Main revenue of Huijiu collapsed; Kouzi Distillery’s operating cash flow has been negative for two consecutive periods.

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As the representative of Anhui liquor, Kouzi Distillery has entered a deep adjustment period amidst declining demand and intensified provincial competition.

In 2025, the company achieved an operating revenue of 3.99 billion yuan, a year-on-year decrease of 33.7%; net profit attributable to shareholders was 670 million yuan, a year-on-year decline of 59.3%, with revenue scale only reaching about 60% of the initial annual budget target.

In the first quarter of 2026, although the rate of decline narrowed somewhat, the trend has not yet reversed. It reported revenue of 1.375 billion yuan, down 24% year-on-year, while net profit attributable to shareholders fell by 46%.

A sharp decline on the revenue side, significant pressure on profits, cash flow turning from positive to negative, and several core indicators weakening simultaneously, together sketch a rare downward cycle for the company since its listing.

A breakdown shows that this round of adjustment is first reflected in the loosening of the core market.

In recent years, internal competition among Anhui liquors has continued to heat up, with regional leaders such as Gujinggong Liquor and Yingjiagong Liquor increasing investment in channels and brand building, while national famous liquors are also accelerating their penetration. Coupled with a temporary weakening of consumption demand, Kouzi Distillery faces an increasingly complex competitive environment.

In 2025, Kouzi Distillery’s revenue within the province reached 3.246 billion yuan, a year-on-year drop of 34.51%, which was larger than the decline in the out-of-province market of 28.58%.

In terms of product structure, in 2025, the company’s premium baijiu revenue was 3.688 billion yuan, a year-on-year decrease of 35%.

With premium products accounting for over 90% of the structure, the company is highly dependent on sub-premium demand, which happens to be the price range most under pressure in the current baijiu industry.

In 2025, the net cash flow from operating activities of Kouzi Distillery was -216 million yuan, turning negative year-on-year with a decline of 114.81%. In the first quarter, this figure was still -135 million yuan, remaining negative for two consecutive reporting periods.

Correspondingly, contract liabilities dropped to 334 million yuan, a year-on-year decrease of nearly 40%; inventory reduction was not smooth, and despite a 22% decrease in output, inventory still increased by 6.4% year-on-year.

Under multiple pressures, the company is also trying to find structural increments.

In 2025, direct sales (including group purchases) revenue increased by 44.4% year-on-year, and in the first quarter of 2026 further rose to nearly 60%.

The growth mainly came from e-commerce and instant retail channels, including “Yuan Ming Qing” series e-commerce exclusive products and volume growth from platforms such as Douyin Local Life and Meituan Flash Purchase.

However, in terms of scale, direct sales still account for a low proportion, so it is difficult to change the overall pattern in the short term.

Moreover, in the context of generally weak industry demand, the shift in channel structure is more a “distribution structure adjustment” rather than an expansion of overall demand, and the support for performance is still limited.

Overall, Kouzi Distillery is currently facing the result of the combined effect of shrinking demand, regional competition, and its own structural issues.

In the short term, performance recovery still depends on inventory digestion and a rebound in channel confidence; in the mid- to long-term, it will depend on whether product structure and channel capabilities can achieve rebalancing.

Against the backdrop of the industry entering a stage of differentiation, this round of adjustment is more likely to be a marathon with no clear end in sight for now.

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