KWEICHOW MOUTAI(SH:600519) Feng Huang Wang·2025-08-08 13:24Core Viewpoint - The Chinese liquor industry is facing severe challenges due to weak consumer demand and intensified competition, leading to price declines and increased inventory levels across the sector [1][3][6]. Group 1: Industry Challenges - The liquor industry is experiencing a significant downturn, with over 60% of liquor companies and distributors reporting reduced operating profits in the first half of the year [1][6]. - Channel inventory has reached historical highs, with an average inventory turnover period of 900 days, a 10% increase from the previous year, and a 25% year-on-year rise in inventory levels [3][6]. - Price inversion is becoming more widespread, with over 50% of distributors and retailers reporting increased levels of price inversion, and 40% facing cash flow pressures [3][4]. Group 2: Company-Specific Issues - Even leading companies like Kweichow Moutai are under market pressure, with significant price inversions observed in their non-standard products, exceeding 20% for several items [4][5]. - The core product, 53-degree, 500ml Moutai, saw its price drop from approximately 2180 yuan to 1720 yuan during Q2, with current prices remaining below 1900 yuan [5][6]. Group 3: Competitive Landscape - The industry is witnessing a trend of "involution" where companies are engaging in price wars to survive, which is seen as a short-term solution that does not address the underlying issues of supply and demand imbalance [2][7]. - Major liquor companies are calling for a halt to "involution-style" competition and price wars, advocating for strategies such as reducing supply, enhancing quality, and focusing on niche markets [2][8][9].