Interview with National People's Congress Representative Yan Tao: The Baijiu Industry's Bottom Assessment is Basically Sound, Must Remain Vigilant Against Price Wars

Southern Finance National Two Sessions Report Team Xiao Xia

“Young people are not rejecting baijiu itself, but traditional ‘drinking culture.’ Therefore, companies should fully consider and create light social scenarios in product development.”

During this year’s National Two Sessions, Yan Tao, a National People’s Congress delegate and Party Secretary and Vice Chairman of Zhenjiu Lidu Group, told the Southern Finance National Two Sessions reporting team.

This is Yan Tao’s fourth time attending the National Two Sessions. Over the past few years, he has offered suggestions and expressed opinions on improving tax distribution between head and branch offices, supporting the healthy development of the liquor industry, and emphasizing the social responsibility of private enterprises. As a representative of the liquor industry, this year he again brought multiple suggestions focused on the baijiu sector.

The baijiu industry has been undergoing comprehensive adjustments for two or three years. As inventory gradually clears, leading liquor companies have delivered unexpectedly strong performances this Spring Festival. Regarding whether the industry can bottom out this year, many liquor executives and domestic and international institutions have expressed positive views, though some top companies remain cautiously optimistic.

In response, Yan Tao told the Southern Finance National Two Sessions reporting team, “I believe the judgment that the industry is at the bottom is basically correct.”

He noted several signals indicating a bottom: weak sales activity, low wholesale prices, low market expectations, and the fact that mainstream liquor companies are generally shifting from “passive pressure” to “active adjustment,” with performance growth slowing or even turning negative. “This shows the industry is actively clearing inventory and shedding burdens.”

However, Yan Tao also emphasized that to truly determine a rebound, multiple inflection points must occur simultaneously: inventory returning to reasonable levels, business banquets stabilizing and rebounding, and the price system stopping its decline and beginning to recover.

Additionally, regarding industry hot topics such as youth orientation, low-alcohol products, internationalization, and how to view the booming instant retail of liquor, Yan Tao shared his insights.

Regarding instant retail, he highly praised it as a strategic new channel that will reshape how baijiu reaches consumers, but warned of the risks of price wars driven by platform subsidies.

“21st Century”: Some believe the baijiu industry is currently at the bottom. How do you view this? What conditions do you think need to be met to determine that the industry has bottomed out and is rebounding?"

Yan Tao: I believe the judgment that the industry is at the bottom is largely correct. Several signals clearly indicate a bottom: weak sales activity, low wholesale prices, low market expectations, and the shift of mainstream liquor companies from “passive pressure” to “active adjustment,” with slowing or negative growth.

This shows the industry is actively clearing inventory and shedding burdens.

To truly judge a rebound, I think three conditions must be met simultaneously: first, channel inventory must return to reasonable levels. For example, last year in the second half, Zhenjiu Lidu proactively controlled inventory, which temporarily pressured performance but significantly improved channel health. Second, demand in core scenarios like business banquets must stabilize and rebound. Baijiu is fundamentally a social currency, and the recovery of business scenarios is a leading indicator of industry warming. Third, the price system must stop falling and begin to rise. The stabilization of wholesale prices for flagship products is a key signal of industry confidence recovery.

I expect the baijiu industry to develop positively by 2026.

“21st Century”: Over the past two years, due to adjustments, companies and distributors have paid close attention to generational changes among baijiu consumers. Do you think low-alcohol products are a truly worthwhile investment? We see many companies producing products under 30 degrees, and some are promoting cocktail-style mixed drinks with foreign spirits. However, many opinions suggest ultra-low-alcohol baijiu lacks market competitiveness, with some leading companies questioning its viability and considering other ways to cultivate young consumers’ favorability. What is your view?"

Yan Tao: Low-alcoholization is a direction worth exploring, but it is not the only answer.

The China Alcoholic Drinks Association previously forecasted that by 2025, the low-alcohol market would surpass 74 billion yuan, with a compound annual growth rate of around 25%, indicating genuine market demand. Zhenjiu Lidu is closely monitoring this trend and will adjust its layout based on consumer feedback.

