Kweichow Moutai: Earnings Hit the Brakes Again? Still in 'reform growing pains'!

On the evening of Aug 15 Beijing time, Kweichow Moutai (600519.SH) released its Q2 2026 results. Overall, performance was weak, with both revenue and profit turning negative and missing expectations, which we believe was mainly dragged by the steep price cuts on non-standard SKUs at the start of the year.

1) Channel reform pains exceeded expectations. Moutai reported revenue of RMB 37.6bn in Q2, down 5.2% YoY. Although the late-Mar ex-factory price hike for Feitian took full effect in the quarter, the shift in channel strategy led to a deliberate pullback in high-margin non-standard product supply and lower proxy-sale pricing on i Moutai vs. the prior dealer prepayment price, compressing the blended ASP per ton and offsetting the uplift from Feitian's price increase. As a result, revenue still declined, and attributable net profit came in at RMB 17.2bn, down 6% YoY, a faster drop than the top line.

2) Non-standard SKUs saw both price and volume declines, the key drag. By product, Moutai liquor revenue was RMB 31.7bn, -1% YoY, vs. a consensus that unrealistically penciled in +15%. Even with cumulative ex-factory hikes of 17% YTD for Feitian, revenue still edged down, suggesting that after shifting non-standard items into proxy-sales, volumes were also soft in addition to the visible ASP pressure, especially in the first quarter of this model's rollout. Series liquor revenue was RMB 5.1bn, -25% YoY, and dealer numbers fell by a net 46 in H1, mainly in series liquor, indicating ongoing destocking.

3) i Moutai has become the dominant core channel. Direct sales revenue reached RMB 22.5bn, up 33.6% YoY, with i Moutai contributing RMB 18.7bn in the quarter, nearly half of total revenue and 83% of direct sales. For an in-house app launched less than three years ago, this scale-up is remarkable, but it has come with a sharp short-term contraction in wholesale channels, which fell 35% YoY.

4) Lower ASP per ton modestly pressured group GPM. Q2 GPM declined 120bps YoY to 89.5%. While the mix of higher-margin direct sales increased, the deterioration in product ASP and mix more than offset channel mix benefits, keeping margins under pressure, and opex was broadly stable vs. last year. Attributable net profit was RMB 17.2bn, down 6% YoY.

5) Key financials at a glance

Dolphin Research view:

Heading into Q2, the market expected that as the first full quarter after Feitian's price hike (adding a 2%+ apparent lift), coupled with continued scaling of i Moutai, revenue was unlikely to turn negative. However, in practice, the expansion came mainly from direct sales, which sell non-standard SKUs that were cut by 30%+ in price earlier this year and Feitian priced under the i Moutai system. This created an awkward setup: wholesale, where prices were raised, shrank, while direct sales, where prices are lower, expanded, limiting the pass-through of the price hike on the P&L and driving the miss.

Setting aside this quarter's noise, consider the market's focus on Moutai's frequent price hikes over the past six months. The table below summarizes the changes and provides the recent pace and structure of adjustments.

Year to date, Feitian has seen double-digit price hikes, and the ex-factory price (+17.1%) has moved almost in lockstep with the company's own store terminal retail price (+16.9%). This marks a break from the old model of only lifting ex-factory prices while keeping the list retail price fixed, shifting instead to a market-following dynamic pricing mechanism.

Under the current architecture, i Moutai at RMB 1,639 is the lowest, but requires a draw, anchoring the social wholesale price and acting as the baseline for inclusivity, traffic, and price floors. Offline self-operated stores at RMB 1,753 cost about a hundred yuan more, but offer immediacy and guaranteed authenticity, reflecting brand trust premium. Traditional dealers continue to provide broad geographic coverage and down-market distribution, with prices floating based on supply-demand.

Why did Moutai choose to raise prices so frequently this year? We see three angles. a) Demand resilience has been tested. The regular launch of Feitian on i Moutai essentially served as a nationwide real-demand stress test, and absorption far exceeded expectations, as management colorfully put it at the AGM: 'The volume released daily on i Moutai is like rain in the desert, it disappears as soon as it falls.'

