In the first half of 2026, the interim reports of 20 listed baijiu companies delivered a sobering verdict. Wind data shows their combined revenue fell by about 14 billion yuan year-on-year, down 6.65%, while net profit attributable to shareholders dropped 8.28%. Only three companies—Wuliangye, Yingjia Gongjiu, and ZJLD—achieved growth in both revenue and profit. The rest declined to varying degrees, painting a picture of broad-based contraction, echoing the slump seen in 2025 annual reports. The question everyone asks: how long will this "deep adjustment" last?

Three danger signals suggest a protracted battle. First, gross margins are falling across the board. Apart from leaders like Kweichow Moutai and Wuliangye, many sub-high-end and regional players saw margin declines exceeding 4 percentage points, signaling that the previous "premiumization" strategy has lost its punch. Second, inventory and cash flow divergence is worsening. The 20 companies hold nearly 200 billion yuan in inventory. Some sub-high-end players have inventories exceeding 45% of total assets, far above the 12–24% range of top players. Meanwhile, short-term borrowings are surging at some firms, squeezing liquidity. Third, concentration is rising, not falling. Moutai and Wuliangye together generated over 120 billion yuan in revenue, more than 60% of the total. The adjustment is accelerating divergence, with resources flowing to a few top players.

These signals indicate this is not a short-term downturn but a tectonic shift. The industry has left its golden era of "rising volume and price" and entered a long adjustment with no clear end in sight. Traditional remedies—output control, price support, channel destocking, waiting for demand to recover—no longer work. The underlying drivers have fundamentally changed: aging and population decline cap the consumer base, while the property downturn has reshaped business drinking occasions. Meanwhile, the traditional distribution model has hit its limit. When inventory approaches half of total assets and cash flow forces firms to borrow to survive, the old dealer model is simply unsustainable.

Price wars offer no way out. Survival requires rebuilding three core capabilities. First, value. As consumers stop paying for face, companies must redefine value anchors—differentiating products for self-enjoyment, family gatherings, and investment collection. Second, channel management. The old "push inventory" model is dead. Firms must use digital systems for dynamic, granular control, optimize dealer tiers, and clarify price and profit-sharing mechanisms across instant retail, community group buying, and e-commerce. Third, marketing. Instead of broad-brush spending on TV and sponsorships, companies need precise, data-driven operations that reach consumers directly.

The 2026 interim reports make one thing clear: waiting for a cyclical rebound is an illusion. Real long-termism means proactive adjustment. Those who first shift from scale expansion to value management will seize new growth in the zero-sum second half.