Jinhui Liquor adjusts its outside-province expansion pace; premiumization continues.

Ask AI · Why can’t Kingway Distillery’s high-end product growth mask the overall revenue pressure?

An Economic Daily reporter Jiang Zheng, Beijing report

Kingway Distillery, which has continued to deepen its high-end strategy, encountered a growth bottleneck in 2025 due to a sharp decline in products priced below 100 yuan.

The latest disclosed financial reports show that in 2025, Kingway Distillery achieved revenue of 2.92B yuan, a year-on-year decrease of 3.4%; attributable net profit was 354 million yuan, a year-on-year decrease of 8.7%.

This is the first time that Kingway Distillery has seen revenue decline in the past several years. In its financial report, the company said the main reasons were the liquor industry’s policy controls, in-depth adjustments, and intensifying competition, which led to a drop in sales volume, resulting in operating revenue decreasing compared with the same period last year, while selling expenses increased compared with the same period last year.

In fact, in recent years, Kingway Distillery has been seeking to adjust its product structure and focus on products priced above 100 yuan. Overall, the company’s high-end strategy continued to deepen in 2025.

In 2025, Kingway Distillery’s products priced above 300 yuan generated operating revenue of 709 million yuan, a year-on-year increase of 25.21%. They accounted for 25.54% of liquor revenue, an increase of 6.02 percentage points; products priced between 100 and 300 yuan generated operating revenue of 1.53B yuan, a year-on-year increase of 3.09%, accounting for 55.17% of liquor revenue, an increase of 3.95 percentage points. Meanwhile, products priced below 100 yuan generated revenue of 536 million yuan, a year-on-year decrease of 36.88%.

“Products priced above 100 yuan accounted for 80.71%, up 9.96 percentage points, and the product structure continued to improve.” Kingway Distillery responded to reporters from China Business Journal.

However, in 2025, the revenue decline figure of products priced below 100 yuan (313 million yuan) was far higher than the revenue growth of products priced above 300 yuan (143 million yuan), which in turn put pressure on the company’s overall revenue.

In addition, the reporter also noted that in the sales data for products priced above 300 yuan, in 2025, sales volume was 17.1652 thousand kiloliters, a year-on-year increase of 37.52%; sales revenue in 2025 was 709 million yuan, a year-on-year increase of 25.21%.

In its research report, CITIC Securities said that in 2025, the year-on-year growth rates of both sales volume and price per ton for products priced above 300 yuan were 37.5% and -9.0% respectively. It judged that the decline in the price per ton was mainly related to intensifying industry competition, the company increasing freight discounts (or invoicing discounts) investment, and lower costs.

“Over the past two years, the company has continuously carried out a user project led by its brand, and in the province, consumers’ brand recognition of Kingway 18 and 28 has been steadily improving. It is expected that Kingway 18 has gained momentum in the province’s 400-yuan price band, driving better performance in terminal sell-through for products priced above 300 yuan.” The research report said.

Zhan Junhao, founder of Fujian Huace Brand Positioning Consulting, believes that the growth rate of Kingway Distillery’s products priced above 300 yuan is clearly significant. Against the backdrop of fierce competition in the industry’s high-end-but-not-luxury segment, it far exceeded market expectations, showing strong results from product structure upgrading. However, the sharp decline in revenue for products priced below 100 yuan is due, on the one hand, to the fierce homogeneous competition in the mass-market liquor segment and a lack of competitive advantages; on the other hand, it is also a strategic choice by the enterprise to actively shrink its low-end product line and focus on mid-to-high-end products. The adjustment intensity was on the high side, and the cliff-like drop in low-end revenue directly dragged down overall revenue, with relatively prominent pain from performance in the short term.

Kingway Distillery told the reporter that in a complex market environment, it has managed to stabilize its fundamental base for development and demonstrated strong development resilience, providing solid support for the brand to build strength and move forward during the adjustment period.

In addition to product structure adjustments, Kingway Distillery’s strategy for expanding beyond its home province has also changed.

Kingway Distillery is located in Longnan, Gansu, and has long been known as the “King of the Northwest.” Besides laying out the provincial market, the company also has arrangements in Northwestern regions such as Shaanxi, as well as in East China and the Northern market. In 2025, Kingway Distillery’s revenue from out-of-province markets was 665 million yuan, accounting for 23.95% of total revenue, up 0.84 percentage points.

