--- title: "Bank of China International: The industry is still in a bottom adjustment phase, and leading liquor companies are operating steadily" type: "News" locale: "en" url: "https://longbridge.com/en/news/241158850.md" description: "Bank of China International released a research report indicating that the liquor industry is still in a bottom adjustment phase, with performance continuing to decline in the second half of 2024, and liquor companies actively slowing down. The performance growth rate in the first quarter of 2025 is expected to slow down, but there will be some recovery compared to the fourth quarter of 2024. The differentiation among different liquor companies is increasing, with leading enterprises demonstrating excellent management and risk resistance capabilities, continuously increasing their market share. The revenue and net profit growth rates for the liquor sector in 2024 are expected to be +7.3% and +7.4%, respectively. Overall, leading liquor companies have medium to long-term allocation value" datetime: "2025-05-21T05:48:03.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/241158850.md) - [en](https://longbridge.com/en/news/241158850.md) - [zh-HK](https://longbridge.com/zh-HK/news/241158850.md) generator: "portal-rs" --- # Bank of China International: The industry is still in a bottom adjustment phase, and leading liquor companies are operating steadily According to the Zhitong Finance APP, Bank of China International released a research report stating that the performance of the liquor industry will continue to bottom out in 2H24, with liquor companies actively slowing down and adjusting their operational pace. In 1Q25, liquor companies will continue the operational pace of 2H24, with performance growth slowing down, but showing some recovery compared to 4Q24. The differentiation among different liquor companies is increasing. In 1Q25, the gross sales difference of listed liquor companies is generally under pressure, and the sales expense ratio has slightly increased. At the bottom of the industry cycle, small and medium-sized enterprises are accelerating their exit, while leading enterprises are significantly enhancing their market share due to excellent organizational management capabilities and strong risk resistance. The current valuation advantage of the industry is evident, and leading liquor companies have medium to long-term allocation value. ## The main points of Bank of China International are as follows: **Performance of the liquor industry bottoms out in 2H24, with liquor companies actively slowing down and adjusting their operational pace** Leading liquor companies have stable performance and continuously increase their market share. In 2024, the revenue and net profit growth rate of the liquor sector are +7.3% and +7.4%, respectively. In terms of quarters, the liquor sector accelerated its bottoming out in 4Q24, with revenue and net profit growth rates of +1.1% and -3.3%, respectively, with the profit growth rate being the lowest since 2021. Affected by the external environment, the willingness of distributors to stock up in 2024 has decreased, and the pressure in the channels has been transmitted to the financial statements, leading to a significant slowdown in the financial statements in 2H24. In 2024, the number of regional leading distributors has significantly increased, and the channel push advantage continues to strengthen. **In 1Q25, liquor companies continue the operational pace of 2H24, with performance growth slowing down, but showing some recovery compared to 4Q24** The differentiation among different liquor companies is increasing. In 1Q25, the consumer confidence index and dining data have shown some recovery. In March 2025, the year-on-year growth rates of retail sales in the catering sector and retail sales above the designated size in the catering sector are +5.6% and +6.8%, respectively, with growth rates increasing by +1.3 percentage points and +3.2 percentage points compared to January-February. Notably, the growth rate of retail sales above the designated size in the catering sector has outpaced that of the catering retail sales for the first time since 2024, indicating a recovery in business consumption. In 1Q25, the revenue and net profit growth rates of listed liquor companies are 1.6% and 2.3%, respectively, showing some recovery compared to 4Q24. Among different types of companies, high-end liquor and regional leading enterprises maintain steady growth, while the performance of nationally distributed mid-to-high-end liquor shows significant differentiation. **In 1Q25, the gross sales difference of listed liquor companies is generally under pressure, and the sales expense ratio has slightly increased** In 2024 and 1Q25, the sales gross profit margins of the liquor sector are 81.8% and 81.5%, respectively, with year-on-year increases of 0.8 percentage points and 0.3 percentage points, mainly driven by the increased revenue share of leading companies. In terms of performance among different liquor companies, in 1Q25, Shanxi Fenjiu, Shui Jing Fang, Yingjia Gongjiu, Lao Bai Gan Jiu, and Jin Hui Jiu benefited from product structure optimization, resulting in year-on-year increases in gross profit