Of course, low-alcoholization should not be pursued just for the sake of it. I have three thoughts:

First, low-alcohol products are not simply about reducing alcohol content. They require higher quality base liquors; reducing alcohol without sacrificing quality is a technical challenge. Sacrificing taste just to lower alcohol content can damage the brand.

Second, scenario fit is more important than alcohol degree. Young people are not rejecting baijiu itself but the traditional “drinking culture.” Companies should focus on creating and considering light social scenarios in product development, which is more effective than merely pushing low-alcohol products.

Third, maintain strategic focus. Low-alcohol products can be a supplement but should not shake the fundamental attributes of baijiu.

“21st Century”: To cultivate young consumers, what do you think is the most important thing for baijiu companies to do? Provide scenarios for young people to choose baijiu? Endow baijiu with stronger interactive cultural value? How is your brand, such as Xiang Jiao, currently approaching this?"

Yan Tao: To cultivate young consumers, I believe the core is to help them understand and appreciate Chinese baijiu culture. Baijiu should be a carrier of taste and emotion, but many young people see it as a form of social conformity.

What we need to do is “return” baijiu to young people—allowing them to rediscover Chinese baijiu in their own way and within their preferred scenarios. Currently, Xiang Jiao is working on product innovation, brand communication, and marketing strategies to meet the personalized needs of young consumers.

“21st Century”: Since last year, e-commerce has vigorously promoted instant retail with significant subsidies. How do you view the significance of instant retail channels for baijiu? Is it a short-term trend or a potential key channel?"

Yan Tao: I believe instant retail is not just a short-term trend but a strategic channel that is reshaping how baijiu reaches consumers.

First, it reaches the “last mile” of young consumers. Data shows that over two-thirds of Meituan Flash Sale users are post-90s, which is exactly the demographic baijiu companies most want to reach.

Second, it extends consumption scenarios. Instant retail transforms baijiu from traditional settings like banquets and gift-giving to daily scenarios such as home drinking and spontaneous visits among friends, creating new growth space.

Third, caution is needed regarding price wars. The phenomenon of price inversion caused by platform subsidies is concerning. When cooperating with platforms, companies should seize opportunities but also maintain price red lines.

“21st Century”: In recent years, baijiu companies have accelerated their “going global” efforts, but they face challenges in brand recognition, overseas spirits taxation, and other areas. From your company’s perspective, is there a phased plan for internationalization? Regarding overseas spirits taxation, you previously made suggestions—are there any developments?"

Yan Tao: Zhenjiu Lidu actively promotes internationalization. The group successfully listed in Hong Kong in 2023, attracting more global investors and marking an important step in the brand’s international expansion. In recent years, Zhenjiu Lidu products have entered Hong Kong, Macau, and Southeast Asian markets, and we have partnered with China Duty Free Group to provide more convenient purchasing channels for domestic and overseas consumers.

Regarding taxation, I hope relevant departments actively promote trade negotiations at the national level to achieve fair trade conditions and equal tax rates for distilled spirits, helping Chinese baijiu go global.

“21st Century”: Although the baijiu industry has faced some pressure in the past two years, its overall resilience against cycles has improved. However, in the capital market, there is still a need for more reasonable valuation, which affects residents’ non-wage income and companies’ financing and reproduction capabilities. Do you have any suggestions on how to boost the overall value of baijiu companies?"

Yan Tao: To enhance the value of baijiu companies, I suggest: first, earn recognition through quality; capacity is the guarantee of good liquor. We at Zhenjiu plan to continue investing in 44,000 tons of production capacity in the second half of 2025, with 150,000 tons of high-quality base liquor storage, further consolidating our capacity and inventory advantages. Our newly launched strategic flagship product, “Da Zhen·Zhenjiu,” is the top-selling mid-to-high-end baijiu online.

Second, win value through innovation. Last year, Zhenjiu Lidu launched the “Ten Thousand Merchants Alliance” model, signing contracts with 4,000 partner supermarkets, and “Da Zhen·Zhenjiu” achieved over 900 million yuan in receivables. This model clarifies channel profit distribution, links long-term interests like equity benefits, and shifts relationships from confrontation to win-win cooperation. Channel confidence has returned, and company valuation is expected to be re-evaluated accordingly.