moutai, Eightth-generation Wuliangye, Honghu Lang, and other nationally strong-brand liquor brands).

4）Adjustments to nationwide strategy: In the current industry adjustment period, distilleries’ nationwide strategy needs to focus further and aim to improve the efficiency of spending.

Demand recovery falls short of expectations. In recent years, due to factors such as the macro environment, economic growth has slowed somewhat, and national income growth has also been affected. In the future, the recovery pace of residents’ income growth in the medium and short term and the pace at which consumption power increases may fall short of expectations;

Baijiu inventory destocking falls short of expectations. At present, baijiu is in the process of destocking. Distilleries’ earnings decline is used to improve channel health. If sell-through recovery does not meet expectations, the time when inventories hit the bottom will be delayed, and the turning point of the industry cycle will be extended.

High-end demand continues to be sluggish, and high-end prices will face pressure.

Food safety risks. In recent years, food safety issues have always been a focus of consumers’ attention. Although companies in the industrial chain have continuously improved production-quality management and control levels, because the industrial chain is relatively long and involves more links and companies, there are still risks regarding food quality and safety;

（Source: Securities Times）