Northwest liquor companies face market pressure, with Jin Hui Liquor experiencing declines in both revenue and net profit

Ask AI · Why Did Jinhui Liquor’s High-End Products Grow Against the Tide During the Industry’s Winter?

Jiemian News reporter | Zhang Rui

On the evening of March 20, Jinhui Liquor (603919.SH) released its 2025 annual report. During the reporting period, the company achieved operating revenue of RMB 2.92B, down 3.4% year over year; net profit attributable to shareholders was RMB 354 million, down 8.7% year over year; and non-recurring profit attributable to shareholders was RMB 348 million, down 10.36% year over year.

Regarding the decline in revenue, the company stated that it was mainly due to the liquor industry’s policy controls, in-depth adjustments, and intensified competition, which led to a decline in sales volume and caused operating revenue to decrease compared with the same period last year, while selling expenses increased compared with the same period last year.

In terms of products, Jinhui Liquor’s performance across different price bands shows clear differentiation. For products below RMB 100, the decline was more pronounced: sales volume decreased 33.56% year over year, and revenue was RMB 536 million, down 36.88% year over year. For the RMB 100 to RMB 300 price-band products, which are the company’s revenue mainstay, performance was relatively stable: sales volume increased 1.05% year over year, revenue increased 3.09% year over year, reaching RMB 1.53B, with revenue contribution accounting for more than half. Meanwhile, high-end products above RMB 300 achieved faster growth: sales volume increased 37.52% year over year, and revenue was RMB 709 million, up 25.21% year over year. Overall, products above RMB 100 combined accounted for 80.71% of liquor revenue, about 10 percentage points higher than last year.

On gross margin, Jinhui Liquor’s gross margin in 2025 was 63.17%, up 2.25 percentage points year over year. Among them, gross margin for products below RMB 100 was 47.85%, down 3.01 percentage points year over year; gross margin for products in the RMB 100 to RMB 300 range was 66.50%, up 2.70 percentage points year over year; and gross margin for products above RMB 300 was 76.17%, up 0.18 percentage points year over year.

The increase in overall gross margin was mainly driven by structural dividends brought by the revenue share of products above RMB 100 breaking through 80%. With the proportion of high-margin products expanding, overall profitability was effectively boosted. Meanwhile, the synchronized rise in gross margin for mid-to-high-end products to a certain extent reflects that the company’s brand premium capability in its core price band is strengthening.

Looking closely at Jinhui Liquor’s sales data inside and outside Gansu Province, in 2025 the company achieved revenue of RMB 2.11B in the provincial market, down 5.34% year over year, accounting for 76.05% of total revenue. Revenue in the out-of-province market was RMB 665 million, down 0.81% year over year, accounting for 23.95% and up 0.84 percentage points compared with last year. However, the gross margin in the provincial market was 60.52%, down slightly by 0.66 percentage points year over year; while the gross margin in the out-of-province market was 70.21%, up 8.86 percentage points year over year.

In 2025, Jinhui Liquor proactively adjusted its out-of-province distributors, trying to safeguard resource allocation efficiency by reasonably reducing the number of distributors. The annual report shows that in 2025, the number of out-of-province distributors increased by 80 and decreased by 171. A research report from Guojin Securities analyzed that the company’s “out-of-province development in Shaanxi and Xinjiang markets is going well; Ningxia and the Northern markets are staying stable, and markets such as East China are contracting—focusing on non-core regions.”

In terms of channels, in 2025 Jinhui Liquor increased its efforts to push traffic through internet platforms. Throughout the year, the operating cost of online channels increased 34.76%, achieving revenue of RMB 118 million, up 40.26% year over year, and gross margin increased by 1.10 percentage points. The company stated that it improved sales by conducting fine-grained operations for products, content, traffic, and consumers, thereby building a nationwide online marketing platform, becoming the third growth curve for brand empowerment, consumer cultivation, and sales growth.

In addition, in 2025 Jinhui Liquor generated revenue of RMB 77 million through direct-sales channels, up 4.36% year over year. The distributor channel, accounting for 88.5% of total revenue, generated revenue of RMB 2.58B, down 5.88% year over year. It can be seen that during the industry’s adjustment period, the traditional distributor network faces certain pressure, while online channels are becoming an important engine driving growth.

