Summary of the Conference Call for Luzhou Laojiao Industry Overview - The liquor industry, particularly the baijiu sector, is undergoing a deep adjustment period, with external environment and policy impacts being the main sources of pressure. The industry has not yet reached a bottom or turning point, and pressure is expected to persist in the near future due to a weak consumption environment [2][3][7]. Company Performance and Expectations - Luzhou Laojiao's performance expectations for Q4 and the entire year are under pressure, with reported data aligning with terminal sales conditions. However, sales pressure is affecting inventory digestion. The company maintains a stable pricing strategy and does not compensate for losses from low-price sales [2][4]. - The company has not disclosed its operational plan for 2026, indicating that it will plan according to market conditions and economic laws while ensuring a healthy sales ecosystem [2][6]. Product Performance - There is a noticeable differentiation in performance between high and low alcohol products, with low alcohol products showing relative resilience. The low alcohol product 1,573 has performed steadily, and the trend towards lower alcohol content is gradual and long-term [2][9][10]. - The brand "Laozihao Tequ" is focused on brand revival, maintaining a stable price around 200 yuan, and is less affected by industry adjustments. The company plans to strengthen channel construction and consumer cultivation in the 100-300 yuan price range [2][11][12]. Sales and Distribution Strategy - Luzhou Laojiao is expanding its terminal presence, particularly in Sichuan and North China, to enhance market share. The company emphasizes online channels and instant retail while traditional tobacco and liquor stores remain the main distribution channels [4][15][18]. - The company is cautious about introducing lower alcohol products below 30 degrees, focusing on quality and stability before launching new products [10][20]. Market Trends and Consumer Behavior - The company anticipates that the consumption environment will remain weak, with the impact of policies likely to diminish over time. However, a sudden surge in consumer demand during the Spring Festival is not expected [7][25]. - The current pricing strategy is stable, with the company not compensating for losses from low-price sales, which helps maintain price stability [8][23]. Digitalization and Inventory Management - Luzhou Laojiao has a relatively mature digitalization strategy, with high opening rates for its products. The implementation of a five-in-one system effectively addresses issues of cross-regional sales [4][24]. - The company is managing inventory levels carefully, as a slowdown in sales could lead to instability in inventory levels [5]. Future Outlook - The company expects to continue facing significant pressure in the liquor industry over the next few quarters, with cautious optimism for 2026 depending on improvements in the consumption environment and reduced policy impacts [25]. This summary encapsulates the key points discussed during the conference call, highlighting the challenges and strategies of Luzhou Laojiao within the broader context of the baijiu industry.

Industry Overview - The Chinese liquor market is currently facing a downturn, as evidenced by the subdued atmosphere at the Chengdu Spring Sugar and Wine Fair, which is typically a vibrant event [1][3] - Attendance at the fair has decreased significantly, with a reported drop of over 20% in foot traffic compared to the previous two years, reflecting the broader challenges in the liquor industry [3][6] Market Dynamics - Major liquor companies like Kweichow Moutai, Wuliangye, and Yanghe have reduced their promotional activities at the fair, indicating a shift in focus amid economic pressures [3][5] - The fair attracted over 6,600 exhibitors and covered an exhibition area of 325,000 square meters, marking a record high in terms of scale, despite the decline in visitor numbers [3][6] Consumer Trends - There is a noticeable trend of consumption downgrade in the liquor market, with high-end liquor demand weakening and inventory piling up [5][6] - Traditional consumer groups, such as those from real estate and finance, have been impacted, prompting premium liquor brands to pivot towards more affordable options [5][6] Competitive Landscape - Leading liquor companies are increasingly focusing on high-cost performance products priced under 100 yuan, which is intensifying competition and squeezing smaller local distilleries [5][6] - The industry is experiencing a consolidation trend, with larger companies gaining market share while smaller firms struggle to survive [6] Financial Performance - In 2024, the production of large-scale liquor enterprises is expected to decline by 1.8%, while sales revenue is projected to reach 796.4 billion yuan, a year-on-year increase of 5.3% [6] - Profit totals are anticipated to rise by 7.76% to 250.9 billion yuan, indicating that while profits are growing, the overall production is decreasing, highlighting the challenges faced by smaller enterprises [6]