Zhenjiu Lidu's Worst Annual Report Since Listing: Core Financial Metrics Halved Compared to Last Year

Recently, “Hong Kong’s No. 1 Liquor Stock” Zhenjiu Lidu (06979.HK) disclosed a profit warning announcement, with core financial indicators roughly halved compared to last year. The company expects 2025 revenue to be approximately 3.55 billion to 3.7 billion yuan, down 47.7% to 49.8% year-on-year; net profit attributable to shareholders is estimated at 520 million to 580 million yuan, a decline of 56.1% to 60.6%; and adjusted net profit is projected to be 520 million to 580 million yuan, decreasing 65.5% to 69% year-on-year.

Zhenjiu Lidu stated in the announcement that the performance decline is mainly due to two factors: first, the overall weakening of demand in the white liquor market, with core consumption scenarios such as business banquets, social gatherings, and gift giving shrinking; second, the company actively promoted channel destocking measures in the second half of 2025, which temporarily impacted performance.

The Worst Annual Report Since Listing

Between 2001 and 2009, “White Liquor Godfather” Wu Xiangdong acquired 13 liquor companies, including Hunan Xiangjiao Distillery, Jiangxi Lidu Distillery, and Guizhou Zhenjiu Brewing. In 2021, he merged these assets into Guizhou Zhenjiu Distillery and registered Zhenjiu Lidu in the Cayman Islands. In April 2023, Zhenjiu Lidu was listed on the Main Board of the Hong Kong Stock Exchange, becoming “Hong Kong’s No. 1 Liquor Stock.”

Data shows this is Zhenjiu Lidu’s worst annual report since going public. From 2021 to 2024, revenue was 5.102 billion, 5.856 billion, 7.03 billion, and 7.067 billion yuan, with growth rates of 112.66%, 14.79%, 20.06%, and 0.52%, respectively. Although revenue continued to grow, the overall growth rate showed a declining trend.

Net profits attributable to shareholders for these years were 1.032 billion, 1.03 billion, 2.327 billion, and 1.324 billion yuan, with growth rates of 98.47%, -0.23%, 125.96%, and -43.1%, showing significant fluctuations.

In 2025, revenue for Zhenjiu Lidu first declined, and net profit fell sharply for two consecutive years. This marks the first time since its 2023 listing that both revenue and net profit have decreased.

The decline in performance is closely related to the overall weakening demand in the white liquor market. A research report pointed out that during the recent Spring Festival holiday, overall consumption in the white liquor industry shrank by about 10%, with significant differentiation across price segments: high-end liquor focused on banquet consumption, low- and mid-priced products dominated household consumption, both performing well; mid-tier premium liquors, however, faced pressure, as their main products were caught in a difficult position.

According to Zhenjiu Lidu, to cope with declining market demand and promote business development, the company has adopted multiple strategic measures to lay a solid foundation for 2026, with a focus on continuously advancing the “Wanshang Alliance” model.

The Wanshang Alliance is a new channel model launched by Zhenjiu for “Da Zhen” products, implementing a “no stockpiling, phased delivery” strategy. Alliance merchants are required to complete three deliveries of 100 units each, with delivery pacing ensuring that dealer inventories remain healthy. More importantly, Zhenjiu introduced a rare “bottom-line” policy: even if only one bottle remains, dealers can return it to the company, fundamentally reducing channel inventory risks.

The company also binds the interests of alliance merchants through “full price control” (uniform pricing) and a “continuous profit-sharing mechanism,” promising long-term rebates to prevent channel mispricing. On the operational level, clear entry thresholds are set, requiring payment of goods and deposits to qualify for selling “Da Zhen” series products, with some company stock awarded as well.

Four Major Brands Are Under “Full Pressure”

Currently, Zhenjiu Lidu has four major brands: Zhenjiu, Lidu, Xiangjiao, and Koukouxiao. From the first half of the year, all four brands faced “full pressure.”

Among them, the core brand Zhenjiu reported revenue of 1.492 billion yuan in the first half, down 44.8% from 2.7 billion yuan in the same period last year; sales volume dropped from 6,932 tons to 4,612 tons, and average price fell from 389,800 yuan/ton to 323,400 yuan/ton. Its share of internal revenue decreased to less than 60%.

The multiple declines in sales volume, ton price, and revenue for the core brand are attributed to weak demand in white liquor consumption, with the group strictly controlling sales pace to maintain healthy channel inventories.