Jinhui raw liquor / Source of image: Jinhui official website

When the perspective is expanded to the entire Northwest region, it becomes clear that Jinhui Liquor’s performance can be considered steady. In the first three quarters of 2025, four listed liquor companies in the Northwest—Jinhui Liquor, Yiliite, Tianyoudedao Wine, and Huangtai Liquor—were all under pressure from declining performance, with the regional liquor market as a whole facing headwinds.

Specifically, Tianyoudedao Wine’s operating revenue in the first three quarters was RMB 880 million, down 10.79% year over year; its net profit attributable to shareholders was only RMB 21.81M, down sharply by 62.03% year over year. Huangtai Liquor continued its long-term slump: its operating revenue in the first three quarters was only RMB 87.0831 million, down 23.25% year over year, and it reported a net loss of RMB 7.1359 million. Yiliite’s operating revenue in the first three quarters was RMB 1.3B, down 21.46% year over year, and its net profit attributable to shareholders fell by 43.06%; its net cash flow from operating activities was -RMB 274 million, down significantly by 1241.37% year over year. In addition, Yiliite’s revenue in markets outside Xinjiang decreased by about half year over year, and its nationwide expansion strategy did not progress as expected.

In a horizontal comparison, Jinhui Liquor’s revenue decline in the first three quarters was only 0.97%, and its net profit attributable to shareholders decreased by 2.78%, reflecting its relative “resilience” among regional liquor companies, the stable position of its provincial base market, and breakthrough growth in online channels.

While continuously advancing market layout and channel optimization, Jinhui Liquor is also stepping up investment at the capacity level. According to information from the company’s official website, in February 2025, the fourth phase of the Jinhui “Billion-Yuan” Ecological Smart Industrial Park (with a total investment of RMB 5 billion) began construction in full.

As early as August 2025, Jinhui Liquor won the bidding for 524.67 mu of Category II industrial land located in Fujia Village and Qianjin Village, Fujia Town, Huixian County, Gansu Province, with a bid of RMB 98.55 million; in February 2026, it won another parcel of 195.96 mu of Category I industrial land with a bid of RMB 36.83 million. Both land parcels are used for the construction of the Jinhui billion-yuan industrial park project.

Source of image: Jinhui official website

However, while capacity construction is progressing steadily, Jinhui Liquor’s finance expenses and research and development expenses have shown different directions of change. The annual report shows that in 2025, Jinhui Liquor’s finance expenses were -RMB 9.6716 million, up 50.11% year over year (the negative figure narrowed). The main reason was that deposit interest income decreased by nearly RMB 7 million. At the same time, research and development expenses were RMB 39.5758 million, down 27.18% year over year, mainly because the number of R&D projects in the current period decreased compared with the same period last year. These two indicators have attracted market attention: the decline in interest income reflects changes in capital utilization efficiency, while the reduction in R&D spending may reduce expense outlays in the short term, but in the long run may affect the company’s product technological iteration and quality improvements.

In addition, against the background of performance pressure and increased capacity investment, Jinhui Liquor still continues to maintain a relatively high dividend payout ratio. In 2025, it completed cash dividends for 2024 of RMB 5 per 10 shares; in February 2026, it completed cash dividends for the first three quarters of 2025 of RMB 2 per 10 shares. At the same time, it plans to distribute cash dividends of RMB 3.00 per 10 shares (tax included), and the cumulative annual dividends will account for 42.06% of net profit attributable to shareholders.

For 2026, in its annual report Jinhui Liquor stated that with the comprehensive implementation of the country’s “15th Five-Year Plan” and the sustained rollout of policies to expand domestic demand, especially with the issuance of the《Guiding Opinions on Improving Quality and Upgrading the Liquor Brewing Industry (2026-2030)》, the liquor industry will usher in new development opportunities and a reshaping of the competitive landscape. The company will focus on developing new products based on consumer needs, and accelerate the layout of intelligent brewing and digital marketing.