In-depth Analysis of Luzhou Laojiao's Digital Transformation and Youth-oriented Strategy

Currently, China’s baijiu industry is in a

. According to brokerage API data, from January to October 2025, China’s baijiu (converted to 65% alcohol volume) production reached 2.902 million kiloliters, a cumulative decrease of 11.5%, and overall production has been declining for three consecutive years [4]. This round of adjustment has the following characteristics:

:

• High-end baijiu demand has shrunk significantly. According to the judgment of Luzhou Laojiao’s management at the 2025 Second Extraordinary General Meeting, the first quarter of 2026 is expected to be the “critical point” for the industry, and the demand for high-end baijiu during the Spring Festival is expected to shrink by
  30%-40%
• The traditional government consumption scenario has cooled down, and the newly revised “Regulations on Practicing Economy and Opposing Waste in Party and Government Organs” clearly stipulates that alcohol cannot be provided for working meals
• The generational change of consumer groups is accelerating, and Gen Z (post-95s) has challenges in accepting baijiu

:

• The industry presents a
  “K-shaped differentiation”
  pattern. Leading liquor companies can still maintain their positions relying on brand accumulation and channel advantages, while regional liquor companies and “pseudo-high-end” brands are facing life-or-death situations [3]
• The total revenue of 20 listed liquor companies in the A-share market in the first three quarters of 2025 decreased by 5.83% year-on-year, and the total net profit decreased by 6.76% year-on-year. Only Kweichow Moutai and Shanxi Fenjiu achieved “double growth” [5]
• Industry concentration continues to increase, with the top six liquor companies accounting for
  84%
  of sales [5]

:

• “High inventory” and “price inversion” have become two major problems in the industry
• Channel confidence is insufficient, and terminal actual sales are weak
• Distributors have low expectations for the Spring Festival period and are generally cautious and wait-and-see [3]

However, industry experts predict that the

. According to a research report by CICC, under the resonance of three positive factors: policy support for consumption, scenario recovery, and channel innovation, the upward inflection point of the industry will gradually become clear in the first half of 2026 [4].

---

Luzhou Laojiao’s digital transformation has moved from concept to in-depth implementation, mainly reflected in the following dimensions:

:

• The company’s management revealed that by the end of 2025,
  computing power will reach 30T
  , which is leading in the traditional baijiu industry
• The intelligent brewing technical transformation project is expected to
  be put into operation in September 2026
  , marking the deep integration of traditional craftsmanship and modern technology
• Through a high-level think tank led by 5 academicians and top experts, break through the technical bottleneck of low-alcohol liquor

:

• During the “14th Five-Year Plan” period, it has completed the
  full-chain digital transformation
  of brewing production, internal supply chain, marketing system, and headquarters management
• Build a digital operation base to lay the foundation for upgrading to a
  chain-leading enterprise
  during the “15th Five-Year Plan” period
• In the first half of 2025,
  revenue from emerging channels surged by 27.55% year-on-year
  , and gross profit margin increased by 4.52 percentage points [1]

:

• Optimize resource allocation and collaboration efficiency through data analysis
• Realize real-time monitoring of channel inventory and terminal sales
• Support precision marketing and personalized services

Luzhou Laojiao’s digital transformation has significant advantages in the industry adjustment period:

: After the intelligent brewing project is put into operation, it is expected to significantly improve production efficiency, reduce labor costs, and enhance the stability of product quality

: Digital capabilities help the company grasp terminal demand more accurately, optimize channel inventory management, and alleviate the “price inversion” problem

: 30T computing power provides strong technical support for product innovation, market forecasting, and consumer insight

---

Luzhou Laojiao’s low-alcoholization layout can be traced back to the 1970s. After half a century of technical accumulation, it has become an industry benchmark:

:

• Entered the national market promotion stage around 2010, adopting the strategy of “regional breakthrough - national replication”
• Has become the
  first low-alcohol baijiu blockbuster product with sales reaching 10 billion yuan in the industry
  [1]
• As of 2025, the
  sales volume of 38% Guojiao 1573 accounts for nearly 50%
  , successfully achieving structural breakthrough [1][5]

:

• Successfully solved the three major technical problems of low-alcohol liquor: “easy turbidity of wine body, weak taste, and easy hydrolysis during long-term storage”
• Achieve the taste experience of “low but not weak”, ensuring flavor retention and stability
• Based on “Dual National Treasures” technology to ensure quality, providing a technical model for the industry [1]

