How can Luzhou Laojiao achieve a cycle reversal?

Question AI · How can Low-ABV Guojiao break through regional market limitations?

Spring 2026, the Baijiu industry stands at a crossroads in its cycle.

Signals from the market are complex and intertwined: According to the National Bureau of Statistics, in 2025, the total production of liquor above designated size nationwide was 3.549 billion liters, down 12.1% year-on-year, marking nine consecutive years of decline, with production shrinking nearly 74% from its 2016 peak. This is a hard indicator that the industry is bidding farewell to rapid expansion and fully entering a stock competition era.

However, entering 2026, high-end Baijiu prices like Moutai have stabilized, and sales during the Spring Festival exceeded expectations. Brokerage firms have repeatedly announced that a “cycle turning point is imminent,” hinting at a possible recovery.

Data from the China Alcoholic Drinks Association also reveal deep industry challenges: in 2025, the industry’s average inventory turnover days are expected to reach 900 days, with circulation channel inventories exceeding 500 billion yuan. The industry faces triple pressures of declining production, high inventory, and weak sales.

During this industry adjustment period, Luzhou Laojiao’s choices are intriguing. Instead of following the price-cutting trend, it themed its 2026 Cask Seal Ceremony as “Ancient Fragrance, New Chapter of Guojiao,” emphasizing its historical assets as the “Living Double National Treasures.” It also launched the industry’s first low-ABV product, Guojiao 1573 at 38 degrees, as a new growth engine, attempting to carve out a unique path of “maintaining integrity and innovating” amid stock competition.

Many institutions predict 2025 will be a year of pressure release for Luzhou Laojiao, with a potential cycle reversal starting in 2026, and some optimistic forecasts suggest net profit could return to high single-digit growth by 2027.

How can Luzhou Laojiao achieve the leap from “pressure release” to “cycle reversal”? What strategies can be seen in its recent product and brand layout?

Product Growth Strategy

This year’s Spring Festival Baijiu sales pattern was markedly different from previous years. Instead of a uniform pre-holiday or delayed peak, a highly segmented multi-node explosion pattern emerged. The demand for gift-giving scenes among top brands remains strong, while the mass market benefits from the returning home trend, with family banquets and self-drinking scenarios. The mid-to-high-end segment faces pressure from both ends. Meanwhile, the low-ABV track continues to heat up, with younger consumers increasingly seeking low-ABV, lightly intoxicating, and mood-enhancing experiences, driving Baijiu consumption from “functional satisfaction” to “emotional value.”

This rhythm segmentation reflects the normal competition in a stock-based industry.

In this environment, Luzhou Laojiao’s key to cycle reversal lies in solving a fundamental problem: balancing “short-term sales sacrifice” with “long-term value growth,” and upgrading its product structure with verifiable results to facilitate the transition of growth drivers.

Specifically, Luzhou Laojiao’s product strategy is divided into three parts.

Gaoduan Guojiao: From “firm pricing” to “balance of volume and price.”

In 2025, Luzhou Laojiao actively released pressure, with management stating at the December shareholder meeting: “Price increases cause pain, price cuts sacrifice volume; non-top brands find it hard to gain volume through price cuts. We坚持不降价、稳价格的量价策略” (坚持不降价、稳价格的量价策略). The results met expectations: Gaoduan Guojiao 1573 maintained around 850 yuan, avoiding price inversion. But a true reversal depends on demand stabilization; a recovery in sales of Gaoduan Guojiao will mark the end of the adjustment period.

Low-ABV Guojiao: From “single-point breakthrough” to “national expansion.”

Guojiao 1573 at 38 degrees is the most certain growth engine in Luzhou Laojiao’s current product strategy. In 2025, it became the industry’s first billion-yuan low-ABV product, accounting for 50% of sales. This confirms the market feasibility of the low-ABV route, giving it a first-mover advantage.

Currently, revenue from low-ABV Guojiao heavily depends on North China (Hebei revenue exceeds 5 billion yuan, with 80% from low-ABV). The goal is to expand into Southwest and East China markets. According to Shenwan Hongyuan, there is over 50% growth potential for low-ABV Guojiao in the next five years.

Youngerization and Innovation Lines: From “layout” to “conversion.”

Youngerization efforts often receive praise but little sales. However, Luzhou Laojiao’s “Jiaozhu Festival” provides measurable conversion results. By March 2026, the event had been held for three years, with 10 offline sessions in core cities, attracting 60,000 visitors and online exposure of 130 million times, driving 40 million yuan in consumption.

