In-depth Analysis of Luzhou Laojiao's Response to Transformation Challenges in the Baijiu Industry's 'Personal Consumption Era'

Currently, the Baijiu industry is undergoing

, which goes beyond cyclical fluctuations and has become a [2].

• Restructuring of consumption scenarios
  : The proportion of Baijiu used in business banquets has fallen below 50% for the first time, replaced by light social drinks like coffee and milk tea; the proportion of family gatherings and self-consumption scenarios has risen to 62%, while business banquets have dropped sharply by 30% [2]

• Price band downgrade
  : The main sales price range has shifted from 300-500 yuan to 100-300 yuan; the 500-800 yuan price band is struggling to survive, and the 800-1500 yuan price band has experienced severe price inversion [2]

• Change in consumption motivation
  : Among the decision-making factors for consumers born between 1985 and 2000, the weight of ‘emotional resonance’ has jumped from 18% in 2020 to 43% in 2024, becoming the top factor, and ‘self-pleasure’ has become the core consumption motivation [2]

• Significant generational gap
  : Consumers aged 26-35 account for 39% of Baijiu consumers, while those aged 18-25 account for only 11%. Traditional table culture such as ‘toasting’ and ‘hierarchical etiquette’ is regarded by young people as ‘power oppression’ and ‘invalid social interaction’ [2]

• High inventory
  : The average inventory turnover days of the industry reach
  900 days
  , an increase of 10% compared to the same period last year, and inventory volume increased by 25% year-on-year [2]

• Differentiated competition pattern
  : From January to June 2025, the operating income of the top 6 Baijiu brands (Maotai, Wuliangye, Fenjiu, Luzhou Laojiao, Yanghe, Jiannanchun) accounted for 87.6% of the operating income of 20 Baijiu brands listed on A-shares, and the trend of ‘the strong get stronger’ is becoming more obvious [2]

• Q3 2025 single-quarter revenue: 6.674 billion yuan, down 9.8% year-on-year
• Q3 single-quarter net profit: 3.099 billion yuan, down 13.07% year-on-year
• First three quarters revenue: 23.127 billion yuan, down 4.84% year-on-year
• First three quarters net profit: 10.762 billion yuan, down 7.17% year-on-year [0]

• Net profit margin: 42.11%
  , ROE reaches 26.10%, significantly higher than the industry average [0]
• Current ratio:3.61, abundant cash assets, debt risk level is
  low risk
  [0]
• Free cash flow is about
  18 billion yuan
  , providing sufficient ammunition for strategic transformation [0]

Luzhou Laojiao’s exploration of low-alcoholization dates back to the 1970s, with

, successfully overcoming three major technical bottlenecks of low-alcohol Baijiu: easy turbidity of the wine body, weak taste, and easy hydrolysis during long-term storage [1].

Current product strategies include:

• Continuously deepening the 38° low-alcohol product line
  : Strengthening the soft and smooth drinking characteristics of the wine body through process optimization to adapt to young people’s core needs for low-alcohol, easy-to-drink, and slightly tipsy experiences
• Developing innovative alcoholic products
  : Craft beer, Chinese fruit wine
• Alcohol derivatives
  : Bio-fermented masks, perfumes, etc., to meet the consumption needs of young groups [1]

: According to the prediction of the China Alcoholic Drinks Association, the market size of low-alcohol drinks will exceed 74 billion yuan in 2025, with a compound annual growth rate of 25%, becoming the core engine of industry growth [1].

• In the first half of 2025, revenue from emerging channels surged by 27.55% year-on-year, with gross margin increasing by 4.52 percentage points [1]
• Cooperating with platforms like Meituan and Ele.me to realize ‘30-minute delivery’ of alcoholic drinks
• Building a content matrix of ‘short video + live broadcast + interaction’ on Douyin and Xiaohongshu, launching the ‘Guojiao 1573 Special Blend Challenge’ [1]

• Continuously creating the ‘Cellar Owner Festival’, combining leisure and entertainment, food and wine, peripheral purchases, theme day marketing, etc.
• Low-alcohol Guojiao 1573 has penetrated into emerging scenarios such as small pubs and Livehouses
• Trying to open consumer stores, focusing on displaying products in combination with food and wine consumption [1]

During the ‘14th Five-Year Plan’ period, Luzhou Laojiao anchored the supply chain strategy, promoting

of brewing production, internal supply chain, marketing system, and headquarters management:

• Data scale
  : Increased from 57G to over 200G
• Computing power construction
  : Reaching 30T by the end of the year
• Intelligent brewing
  : Promoting technological transformation projects, cooperating with new energy enterprises like ABB, and deepening cooperation in fields such as green factories and intelligent manufacturing [1]

During the ‘15th Five-Year Plan’ period, it will fully upgrade and implement the

to move towards a chain-leading enterprise [1].