Lidu is regarded as the group’s “second growth curve.” Based on 2024 revenue, it ranks as China’s fifth-largest fragrant liquor brand. In the first half of 2025, Lidu’s revenue was 611 million yuan, a 9.4% decrease; combined with a sharp drop in Zhenjiu sales, Lidu’s internal revenue share increased for the first time to 24.5%.

However, this was achieved through volume growth at the expense of price. In the first half of 2025, Lidu’s sales volume increased, but ton price declined, with an average of 348,000 yuan/ton, down over 29% from 492,000 yuan/ton in the same period last year.

The other two brands, Xiangjiao and Koukouxiao, focus on the Hunan market, with relatively small revenue bases. In the first half of 2025, Xiangjiao’s revenue decreased by 38.7% to 277 million yuan, and Koukouxiao’s revenue fell by 63.9% to 81 million yuan, accounting for 11.1% and 3.2% of the company’s total revenue, respectively.

From a product structure perspective, a significant change is occurring: the revenue share of high-end products in Zhenjiu Lidu shrank from 26.4% to 23%, making it the least contributing price segment; the share of mid-to-high-end products was 39.3%, down from 40.7%; and mid- and lower-end products increased their share to 37.6%.

At the start of the second half, Zhenjiu Lidu began attempting a “self-rescue.”

In particular, the new product “Da Zhen,” launched in June 2025, is highly anticipated by the company. Wu Xiangdong, chairman of Zhenjiu Lidu, explicitly stated his hope to make Da Zhen “the second Feitian Maotai,” with most of the second-half budget allocated to this product. Da Zhen has been frequently mentioned in Wu Xiangdong’s personal video channels and the company’s public press conferences, and has been endorsed by Yao Anna, becoming one of the most talked-about new products last year.

Da Zhen is positioned as a mid-to-high-end sauce-flavor liquor. Wu Xiangdong revealed publicly that the group-buying price is set at 600 yuan per bottle, aiming for quality comparable to 3,000 yuan products. Market analysts believe that Da Zhen’s emergence helps fill the price gap between Zhenjiu’s existing products “Zhen Fifteen” and “Zhen Thirty.”

Entering the Beer Market to Seek New Growth

Faced with growth bottlenecks in the white liquor business, Zhenjiu Lidu has chosen to venture into the craft beer market to seek new growth points. Last August 8, Wu Xiangdong appeared in a personal video live stream, personally launching the new “Niu Shi” beer.

During the launch, Wu Xiangdong explained the origin of the name “Niu Shi,” the development story, and why they are making beer. “The name wasn’t created internally; it was bought externally for 50,500 yuan,” he said. He noted that typical beer R&D cycles are usually no more than six months, but this beer took three years to develop. It was originally scheduled for release in 2024 but was delayed due to internal testing of the flavor.

Wu Xiangdong introduced that “Niu Shi” beer uses American West Coast Yakima Valley hops, Canadian and Australian two-row barley, German and Belgian yeast, and Mogan Mountain spring water. To ensure quality control, he also partnered with major cold chain logistics companies.

Regarding the unique value of “Niu Shi,” Wu Xiangdong stated that because it uses 20 times the amount of hops compared to regular beer, it overturns the traditional drinking logic that emphasizes freshness. After aging for 2-10 months, the flavor becomes richer. The product is priced at 88 yuan per bottle retail, with a group-buy price of 60 yuan, and features the slogan “Niu Shi Opens, Good Luck Comes.”

Industry insiders suggest that the core motivation for white liquor companies to cross into the beer (especially craft beer) market is not due to declining sales of white liquor but because the industry is undergoing deep adjustment. High-end liquor demand is weak, inventory pressures are high, and young consumers are losing interest. Under this context, liquor companies need to explore new growth points. Additionally, in the trend of diversification, integrating beer and liquor strategies helps improve product matrices, enhance industry chain efficiency, and meet personalized consumer demands, thereby gaining new volume in the stock market.

In the short term, high pricing limits the target audience, but leveraging existing white liquor channels and seasonal complementarity with white beer are advantages. Over the long term, the craft beer market leads the industry in growth. If “Niu Shi” deepens differentiation and expands into affordable product lines, it could establish a foothold amid consumption upgrades. Market observers remain cautiously optimistic about its future.

Meanwhile, competition among leading craft beer brands is fierce. Domestic brands like Gao Dashi and Panda Craft hold about 38% of the market share; international brands such as Goose Island and Shangri-La Craft account for around 32%; and derivative brands of industrial beer giants, like Tsingtao Craft and CR Snow Craft, hold about 25%.

In this market landscape, breaking through in the hundreds of billions of yuan red ocean is a significant challenge for Zhenjiu Lidu.