Kweichow Moutai’s sales growth slows as Chinese consumer demand weakens

China’s economic slowdown has hit sales growth for baijiu giant Kweichow Moutai and its rivals in the first quarter of the year. Weaker consumer spending and a shift in sales strategy contributed to the deceleration. The slowdown of the Chinese economy and the associated weakness in consumer demand have been demonstrated by the slowed sales growth of Kweichow Moutai and its baijiu rivals in the first quarter of this year. Kweichow’s sales rose by 10.5% to 50.6 billion yuan ($6.94 billion), compared with 18.5% growth in the same period last year. The world’s biggest beverage alcohol group said its net profit increased by 12% to 26.85 billion yuan during the quarter compared with a 16% rise in the first three months of 2024.

Lower revenue guidance and price controls impact growth

Moutai’s results had been expected to be weaker after the company had warned investors earlier in the year that it expected annual revenue growth to slow to about 9%, down from 16%. Efforts to maintain relatively stable channel inventory levels and wholesale prices were also cited as factors in the slowing growth rate.

Shift toward direct and e-commerce sales

Interestingly, while the core baijiu brand contributed the bulk of its revenue, generating 43.56 billion yuan, direct sales reached 23.22 billion yuan while wholesale revenue through distributors totalled 27.36 billion yuan. The company has been seeking to boost profitability by reducing its reliance on the wholesale market by increasing its e-commerce activities.

Industry-wide pressure on baijiu sales

Kweichow was not alone in reporting slowing growth. First-quarter results from baijiu companies such as Wuliangye Yibin and Luzhou Laojiao also reflected consumer spending pressures. Wuliangye Yibin's revenue growth slowed to 6% while Luzhou Laojiao made a marginal 1.8% gain. Modest share price recovery after 2024 slump Kweichow’s share price on the Shanghai market has gained 1.3% so far this year after sliding by 12% in 2024.