After the Chinese New Year, a phenomenon called “price inversion” appeared in the Chinese liquor market, where retail prices were lower than factory prices. Many liquor companies had to resort to the “shock therapy” of halting supply to stabilize market prices.
Shortly after the Chinese New Year, several Chinese liquor companies announced halts in their supply.
According to financial news on February 22, on February 19, Luzhou Laojiao’s product, Old Head Cellar 500ml, stopped supply; on the 20th, Xijiu’s core product, Core Cellar 1988 (2020 edition), announced the suspension of orders.
Overall, from January to February 2025, more than 10 major liquor companies in China issued a total of 16 supply suspension notices. This included high-end brands like the 8th generation Wuliangye (Pu Wu), Mengzhilan M6+, and Xijiu Cellar 1988; mid-range brands like Yanghe’s Blue of Heaven/Blue of Sea, Jinshiyuan’s Guoyuan Four-Opening/Double-Opening, Fenyang’s Blue Flower 20; and basic brands like Luzhou Laojiao’s Old Head Cellar, Lidu Gaoliang 1955. The companies issuing supply suspension notices covered a wide range of price points, from products priced at around a hundred yuan to high-end products costing thousands of yuan.
Financial analysts believe that this supply halt has three main characteristics: long duration (from before the Chinese New Year to after), wide coverage (across different price points, regional markets, and channel shrinkage), and an upgrade in control measures (moving from simple supply halts to quota controls). This wave of supply halts reflects the collective anxiety of the liquor industry in the face of overcapacity, high inventory levels, and shrinking consumption.
A distributor with over a decade of experience told the media, “In previous years, the Chinese New Year season was a time for price increases, but this year we are busy halting supplies.” Industry monitoring data showed that in January 2025, the wholesale price of Feitian Maotai 53% decreased by 8% year-on-year, while prices of major products like Wuliangye Pu Wu and Guojiao 1573 had price inversions of 10% to 15%. The channel wholesale price of Xijiu Cellar 1988 (390 yuan/bottle) was 31% lower than the factory price (568 yuan/bottle), resulting in distributors losing over a hundred yuan for each bottle sold.
Financial analysts state that the severe internal turmoil in the liquor market and the halting of supply by liquor companies is due to several reasons. Firstly, there is overcapacity. For example, in 2024, the production capacities of Maotai and Wuliangye’s base liquor increased by 9% and 6% respectively, far exceeding market demand growth rates. Secondly, there’s a contraction in consumption. Business banquet scenarios have reduced, with younger generations turning to low-alcohol beverages and craft beer, leading to an 18% year-on-year decline in the sales volume of popular wines priced below 50 yuan. Thirdly, the price system is collapsing, as OEM wines flooding the market impact retail prices, with the percentage of “branded wine products” on a certain Chinese e-commerce platform exceeding 30%, selling at only one-third of the price of genuine products. Additionally, high inventory levels are a concern. According to data from the National Bureau of Statistics of the People’s Republic of China, in 2024, the production output of large-scale liquor enterprises decreased by 12% year-on-year, but social inventory rose to 120 million kiloliters (approximately 24 billion bottles), which is enough for Chinese consumers to “drink for a year and a half.”
Regarding the future of the liquor market, Kaiyuan Securities believes that “the industry truly hitting bottom requires waiting for inventory cycles to clear.” This adjustment not only concerns the reconstruction of price systems but also tests whether liquor companies can break the cycle of “price pressure-supply halt.”
One netizen named “Songbai” commented, “With the economic downturn and reduced income, most people are excluded from buying high-end liquors priced over a few hundred yuan. Only a few can afford to and are willing to drink, so with manufacturers producing so much, oversupply naturally occurs, leading to unsold inventory at lowered prices.”
“Ximen Eating Ice” expressed, “Without a consumer market, halting supplies will only allow other brands to fill the gap. Or halting supplies for a period to uphold brand value is also a way to survive.”
“Fuquanshan” lamented, “A bottle of liquor for several hundred yuan, consuming the livelihood of a farmer, only the wealthy can afford to drink.”