:

• Plan to launch 28% Guojiao 1573 at the right time and consider lower-alcohol products
• Precisely adapt to Gen Z’s demand for “slight intoxication without getting drunk” drinking experience
• Closely follow the trends of low-alcoholization, healthization, smoothness, and diversification

: According to the prediction of the China Alcoholic Drinks Association, the , with a compound annual growth rate of 25% [1]. Luzhou Laojiao has obvious first-mover advantages in this细分 track

Luzhou Laojiao builds a marketing ecosystem with deep integration of digitalization and scenario-based through channel reform:

:

• Cooperate with platforms such as Meituan and Ele.me to realize “30-minute delivery” instant delivery, matching young people’s social rhythm of “gathering immediately”
• Build a content matrix of “short video + live broadcast + interaction” on platforms such as Douyin and Xiaohongshu
• Launch the “Guojiao 1573 Special Mix Challenge” to encourage users to create UGC content
• Cooperate with bartenders to carry out live teaching, integrating baijiu with young elements such as fruit juice and sparkling water [1]

:

• Continuously build the “Cellar Owner Festival”, integrating leisure and entertainment, food and wine, peripheral purchases, and theme day marketing
• Upgrade baijiu consumption from simple commodity transactions to lifestyle expression
• Low-alcohol Guojiao 1573 has penetrated into emerging scenarios such as small bars and Livehouses

: In the first half of 2025, Luzhou Laojiao’s revenue from emerging channels surged by 27.55% year-on-year, and gross profit margin increased by 4.52 percentage points. Behind this data is the brand’s profound insight into young consumption logic and forward-looking layout [1]

Luzhou Laojiao reconstructs the baijiu narrative with aesthetic language, strengthening young groups’ cultural identity of the “Originator of Strong Aroma Baijiu”:

:

• Build immersive cultural experience spaces, creating a three-dimensional communication field for baijiu culture through interactive exhibitions
• The museum has become a cultural hub connecting tradition and modernity, local and global
• Tell the century-old brand story in a young way, making traditional techniques a social temperature

:

• Do not deny the past, but find a way to dialogue with the future
• When intangible cultural heritage techniques are搭载 on the digital express, the century-old brand can also become a “top stream” in the young consumer market [1]

---

According to brokerage API data, the performance of Luzhou Laojiao (000568.SZ) shows the following characteristics:

:

• Current Price
  : 119.39 yuan (as of December 26, 2025)
• 52-week Range
  : 106.75 yuan - 146.72 yuan
• Year-to-date Performance
  : -1.37% return since the beginning of the year, outperforming the industry overall
• Three-year Performance
  : A cumulative decline of
  46.34%
  , reflecting the pressure of industry adjustment [0]

:

• Price-to-Earnings Ratio (P/E)
  : 13.88 times, at a relatively low historical level
• Price-to-Book Ratio (P/B)
  : 3.53 times
• Price-to-Sales Ratio (P/S)
  : 5.85 times
• Beta Coefficient
  : 0.81, lower than the market overall, with obvious defensive characteristics [0]

:

• Currently in the
  sideways consolidation stage
  , with a trading range of [118.12 yuan, 124.32 yuan]
• KDJ indicator shows oversold opportunities, and RSI is also in the oversold area
• Short-term support level is 118.12 yuan, resistance level is 124.32 yuan [0]

:

• Return on Equity (ROE)
  : 26.10%, leading in the industry
• Net Profit Margin
  : 42.11%, reflecting the premium ability of high-end brands
• Gross Profit Margin
  : 87.11%, maintaining a high level [0]

:

• Current Ratio
  : 3.61
• Quick Ratio
  : 2.57
• Financial Risk Rating
  : Low risk [0]

:

• Operating Revenue
  : 23.127 billion yuan, down 4.84% year-on-year
• Net Profit Attributable to Parent Company
  : 10.762 billion yuan, down 7.17% year-on-year
• Single Quarter Q3
  : Revenue 6.674 billion yuan (-9.8%), net profit 3.099 billion yuan (-13.07%) [3]

Although the performance has declined, compared with the overall industry performance, Luzhou Laojiao has shown strong

. As of the 2025 third quarterly report, only 2 of the 20 listed liquor companies in the A-share market achieved “double growth”, and Luzhou Laojiao’s decline was much smaller than most peers.