Indicator	Luzhou Laojiao	Wuliangye	Maotai
Market Capitalization	About 175.5 billion yuan	About 426.1 billion yuan	About 1.77 trillion yuan
P/E Ratio	13.88x	14.99x	19.68x
ROE	26.10%	20.15%	36.48%
Net Profit Margin	42.11%	34.59%	51.51%
YTD Stock Price	-1.37%	-19.86%	-4.96%
1-Year Stock Price	-7.84%	-22.97%	-7.51%

• Luzhou Laojiao’s 2025 stock price performance is relatively resilient, significantly better than Wuliangye
• ROE level is outstanding, second only to Maotai, with strong profitability
• Valuation is relatively reasonable, PE is lower than Maotai and Wuliangye

• Maotai
  : Once vigorously launched Maotai ice cream, sauce-flavored coffee, and wine-filled chocolates, but ‘they have basically lost momentum, and sales performance data is mediocre’ [2]
• Industry overall
  : Facing unprecedented challenges, low-alcoholization and light bottle Baijiu have become two main breakthroughs, and in 2025, the alcohol content once dropped from above 30 degrees to single digits [2]

• 50 years of low-alcohol Baijiu technical accumulation
• 38-degree Guojiao 1573 has formed brand awareness
• The strategic effect of emerging channel revenue growth of 27.55% is initially visible [1]

• Net profit margin:42.11%, ROE:26.10%, strong profitability [0]
• Free cash flow: about 18 billion yuan, supporting transformation investment [0]
• Low debt risk, healthy financial structure [0]

• Low-alcohol drink market has a CAGR of 25%, expected to exceed 74 billion yuan in 2025 [1]
• Digital transformation (200G data volume,30T computing power) is expected to build long-term barriers
• International layout has covered more than 70 countries and regions [1]

• ‘Originator of Nongxiang Baijiu’, double national treasures (1573 National Treasure Cellar Group + Luzhou Laojiao Traditional Brewing Technique)
• High-end image and youth-oriented innovation go hand in hand

• Within 90 days,27 institutions gave ratings:24 buy,3 hold
• Target average price:162.1 yuan, with a35.9% upside potential compared to the current119.39 yuan [0]

###4.2 Main Risks and Challenges

• Three consecutive quarters of revenue and profit decline
• Q12026 is regarded by management as the ‘ghost gate’ of the industry, and short-term pressure will still exist

• Consumers aged18-25 account for only11%, significant generational gap [2]
• Conflict between traditional table culture and young people’s values
• Whether youth-oriented products can contribute substantial profits is still in doubt

• Severe price inversion in the800-1500 yuan price band [2]
• Maotai and Wuliangye have obvious advantages in the high-end market
• Price band downgrade puts pressure on profit margins

• Industry inventory turnover days reach900 days, Luzhou Laojiao: about826 days
• Channel inventory reduction may affect report performance

• Return on investment of digital transformation needs time to verify
• Profitability of low-alcohol product matrix is still unclear
• Internationalization faces challenges such as trade barriers and cultural differences

###5.1 Strategic Feasibility Assessment

1. Adequate technical preparation
   :50 years of low-alcohol technical accumulation, not ‘last-minute preparation’
2. Initial results of channel innovation
   : Emerging channel revenue increased by27.55%, gross margin increased by4.52 percentage points
3. Strong financial support
   :18 billion yuan of free cash flow provides transformation ammunition
4. Deep brand heritage
   : Cultural assets of ‘originator of Nongxiang Baijiu’

1. Time threshold
   : The effect of youth-oriented strategy needs3-5 years to verify
2. Scale threshold
   : Low-alcohol products need to contribute substantial revenue and profit
3. Cultural threshold
   : Need to find a balance between maintaining high-end image and youth-oriented transformation

###5.2 Core Variables of Cycle Crossing Ability

Core Variable	Current Status	Observation Indicator
Financial Resilience	Strong (net profit margin:42.11%)	Whether cash flow is sufficient to support transformation investment
Product Innovation	38° technology mature	Low-alcohol product revenue proportion, gross margin contribution
Channel Innovation	Emerging channel growth:27.55%	Online revenue proportion, young customer group proportion
Digital Transformation	Infrastructure construction in progress	Actual improvement of operational efficiency by digitalization
Brand Renewal	In exploration	Change in brand awareness among young groups

###5.3 Time Dimension from Investment Perspective

• Continuous performance pressure, Q12026 may be the industry low point
• Stock price may remain volatile, performance improvement needs to wait for inventory reduction completion
• Risk
  : Continued deterioration of performance, intensified competition in high-end market

• The effect of youth-oriented strategy gradually appears
• Low-alcohol drink market is expected to become a new growth curve
• Digital transformation brings operational efficiency improvement
• Opportunity
  : Under the personal consumption era, enterprises adapting to new demands will win

• Industry pattern reshaped, concentration of leading enterprises increased
• International layout contributes incremental market
• Key
  : Whether to achieve youth-oriented transformation while maintaining high-end positioning

###5.4 Core Conclusion

1. Solid financial foundation
   :42.11% net profit margin, 26.10% ROE,18 billion yuan free cash flow, providing sufficient ammunition for strategic transformation

2. Relatively leading strategic layout
   :50 years of low-alcohol