She De Liquor: Finding New Reasons for Growth in the Era of Baijiu's Return to Consumer Goods

Ask AI · How can Laojiao Liquor’s aging wine strategy adapt to the consumer mindset battle?

Over the past five years, the Baijiu industry has experienced Davis’s “double kill”: valuations and performance have bottomed out. Currently, the market remains closely watching the industry’s next moves.

Shede Spirits is at the center of this major transformation. Its recent earnings report shows that by 2025, the company achieved an operating revenue of 4.419 billion yuan, down 17.51% year-on-year; net profit attributable to shareholders was 223 million yuan, down 35.51%.

At the same time, performance isn’t declining evenly but shows a clear quarter-by-quarter cooling: in Q1, net profit attributable to shareholders was 346 million yuan; by Q3, it dropped to 28.73 million yuan; and in Q4, it turned into a loss of 249 million yuan. Under these circumstances, the company plans to distribute a cash dividend of 3.10 yuan per 10 shares, accounting for 45.67% of net profit attributable to shareholders.

Looking at the numbers, Shede Spirits still maintains operational discipline, but growth pressure is simultaneously emerging from the market, channels, and products. This is mainly due to the significant changes currently underway in the Baijiu industry.

Most people think Baijiu “is not selling anymore,” but industry practitioners focus on the real reasons behind the weakening sales and target solutions accordingly.

With banquet scenes shrinking, gift-giving logic cooling down, and consumers becoming more price-sensitive, Baijiu, once a strongly social “relationship product,” is now returning to the position of everyday consumer goods.

In simpler terms, even Moutai has returned to normal prices, and other brands at the lower end of the pyramid naturally need to find their new positions. Since consumers no longer accept “expensive equals right” as a default, but instead start questioning why a particular bottle is worth buying, brands only need to provide reasons.

For different brands, because consumers and regions vary, the core issues to solve are also different. For Shede Spirits, when “aged wine” no longer naturally equals “high price,” and “famous wine” no longer automatically drives sales, what can it rely on to rebuild purchase reasons?

1. Behind the Financials: Structural Dislocation in the Baijiu Market

The performance change of Shede Spirits in 2025 first reflects in its product structure. Revenue from mid-to-high-end liquor was 3.12 billion yuan, down 23.83% year-on-year; revenue from ordinary liquor was 733 million yuan, up 5.75%. This structure is crucial because it indicates the company’s most important profit source is shrinking, while the growth in ordinary liquor, which is filling the gap, is not enough to provide the same profit margins.

The profit of the Baijiu industry fundamentally comes from brand premiums, which are built on the combined effects of scene, identity, and channels.

Historically, the core consumption scenarios for mid-to-high-end Baijiu were business banquets, holiday gifts, and important social occasions; consumers bought not just a bottle of liquor but a social guarantee. When these scenes diminish, the pricing system for high-end liquor faces stricter scrutiny. Consumers compare, hesitate, and turn to higher cost-performance alternatives.

Shede Spirits does not lack products, but there is a mismatch between products and consumption scenes. The decline of mid-to-high-end liquor and the growth of ordinary liquor suggest the company is trying to penetrate broader consumer layers, but expansion at the low-price end isn’t enough to offset the contraction of high-margin businesses.

This is a typical symptom during the adjustment period of the Baijiu industry: high-end isn’t high enough, penetration isn’t deep enough, and the middle tier faces fierce competition, making complete transformation difficult in the short term.

The same applies to channels. In 2025, Shede Spirits’ wholesale and代理收入为324.9亿元，同比下降25.19%；经销商净减少138家，至2525家。

Channel reduction is not just a number but a signal—traditional Baijiu distribution, stocking, and terminal coverage capabilities are undergoing reassessment. Once channels lose confidence in sales momentum, companies face slower receivables, higher inventories, and weaker market response.

However, Shede Spirits’ e-commerce channel is one of the bright spots, with annual sales of 60.3593 million yuan, up 35.46%. Although online growth alone isn’t enough to change the offline-dominant pattern of Baijiu consumption, it reflects an adjustment in growth logic and demonstrates the company’s proactive approach.

2. Competition in Baijiu Has Shifted from Channel Battles to Mindset Battles

One of Shede Spirits’ most valuable assets is its “aged wine strategy.” The narrative advantage of aged wine is clear: it signifies reserves, vintage, flavor, and craftsmanship accumulation, making it easier to build brand depth and premium space.

However, in today’s consumer environment, aged wine is merely a supply-side capability; it doesn’t automatically translate into a purchase reason on the consumer side.