• A total of 27 institutions gave ratings within 90 days
  , including
  24 buy ratings
  and
  3增持 ratings
  (wait, need to translate 增持 → “hold”? Wait 增持 is “increase holdings” → but in institutional ratings, 增持 usually translates to “Outperform” or “Add”. Wait let’s check: the original says “买入评级24家，增持评级3家” → “24 buy ratings and 3 outperform ratings”? Or “24 Buy, 3 Add”? Let’s use standard terms: “24 Buy ratings and 3 Outperform ratings”
• The average target price of institutions in the past 90 days is 162.1 yuan
  , which is about 36% upside from the current price [3]
• Margin Trading and Short Selling Data
  : Net inflow of financing was 223 million yuan in the past 3 months, showing that institutional funds are optimistic about the company’s prospects

---

Luzhou Laojiao owns

, which is an irreplaceable core competitive advantage:

:

• “Dual National Treasures” resources (old cellar pool group + intangible cultural heritage brewing techniques) build a deep brand barrier
• The historical status of “Originator of Strong Aroma Baijiu” provides cultural support for high-endization
• Centuries of inherited quality endorsement, establishing trust in consumers’ minds

:

• The old cellar pool group endows products with unique flavor characteristics
• Combination of traditional craftsmanship and modern technology ensures quality stability
• Provides an irreplaceable quality foundation for high-end product lines (Guojiao 1573)

Luzhou Laojiao’s youth-oriented strategy is not a scattered marketing test, but a

:

:

• Deep accumulation of low-alcoholization technology, 38% Guojiao 1573 has become a 10-billion-yuan blockbuster product
• Prepare 28% and lower-alcohol products to form a complete low-alcohol liquor matrix
• Cross-border into fruit wine, sparkling wine and other categories to expand consumption scenarios

:

• Comprehensive layout of instant retail, live-streaming e-commerce, and private domain traffic operation
• Create immersive experiences through IPs such as “Cellar Owner Festival”
• Innovative drinking methods such as cocktails reduce the consumption threshold

:

• Fully upgrade the ecosystem chain strategy during the “15th Five-Year Plan” period, moving towards a chain-leading enterprise
• Strengthen industrial chain collaboration externally, build an open and win-win industrial ecosystem
• Proactively grasp the strategic window period of industrial structure adjustment and consumption transformation [2]

Compared with the previous industry adjustment period (2012-2015), Luzhou Laojiao has shown significantly improved

:

:

• No longer passively “exchange price for volume”, but actively focus on quality improvement and channel optimization
• Abandon relying on channel resilience to push goods, and instead actively explore new growth
• Lay out youth-oriented and digital transformation in advance to accumulate strength for crossing the cycle [5]

:

• The inventory of distributors and terminal tobacco and alcohol stores remains at a reasonable level
• Gradually start inventory destocking, avoiding the risk of inventory collapse
• Help channels relieve difficulties and repair the channel ecosystem [5]

---

Although Luzhou Laojiao’s digital transformation and youth-oriented strategy have shown positive results, it still faces the following challenges:

:

• Management expects that the demand for high-end baijiu will shrink by 30%-40% in the Spring Festival
• Need to balance between consumption scenario recovery, inventory destocking, and demand recovery
• Short-term report adjustment pressure will continue

:

• Although the industry is expected to迎来 an inflection point in 2026, structural differentiation will continue
• Whether channel inventory can complete healthy adjustment by the end of 2025 is still uncertain
• Substantial recovery of business and mass consumption demand needs to be verified in peak season sales [4]

:

• Young consumer groups have challenges in accepting baijiu consumption habits, which takes time and cultivation
• The consumption habits of Gen Z are significantly different from those of post-70s and post-80s
• The trend of “slight intoxication without getting drunk” healthy drinking has an impact on traditional high-alcohol liquor

:

• Leading liquor companies have加码 low-alcoholization and youth-oriented strategies, and competition intensity has increased
• Wuliangye launched 29% “Wuliangye ·一见倾心” (“Fall in Love at First Sight”), with sales exceeding 100 million yuan two months after listing
• Gujing Gongjiu launched 26% “轻度古20” (“Light Gu 20”), which received good market feedback [5]

:

• How to inherit the millennium brewing technique while embracing innovation
• The risk that youth-oriented marketing may dilute the high-end brand image
• Positioning adjustment in the transition from “official liquor” to “personal baijiu era”

