Core Viewpoint - The company has faced significant increases in material costs, labor costs, and manufacturing expenses, impacting its financial performance amid declining sales and production volumes in the liquor business [1][2][3]. Cost Analysis - Material costs increased by 39.18% year-on-year due to changes in procurement practices and rising grain prices [1]. - Labor costs rose by 31.34% year-on-year, attributed to efforts to stabilize employment and reduce wage disparities with industry peers [1]. - Manufacturing expenses and energy costs surged by 47.62%, primarily due to the completion of expansion projects and decreased production volume [2]. Sales and Revenue - Transportation costs increased by 50.63% despite a 28.7% drop in sales volume, as distributors opted for multiple smaller orders to ease cash flow pressures [2]. - The company's liquor sales revenue decreased by 27.08%, amounting to a decline of 17.78 billion yuan [13]. Inventory and Accounts Receivable - The company’s inventory of self-produced semi-finished products increased by 7.55 billion yuan, reflecting a 25% year-on-year growth [13]. - Accounts receivable turnover is lower than industry peers due to extended payment terms offered to distributors and the acceptance of bank acceptance bills for settlements [14][15]. Pricing Strategy - Average selling prices for liquor products rose by 2%, with significant increases in lower-priced segments due to changes in procurement practices [11]. - The company implemented additional sales discounts of 3%-5% to help distributors manage inventory amid increased competition [10][11]. Distributor Support - The company employs a discount policy for distributors, including volume-based and promotional discounts, to support market expansion [9]. - The balance of distributor discounts has increased, reflecting a strategic response to market conditions and inventory management [10].