Today’s Baijiu competition is no longer just about whose liquor is better but about who can make consumers think of them first in specific scenarios. This is a battle of mindsets. In the past, Baijiu consumption was more scene-dependent—people bought it because they needed it for dinners, gifts, or socializing; now, Baijiu companies must proactively create new consumption entry points, turning “want to drink” into “want to buy.”

At the recent Asia-Pacific Forum, Tang Huan, President of Shede Spirits, mentioned that the Baijiu industry faces multiple pressures, including changing consumption trends, declining production, and policy impacts, and believes Baijiu will return to the normal attributes of consumer goods.

This statement essentially points out the industry’s key: Baijiu cannot rely long-term on the old logic of “premium equals reasonable.” It must return to genuine consumer needs. Consumers are willing to pay for Baijiu not because it’s expensive but because it fits perfectly in a specific scene.

This is why “extreme value-for-money” is emphasized. On the surface, it seems like a pricing strategy, but in reality, it’s a correction of the old Baijiu logic: not just comparing who is cheaper but who can find a more reasonable balance among quality, price, and usage scenarios. In some cases, brands need to actively create atmospheres, telling consumers which scene, budget, and mood the liquor suits.

Meanwhile, consumer behavior is also changing. Tang Huan pointed out that the new generation prefers small, easy-to-drink products. This indicates that Baijiu cannot continue to think only within traditional banquet scenes but must actively enter new contexts like light socializing, self-drinking, pairing with meals, low-alcohol options, and self-pleasure consumption. Relying solely on the old perception of “drink premium liquor” makes it hard to adapt to an era that values daily comfort, experience, and cost-effectiveness.

From this perspective, although Shede’s aged wine may be less attractive than before, there is a significant way to improve: redefine how consumers understand aged wine.

The industry isn’t short of brands that talk about history, heritage, and craftsmanship; what’s missing are brands that can translate these concepts into purchase reasons. High-end liquor sells status, but status depends on scene presence; if scenes shrink, the premium diminishes. The pressure on Shede’s mid-to-high-end segment is essentially a result of this shift.

3. Shede’s Path Forward Is Not to Maintain Old Growth but to Rebuild a New Growth Organization

Repeating the same problem endlessly won’t improve actual business results. The focus should be on strategic restructuring, which not only relates to short-term performance recovery but also to deeper growth reorganization. The former is short-term; the latter, like the cultural roots behind Baijiu brands, has a profound and lasting impact.

First, Shede has established a dual-brand system centered on “Shede” and “Tuopai”: Shede focuses on being the leading aged wine brand, while Tuopai handles mass-market, cost-effective products. This approach itself is sound, but the real challenge lies in resource allocation.

In the Baijiu consumer circle, there’s a saying: “Luzhou’s aroma, Wuliangye’s richness, Gulinggong’s charm; Jiannanchun’s austerity, Shede’s fragrance, Yanghe’s softness.” It shows that from the most basic aroma types, Baijiu has its ecological niches. These niches are also a continuation of historical memory because brewing itself is a business of time.

Building on this, many consumers in Shede-related comment sections suggest that Shede should pay more attention to Tuopai, which is favored by many “old-timers” as a staple, representing the “Sichuan style aroma.” This could lead Shede to consider more refined brand operation strategies—high-end brands need stable pricing and brand momentum, while mass brands require stronger channel penetration and sales efficiency. How resources are divided directly impacts profit structure.

Additionally, the annual report shows that in 2025, Shede’s revenue in the provincial market decreased by 20.19%, and outside the province by 19.25%. This indicates that whether in core markets or expansion areas, Shede needs to adapt. During the industry’s destocking cycle, how should the nationalization narrative be laid out? Should the focus be on deepening existing markets? These factors may have a more immediate impact on profits.

Finally, regarding expanding consumption scenarios, Shede has proposed a “wine + dining + scenery + tourism” linkage, which is a necessary path for Baijiu to return to everyday life scenes. Embedding into dining, tourism, cultural experiences, family gatherings, and light socializing could help Baijiu become a “daily choice” again.

This requires continued effort in product development and marketing. For example, brands like Wuliangye and Luzhou Laojiao have launched low-alcohol products targeting younger consumers, along with co-branding and channel expansion to change stereotypes about Baijiu.

Shede is also doing this, with the launch of 29-degree “Shede Zizai.” How these new products, and others in reserve, will be marketed and received is worth close attention. While their short-term impact on the company’s structure may be limited, they will test the company’s ability to adapt organizationally to market demands.

In the longer term, the Baijiu industry is shifting from selling brands to selling reasons. The glory of Baijiu in the past is no longer able to illuminate today’s consumer environment. What consumers need, what changes are short-term or long-term, will remain an eternal question for the industry to ponder.

Source: Songguo Finance