:

• The phenomenon of “price inversion” is common in the industry
• The contraction of high-end market demand directly affects the sales and price of Guojiao 1573
• Need to find a balance between controlling volume and stabilizing price and market share

:

• The popularity of traditional business banquet scenarios has cooled down
• The linked sales of high-end catering and high-end baijiu have been affected
• Need to rebuild high-end consumption logic in new scenarios

:

• 30T computing power and intelligent brewing technical transformation require a lot of capital investment
• The benefits of digital operation take time to manifest
• May affect profit margin performance in the short term

:

• Traditional baijiu enterprises lack digital talents
• Organizational culture and digital transformation need to be磨合
• Deep integration of technology and business needs continuous optimization

---

Based on in-depth analysis, we believe that Luzhou Laojiao’s digital transformation and youth-oriented strategy

:

:

1. Structural Growth
   : 38% Guojiao 1573 has become a 10-billion-yuan blockbuster product, accounting for nearly 50% of sales, successfully opening the young consumer market [1][5]

2. Channel Vitality
   : Revenue from emerging channels increased by 27.55% year-on-year, and gross profit margin increased by 4.52 percentage points, showing strong growth momentum [1]

3. Competitive Advantages
   : Low-alcoholization technical barriers, old cellar pool resources, and digital capabilities constitute multi-dimensional competitive advantages

4. Anti-fall Ability
   : The decline in operating revenue in the first three quarters of 2025 (-4.84%) was much smaller than the industry average (-5.83%), showing strong risk resistance

5. Valuation Attractiveness
   : P/E is only 13.88 times, and the institutional target price of 162.1 yuan has a 36% upside from the current price

:

1. Performance Pressure
   : Performance is still adjusting in the short term, and Q1 2026 will face the challenge of 30%-40% demand contraction

2. Weak High-end Demand
   : Youth-oriented products are mainly concentrated in mid-to-low end and emerging scenarios, with limited support for high-end Guojiao 1573

3. Long Cultivation Period
   : The cultivation of baijiu consumption habits among young consumer groups takes 3-5 years

4. Increasing Competition
   : Leading liquor companies have加码 low-alcoholization and youth-oriented strategies, and competition intensity has increased

:

• The support role is
  limited
  . High-end brand premium mainly relies on traditional consumption scenarios and high-end consumption demand, which are in the adjustment period
• The youth-oriented strategy mainly contributes to
  structural optimization
  and
  new growth expansion
  , rather than directly supporting the high-end price system
• Digital transformation is more reflected in
  cost reduction and efficiency improvement
  and
  channel empowerment
  , rather than directly improving brand premium

:

• The support role is
  significant
  . As Gen Z becomes the main consumption force, the layout of low-alcoholization and youth-oriented will become a new growth point for high-end brands
• Digital capabilities will help the company better grasp consumption trends and achieve precision marketing and product innovation
• The cultural breakthrough strategy will strengthen the brand’s high-end cognition among young groups and lay the foundation for future premium

Based on the above analysis, we put forward the following strategic recommendations:

:

1. Stabilize the High-end Base
   :
   • Adhere to the strategy of “control volume and stabilize price” to maintain the price system of Guojiao 1573
   • Strengthen channel inventory management and help distributors destock
   • Focus on core markets and optimize resource allocation

2. Accelerate Youth-oriented Layout
   :
   • Launch 28% and lower-alcohol products as soon as possible to seize the first opportunity in the low-alcohol liquor market
   • Increase investment in new channels such as instant retail and live-streaming e-commerce
   • Deepen IPs such as “Cellar Owner Festival” to create immersive experience scenarios

3. Grasp the Policy Window
   :
   • Pay attention to the introduction of consumption promotion policies and lay out beneficial markets and scenarios in advance
   • Seize the industry inflection point opportunity in 2026 to seize market share

:

1. Build a “Dual-wheel Drive” Growth Model
   :
   • Traditional high-end product line: Focus on consumer groups over 50 years old and business scenarios
   • Youth-oriented product line: Low-alcohol liquor, fruit wine, and new scenario products for Gen Z

2. Deepen Digital Transformation
   :
   • Convert 30T computing power into product innovation and consumer insight capabilities
   • Build a data-driven precision marketing system
   • Achieve digital collaboration across the entire value chain

3. International Layout
   :
   • Seize the opportunity in Hong Kong