At the 2026 Liquor Expo, the new “Many-Oh-Yeah · Liquor World” format debuted, and “Baitiao Light Life” launched craft beers, fruit wines, and wine coffee, entering young consumers’ lifestyles with “low-ABV + trendy drinks.”

The key indicators for youngization success are not just “exposure,” but proportions of new users, repurchase rates, and scene penetration. Luzhou Laojiao’s Chinese-style craft wines and fruit wines need to move from “exhibition tasting” to more “daily consumption.”

In summary, Luzhou Laojiao’s transition from “pressure release” to “cycle reversal” fundamentally hinges on a structural shift in product growth drivers. Using Gaoduan Guojiao as the brand cornerstone, Low-ABV Guojiao as the growth engine, mid-tier products as the relay, and future innovative products as the layout, it aims to form a jointly driven product structure upgrade.

The essence of this path is transforming the “Ancient Fragrance” heritage and low-ABV technological barriers into sustainable performance growth. This is reflected in the changing themes of its annual Cask Seal Ceremony.

New Strategic Intentions

Since 2008, Luzhou Laojiao’s Cask Seal Ceremony themes have carried specific strategic messages. The 2026 theme shift directly reflects the market performance and strategic adjustments during the 2025 and 2026 Spring Festivals.

Previous themes emphasized time and space (110th anniversary, going overseas, etc.), but the 2026 theme “Ancient Fragrance, New Chapter of Guojiao” uniquely combines identity (hereditary origin) with future orientation (new chapter).

“Ancient Fragrance” strengthens category definition, establishing “authentic浓香=Luzhou Laojiao” as a mental anchor amid industry chaos, resisting the squeeze from sauce aroma and light aroma categories. 2026 is a critical year for the low-ABV strategy, which has long faced “quality doubts.” The theme’s “hereditary” endorsement integrates low-ABV products into the authentic浓香体系.

Meanwhile, “new chapter” not only signifies a temporal update but also reflects new achievements in digitalization, intelligence, and low-ABV development, aligning with industry trends (low-ABV, digitalization, youthfulness).

2025 was a year of full digital transformation for Luzhou Laojiao. Through the “Five-Point Connection” system, it addressed long-standing issues like channel misbehavior and price chaos. The core product’s scan rate exceeded 50%, accumulating massive consumer data. This marked a shift from “B-end channel-driven” to “C-end consumer-driven” business models.

With digital tools solving physical channel pain points, the 2026 theme “Guojiao New Chapter” begins to address psychological aspects. As marketing experts note, the competition logic is shifting from “channel battles” to “mind share.”

Additionally, Luzhou Laojiao has launched the industry’s first “Lighthouse Factory” intelligent packaging center, reconstructing the entire industry chain with smart automation, transforming traditional craftsmanship into quantifiable, replicable data assets.

The strategic layout for 2026 can be understood on three levels:

First, heritage assets are the only irreplaceable moat. Amid fierce price wars, emphasizing “Ancient Fragrance” heritage is based on the belief that while prices fluctuate, the brand’s position is irreplaceable.

Second, low-ABV is a validated second growth curve. Luzhou Laojiao aims to convert technological barriers (solving ABV reduction challenges) into market barriers.

Third, intelligentization is a foundational layout to address long-term cost pressures. Improving production efficiency, increasing high-quality liquor ratio, and reducing labor costs. In a long-term trend of rationalized consumption and price sensitivity, these efficiencies will become sustainable competitive advantages.

The signals from the Cask Seal Ceremony indicate that Luzhou Laojiao is preparing for a “cycle reversal” through three measures:

• Value anchor: Using the “Ancient Fragrance Hereditary” status to establish a definite protective moat;

• Growth engine: Building sustainable growth with the 100-billion-yuan Guojiao 1573 and “Lighthouse Factory” efficiency advantages;

• Mental foundation: Promoting youngerization and breaking through circles to shift from channel-driven to consumer-driven strategies;

In essence, Luzhou Laojiao’s strategic direction is clear. The key to success lies in timing—whether the growth momentum of Low-ABV Guojiao can be handed over before Gaoduan Guojiao’s pressure is released, and whether the efficiency dividends from digital transformation can be converted into cost advantages before industry price wars intensify.

This is fundamentally a “trade time for space” strategy. If effectively implemented, Luzhou Laojiao may achieve a “volume and price increase” reversal after the industry adjustment ends. Investors should remain patient, as the results of this strategy may take 2-3 years to fully materialize.