margins, while other liquor companies generally saw a decline in gross profit margins. Regarding the sales expense ratio, in 2024 and 1Q25, the sales expense ratios of the liquor sector are 10.4% and 8.3%, respectively, with year-on-year increases of +0.2 percentage points and +0.3 percentage points, indicating a slight increase in the sales expense ratio. In 1Q25, the gross sales difference of the liquor sector remained flat year-on-year, with high-end liquor, nationally distributed mid-to-high-end liquor, and real estate liquor showing year-on-year gross sales differences of -0.5 percentage points, -1.5 percentage points, and +0.2 percentage points, respectively. Overall, the gross sales difference is generally under pressure among different liquor companies. In 2024, the net profit margin of listed liquor companies is 38.0%, remaining basically flat year-on-year From a quarterly perspective, the net profit margin attributable to the parent company for 4Q24 and 1Q25 is -1.6pct and +0.3pct year-on-year, respectively, indicating a temporary pressure on the net profit margin. **The current valuation advantage in the liquor industry is significant, with leading liquor companies operating steadily and possessing medium to long-term allocation value.** In the second half of 2024, the financial reports of listed liquor companies show a noticeable slowdown, with 4Q24 performance accelerating to a low point, and profit growth reaching its lowest point since 2021. Among the listed liquor companies that have announced operational targets, only Moutai and SCSF have met their operational plans in 2024. In the context of existing competition, liquor companies are proactively slowing down to relieve channel pressure. From the performance disclosed in 1Q25, listed liquor companies are becoming more pragmatic in their operations. Citi International believes that in 2025, the industry will still focus on destocking and promoting sales as the main theme. As channel pressures continue to ease, coupled with liquor companies' own move towards refined management, corporate profitability is expected to gradually recover and emerge from the cyclical low. The unique business model of liquor allows for strong performance realization capabilities, especially as leading companies maintain strong abilities in product quality upgrades and price control. In the current industry situation characterized by strong concentration, strong differentiation, and strong squeezing, the advantages of leading companies are evident. In 2024, the revenue of listed liquor companies accounts for 55.1% of the industry, with a year-on-year increase of 1.0pct. At the bottom of the industry cycle, small and medium-sized enterprises are accelerating their exit, while leading companies are significantly enhancing their market share due to excellent organizational management capabilities and strong risk resistance. The assets of listed liquor companies are of high quality, and after the sales tests during the Spring Festivals of 2023 and 2024, leading liquor companies demonstrate a certain level of operational resilience. The current valuation advantage in the liquor industry is significant, and leading companies possess medium to long-term allocation value. In terms of targets, we recommend the stable-performing Shanxi Fenjiu (600809.SH) and Guizhou Moutai (600519.SH), and suggest paying attention to the thoroughly cleaned-up financials of Luzhou Laojiao (000568.SZ) and WLY (000858.SZ), as well as the deeply rooted market foundation of Gujing Gongjiu (000596.SZ) and Jinshiyuan (603369.SH). **Risk Factors** Macroeconomic fluctuations affecting liquor demand, channel inventory exceeding expectations, and price fluctuations of Moutai and WLY impacting the industry price system ### Related Stocks - [600559.CN](https://longbridge.com/en/quote/600559.CN.md) - [000858.CN](https://longbridge.com/en/quote/000858.CN.md) - [000568.CN](https://longbridge.com/en/quote/000568.CN.md) - [600809.CN](https://longbridge.com/en/quote/600809.CN.md) - [600779.CN](https://longbridge.com/en/quote/600779.CN.md) - [600519.CN](https://longbridge.com/en/quote/600519.CN.md) - [603198.CN](https://longbridge.com/en/quote/603198.CN.md) - [603919.CN](https://longbridge.com/en/quote/603919.CN.md) - [603369.CN](https://longbridge.com/en/quote/603369.CN.md) - [200596.CN](https://longbridge.com/en/quote/200596.CN.md) - [000596.CN](https://longbridge.com/en/quote/000596.CN.md) ## Related News & Research - [CLSA: China's Catering Market Still Faces Challenges, Cautious on Mid-Autumn Festival Baijiu Demand Outlook](https://longbridge.com/en/news/298537103.md) - [G Sachs: Weak CN Consumer Demand, Widening Divergence in Trends; F&B, White Goods Favored; Yum China, GUMING Recommended](https://longbridge.com/en/news/298539807.md) - [CLSA: Beverage Demand Yet to Improve in Aug, Beer Sector Lacks Near-term Catalysts](https://longbridge.com/en/news/298403184.md) - [KARAS WINES NOMINATED FOR 'NEW WORLD WINERY OF THE YEAR' BY WINE ENTHUSIAST](https://longbridge.com/en/news/298621657.md) - [Optimum Nutrition Brings an Unexpected Twist to the Beer Aisle with ChampionSips™](https://longbridge.com/en/news/298633813.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**