However, the company is reducing the number of out-of-province distributors. The financial report shows that during the reporting period, the number of distributors in the province increased by 39 and decreased by 8; while in out-of-province regions, distributors decreased by 171, with only 80 newly added in the same period.

And in 2024, during the reporting period, the number of distributors in the province increased by 48 and decreased by 32; out-of-province distributors added 205 and decreased by 84.

Zhan Junhao believes that the reduction of out-of-province distributors by Kingway Distillery is not a blind contraction, but a targeted optimization of channel layout—eliminating inefficient distributors and focusing on core markets in the Northwest and East China. This adjustment can concentrate resources to deepen efforts in advantageous regions, reduce channel operating costs, and improve the profitability quality of out-of-province markets. Regional liquor enterprises expanding across the whole country should do so within their means: they should first solidify their base in their home province, then steadily expand into surrounding markets; they should not expand blindly, and should control the expansion pace and the input-output ratio.

In its research report, CITIC Securities said that Kingway Distillery’s overall performance in out-of-province markets is steady. It judged that against the backdrop of weak external government and business environments, the company temporarily contracted the East China market and focused resources on布局 its core Northwest markets. At the same time, the company has been continuously adjusting its Shaanxi market, optimizing the distributor structure. It is expected that the sample market in Shaanxi will still be the main contributor to out-of-province revenue. Moreover, successful experience in Shaanxi can be replicated in other Northwest markets such as Xinjiang and Ningxia. Combined with the company’s advantages in market management and organizational capabilities, other Northwest markets are expected to achieve breakthroughs.

Guojin Securities said in its research report that Kingway Distillery’s out-of-province development in Shaanxi and Xinjiang is relatively good, while development in Ningxia and the Northern market remains stable. The contraction in non-core regions such as East China is a focus.

Kingway Distillery said that according to its strategic path of “expanding nationwide, going deep into the Northwest, and making key breakthroughs,” it is steadily promoting the construction of large-Northwest base markets, strengthening internal regional synergy and resource sharing, and continuously improving market share. In the East China market and the Northern market, it is building stable user asset and channel network systems, focusing on cultivating the East China and Northern markets to become new engines for the company’s performance growth, becoming the second growth curve for sales volume.

“At the same time, internet companies operate to increase sales in a refined way around products, content, traffic, and consumers, building a nationwide online marketing platform—becoming the third growth curve for brand empowerment, consumer cultivation, and sales growth. In 2025, it achieved operating revenue of 118 million yuan, a year-on-year increase of 40.26%, and the share increased by 1.35 percentage points.” Kingway Distillery said.

Liquor industry expert Xiao Zhuching said that in recent years, another regional liquor company in Gansu has emerged unexpectedly. Its well-strong brewing capacity from its cellar pits and its large inventory of aged liquor pose a threat to Kingway Distillery’s operations of high-end products. The two companies’ product positioning and product prices have become similar. In the future, Kingway Distillery may face pressure from first-tier liquor brands moving their channels downward; its subsequent performance may continue to face pressure.

Due to the decline in performance, the targets originally set by Kingway Distillery—“2025 revenue of 3.28 billion yuan and net profit of 408 million yuan”—also failed to be met.

The reporter noted that although Kingway Distillery is one of the few listed regional liquor companies that has managed to maintain revenue growth for a sustained period, it has not been able to achieve its profit target for many years.

In 2023, 2024, and 2025, Kingway Distillery planned net profit of 400 million yuan, 400 million yuan, and 408 million yuan respectively; but the actual completed figures were 328 million yuan, 388 million yuan, and 354 million yuan.

As for its operating plan for 2026, in its financial report Kingway Distillery did not clearly present specific numbers. It only mentioned: “Adhere to the general work tone of making progress while staying steady, comprehensively promote quality improvement and efficiency gains, and continuously enhance operating benefits.”

Kingway Distillery told the reporter that it will actively carry out innovation in marketing methods, promote innovation in shared models, build a sustainable community of interests linking manufacturers and suppliers with users, and strive to achieve high-quality development.

(Edit: Yu Haixia Review: Sun Jizheng Proofread: Yan Jingning)