Jiugui Liquor Cuts 447 Distributors, Deepens Partnership with Retailer Pang Dong Lai

Chinese baijiu producer Jiugui Liquor Co., Ltd. (000799.SZ) is aggressively reshaping its sales and product strategy, cutting hundreds of distributors in the first half of the year while deepening a high-volume partnership with retailer Pang Dong Lai. The moves, detailed in a semi-annual earnings briefing on September 18, come as the company navigates a challenging consumer environment and works to stabilize its premium brand pricing.

Strategic Overhaul Focuses on Key Partners

Jiugui Liquor is pursuing a strategy of consolidation, significantly reducing its reliance on a wide distribution network to focus on key partners. The company's management detailed these strategic shifts during its recent earnings call.

Key changes in the first half of the year include:

• Distributor Network Reduction: The number of distributors was cut from 1,109 at the end of last year to 662, a net decrease of 447.
• Product Line Streamlining: The company has already eliminated 60% of its low-efficiency products and is continuing to focus sales on its mid-range "Jiugui" series.
• Deepened Pang Dong Lai Partnership: Following the success of a 2025 product collaboration, Jiugui launched a new 750mL Xiangquan baijiu priced at 65 yuan, exclusively through the popular Pang Dong Lai supermarket chain.

General Manager Cheng Jun addressed concerns that the new low-priced product could dilute the brand, stating it occupies a different price segment and is part of a new channel expansion that will not impact the company's traditional distributor system or premium brands.

H1 Financials and Shifting Sales Channels

The strategic changes are reflected in the company's mixed first-half financial results. While net profit saw a significant year-over-year increase, revenue declined, and performance was heavily skewed by the first quarter.

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• Revenue: 530 million yuan, a decrease of 5.58% year-over-year.
• Net Profit: 12.32 million yuan, an increase of 37.57% year-over-year.

The company reported that its first-quarter profit offset a loss of over 20 million yuan in the second quarter. The partnership with Pang Dong Lai has become a critical revenue driver; after just six months of collaboration in 2025, the retailer became Jiugui's largest customer, accounting for 196 million yuan, or 17.66%, of total annual sales.

Reflecting the distributor consolidation, revenue from the company's top five customers rose to 50.51% of the total, up from 32.63% in the same period last year.

Focus on Price Stabilization

A primary challenge for Jiugui Liquor this year is restoring the price integrity of its high-end "Neican" series, which saw its revenue decline by 24% year-over-year in the first half. The company implemented price support and supply control measures in mid-July to address a price inversion, where wholesale prices fall below the suggested retail price.

As of September 18, the wholesale price for Neican was reported at 565 yuan per bottle, indicating that the price inversion issue persists. However, Zou Fei, the company's deputy general manager for sales, stated on the earnings call that the initial policies had achieved their intended effect. He emphasized that the company's priority is to stabilize market prices before pursuing sales volume growth. Despite the company's stock declining over 31% year-to-date, UBS AG notably appeared as a new top-ten shareholder in the second quarter.