China's largest wine producer, Yantai-based Changyu Pioneer Wine, is confronting an unprecedented market downturn, recording stark financial declines in 2024. 

According to reports from the Hong Kong-based industry platform Vino Joy News, presented during the company's Annual General Meeting, Changyu's revenue plunged to RMB 3.277 billion (approximately €400 million), representing a significant 25% decrease from the RMB 4.385 billion (approximately €535 million) achieved in 2023. The picture for profitability was even bleaker, with net profit collapsing by 43% year-on-year to just RMB 305 million (approximately €37.24 million). Vino Joy News characterized these results as among the company's worst financial performances in nearly two decades, noting that the net profit figure was the lowest recorded by Changyu since 2005.

This dramatic slump is unfolding against the backdrop of a collapsing domestic wine market. Changyu's board, presenting the annual results, offered unusually candid and critical insights into the dire state of the Chinese wine sector. They revealed that overall wine consumption in China during 2024 stood at a mere 26% of its 2019 level – effectively just over a quarter. This precipitous fall highlights a fundamental shift in consumer behaviour and market dynamics severely impacting producers.

Several critical factors are driving this crisis, as outlined by Changyu and Vino Joy News:

1.  Erosion of Core Consumption Occasions: Two traditional pillars of wine sales in China – business banqueting and gifting (especially during major festivals like the Lunar New Year) – have drastically diminished in importance. These occasions previously drove significant volume, particularly for mid-to-high-end offerings.

2.  Intense Competitive Pressure: The market is engulfed in brutal price wars. Changyu specifically highlighted the pressure from baijiu (Chinese grain spirit), wine's traditional competitor. Reportedly, many popular baijiu brands are currently being sold below cost price, making it extremely difficult for wine to compete on value perception.

3.  Disruption in Distribution Channels: Brick-and-mortar retailers are suffering immensely due to aggressive discounting campaigns by major e-commerce platforms. These online players often source products through parallel imports or by purchasing overstock from struggling offline retailers, further destabilizing pricing and channel relationships.

4.  Government Policy Impact: Adding to the industry's woes, a government directive effective May 18, 2025, banned alcohol, high-end dishes, and cigarettes from all official working meals. This directly eliminates another significant, albeit discreet, channel for wine consumption.

Faced with this bleak outlook, Changyu has taken the drastic step of significantly lowering its revenue target for 2025. The company now aims for revenue of at least RMB 3.4 billion (approximately €415 million). This revised target represents a substantial 28% reduction from the previously forecasted 2025 goal of RMB 4.7 billion (approximately €573 million). It also signifies only a marginal hoped-for improvement over the deeply depressed 2024 results. Early figures for Q1 2025, showing performance nearly identical to the weak Q1 2024, underscore the persistent challenges.

Changyu's General Director, Sun Jian, defended the revised target, stating with stark realism: "This revised target reflects our operational reality given current industry conditions. It's not conservative -- it's realistic." He emphasized that the target was grounded in the harsh market realities rather than undue pessimism.

Beyond the external market pressures, Sun Jian also delivered pointed self-criticism regarding Changyu's own strategic shortcomings. He candidly admitted a growing disconnect with consumers: "We're growing more and more distant from our consumers," Sun Jian stated. "We haven't created products that genuinely meet their needs, or consumption scenarios they enjoy, or delivered emotional value that resonates with them." This admission points to a potential failure to adapt product offerings, marketing, and brand positioning to the rapidly evolving preferences and consumption habits of Chinese drinkers, particularly younger generations who may not be tied to traditional banquet or gifting occasions.

The confluence of these factors – a shrunken overall market, ferocious competition, disruptive retail dynamics, adverse government policy, and internal strategic gaps – paints a picture of an industry and its former leader in deep crisis. Changyu's severe revenue and profit declines, drastic downward revision of future targets, and leadership's unusually frank critique signal a pivotal and challenging moment for Chinese wine. The path to recovery appears arduous, demanding significant adaptation and innovation both in navigating the hostile market environment and in rebuilding a relevant connection with Chinese consumers. The performance of Q1 2025 suggests no immediate rebound is on the horizon.