In the first half of 2026, China's white liquor sector entered a new phase of accelerated market shakeout. Jiangsu King'S Luck Brewery Joint-Stock Co.,Ltd. (SSE: 603369), known as Jinshiyuan, reported total revenue of 6.436 billion yuan, a year-on-year decline of 7.41%, with net profit attributable to shareholders of 2.082 billion yuan, down 6.6% year-on-year, according to the latest half-year reports from listed liquor companies.

Across the industry, 19 listed white liquor companies posted combined revenue of 197.894 billion yuan in H1 2026, a 6.75% decrease year-on-year, while aggregate net profit attributable to shareholders fell 8.39% to 73.1 billion yuan. The pace of decline is accelerating: the median revenue growth rate deteriorated from -12.84% in H1 2025 to -15.34%, while the median net profit growth rate slumped from -24.63% to -40.10%.

The loss-making camp is widening. In H1, only four companies achieved positive revenue growth and four saw net profit growth, while the number of companies with revenue declines exceeding 20% jumped from five a year earlier to seven. More notably, three liquor makers—Shuijingfang, Huangtai Liquor, and Jinz种子酒—have fallen into half-year losses.

Trend One: Growth Model Shift

The industry is pivoting from distributor-centric channel stuffing to consumer-driven sell-through growth. Leading players are accelerating this transition; in H1, Kweichow Moutai's direct sales channels (including self-operated stores and i-Moutai) accounted for 57.3% of revenue. Contract liabilities—a proxy for advance payments—across listed liquor firms totaled 32.384 billion yuan, down 13.6% year-on-year, with 13 of 19 companies reporting declines. Kweichow Moutai's contract liabilities plunged 42.3%, while Luzhou Laojiao and Yanghe also posted sharp drops.

Inventory levels tell a similar story, rising 12.4% year-on-year to 189.188 billion yuan from 168.325 billion yuan. Three companies saw inventory grow over 20%, led by Wuliangye with a 27.68% increase. Jinshiyuan, Huangtai, Yilite, Gujing Gongjiu, and Luzhou Laojiao all recorded double-digit inventory growth despite revenue declines.

Trend Two: Double Squeeze on Margins

With weak demand and intensifying competition, liquor firms are caught between declining gross margins and rising expense ratios, causing net margin erosion to outpace gross margin declines. Twelve companies saw gross margins fall, including Kweichow Moutai, Shanxi Xinghuacun Fen Wine, Luzhou Laojiao, and Yanghe. Net margins declined at 16 firms. Excluding loss-makers, Shede Spirits experienced the steepest drop, with net margin falling from 16.35% to 6.21%. On the cost side, 13 companies increased selling expense ratios, and 13 also raised administrative expense ratios; 14 firms saw combined financial and administrative expense ratios rise. Jinz种子酒, Huangtai, Yanghe, and Kouzi Liquor all reported significant expense ratio increases.

Trend Three: Rising Concentration at the Top

Industry consolidation is accelerating. Kweichow Moutai alone contributed approximately 47% of total listed liquor revenue in H1 2026, up from 43% in the same period of 2025. This concentration masks weakness elsewhere. Wuliangye's reported 20.87% revenue growth in H1 stems from a restatement of its 2025 financials; before the restatement, H1 2025 revenue was 52.77 billion yuan and H1 2024 was 50.648 billion yuan, compared to just 28.417 billion yuan in H1 2026. Meanwhile, other billion-yuan players such as Shanxi Fen Wine, Yanghe, Luzhou Laojiao, and Gujing Gongjiu all posted double-digit revenue declines.

Jinshiyuan Q2 Rebounds, but Cash Flow Worsens

Focusing on Jinshiyuan, the company's H1 revenue and net profit growth rates both ranked sixth among the 19 listed liquor firms, placing it in the upper-middle tier and showcasing relative resilience among regional players. Quarter by quarter, Q1 revenue fell 15.23% year-on-year and net profit declined 15.76%, broadly in line with sector trends. However, Q2 saw a rebound, with revenue up 14.11% and net profit up 19.17% year-on-year.

Yet this Q2 recovery rests on a low base from H1 2025, when Jinshiyuan began actively destocking and de-emphasized payment collection targets, causing a sharp earnings downturn. Operational metrics in Q2 raise doubts about a sustained improvement. Quarterly sales collections were 1.81 billion yuan, down 10.7% year-on-year; net operating cash flow was -498 million yuan, worse than the -350 million yuan a year earlier; and contract liabilities fell by 720 million yuan from the end of Q1.

Product mix in H1 showed a clear downward shift. Revenue from special A+ category products (ex-factory price over 300 yuan) was 3.743 billion yuan, down 13.19% year-on-year; the 400-500 yuan price band of Guoyuan Sikai has been hardest hit by contracting business banquets. Meanwhile, special A category (100-300 yuan) revenue rose 3.36% to 2.307 billion yuan, with mass-market price points acting as an anchor amid the sector's deep adjustment.

Despite the mix shift, gross margin actually improved by 0.73 percentage points to 74.14%. Selling expenses for H1 were 933 million yuan, down 9.4% year-on-year, with the selling expense ratio easing 0.32 percentage points to 14.50%—a rare feat in an industry where only six firms reduced this ratio. Administrative expense ratio fell 0.1 percentage points to 3.28%. Net margin climbed 0.28 percentage points to 32.35%, ranking fourth among the 19 listed companies.

However, a cautionary signal: inventory at end-H1 reached 7.14 billion yuan, up 24.76% year-on-year, outpacing revenue growth. The combination of rising inventory and sharply lower contract liabilities suggests that inventory pressure may persist for Jinshiyuan in the coming quarters.