This shows that the reach of the prior 2,000+ dealer network was very limited, and many long-tail consumers with purchasing power simply lacked proper channels. The platform addressed this gap and validated latent demand that had not been effectively captured before.

b) Offsetting the drag from early-year non-standard price cuts on ASP and mix. Historically, non-standard SKUs, though booked under self-operation, were effectively distributed by provincial sales companies to dealers at about a 10% discount to retail, leaving dealers to absorb and sell. In 2025, severe price inversion forced dealers to either tie up cash or sell at a loss. In early 2026, Moutai moved non-standard distribution into self-operation (online i Moutai plus offline proxy sales), cutting i Moutai pricing by about 30% vs. prior dealer prepayment terms and weighing on ASP per ton for the year, hence the need to raise Feitian prices dynamically and repeatedly to offset the margin hit.

c) Highlighting value for money of non-standard SKUs and preserving H2 volume room. As Feitian rose from RMB 1,499 to RMB 1,753 in self-operated stores, the traditional premium of boutique and zodiac editions over Feitian, once RMB 500–1,000 or more, has compressed to around RMB 600. This can catalyze consumer value discovery in non-standard SKUs. With limited Feitian supply in H2, the company will need measured volume from non-standard lines to support results, so lifting Feitian ahead of peak season paves the way for non-standard volume.

From an investment pacing perspective, while Q2 results show the reform costs are larger and more front-loaded than expected, we remain constructive on Moutai's market-oriented reform, with no change to the core thesis but shifting the timeline back by one to two quarters. The execution path remains intact, albeit with a steeper near-term trade-off between channel transformation and reported metrics.

Given further price hikes in Jul and Aug and a low base in H2 last year, we expect revenue growth to turn positive in Q3 and accelerate in Q4, implying a 'low first, high later' year. On a 5% net profit growth assumption, the current multiple is about 19x. This embeds a cautious stance and leaves room for multiple expansion if pricing stabilizes and mix improves.

On supply-demand and valuation alignment, supply-wise, Feitian shipments in H1 were front-loaded vs. prior years, implying a tighter H2 YoY supply. On demand, after the stepped-up anti-alcohol measures from May 18 last year, sell-through in H2 2025 faced a very low base, meaning from this May, demand is unlikely to be worse YoY and should see gradual recovery. This setup supports a sequential improvement through the remainder of the year.

Historically, in wholesale price up-cycles, the market has assigned Moutai a 25–30x PE, while down-cycles pull it back to 18–20x. At around 19x today, the market is effectively pricing in a prolonged bottom in wholesale prices, yet recent prints show a clear inflection, and if Feitian wholesale prices stabilize and trend up in H2, valuation should repair further. Any panic-driven sell-off on the Q2 miss could be a buying opportunity, in our view.

Detailed financial statements for Kweichow Moutai

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Longbridge Dolphin Research articles on 'Kweichow Moutai'

Earnings Season

Apr 17, 2026: 'Kweichow Moutai: Don’t Fear the Numbers, Marketization Is the Trump Card'

Oct 29, 2025 earnings take: 'Kweichow Moutai: Shedding Channel Burdens, Awaiting the Cycle Turn'

Apr 29, 2025 earnings take: 'Kweichow Moutai: Non-Standard in One Hand, Series Liquor in the Other, No Fear of Slower Feitian'

Apr 3, 2025 earnings take: 'Moutai: Barely Passing, How to Restore a Shattered Myth?'

Oct 26, 2024 earnings take: 'Moutai: Can the Pillar Still Hold Up A-shares’ Backbone?'

Apr 3, 2024 earnings take: 'Anyone Can Falter, Moutai Is the Weeble'

Mar 31, 2023 earnings take: 'i Moutai as the Anchor, the Stabilizer Holds'

Oct 17, 2022 earnings take: 'No Issues with Moutai’s Numbers, Sentiment Is the Swing Factor'

Aug 3, 2022 earnings take: 'The Backbone Reports: A-shares Come and Go, Moutai Stands Firm'

Apr 26, 2022 earnings take: 'Direct Sales Keep Firing, Moutai Keeps Dancing'

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