China’s largest domestic wine producer, Changyu, faced tough questions from shareholders at its recent annual general meeting after reporting one of its worst financial performances in nearly two decades. Executives, led by general manager Sun Jian, offered a frank assessment of the company’s setbacks in 2024 and laid out a more restrained outlook for the year ahead.
In 2024, Changyu’s revenue plunged 25.26% and net profit sank 42.68%—falling short of market expectations and posting its lowest net income since 2005. The results underscored broader structural problems in China’s sluggish wine sector.
A Structural Decline in Consumption Scenarios
Sun characterised the industry’s woes with three “cliff-like” declines: in consumer sentiment, in consumption occasions, and in channel momentum.
“Consumers are tightening their wallets, and wine, as a non-essential good, is often the first to go when spending cuts kick in,” Sun said.
He pointed to the sharp drop in wine consumption during two key sales periods—Chinese New Year in 2024 and 2025—as evidence of a long-term contraction in the sector’s most critical sales scenarios: business banquets and gift-giving. Despite being peak season, few brands benefitted from the holidays, reinforcing a growing pattern of “festivals without a sales boost.”
Compared to five years ago, wine sales have essentially been halved twice, Sun noted, with current volumes sitting at just 26% of their 2019 levels. He described the contraction in consumption scenarios as a “chronic condition” for the industry.
Compared to five years ago, wine sales have essentially been halved twice, Sun noted, with current volumes sitting at just 26% of their 2019 levels. He described the contraction in consumption scenarios as a “chronic condition” for the industry.
Baijiu Price Pressure and E-commerce Undercut Distributors
On the distribution front, Sun said wine is being squeezed from all sides. Most Chinese baijiu brands are currently priced below cost, putting enormous pressure on dealers. This strain is now trickling down to wine, as distributors pull back from the category to minimise losses.
“Distributors are retreating from wine. It’s getting marginalised,” he said.
The rise of aggressive discounting on e-commerce platforms has only made things worse. “Major platforms are locked in brutal price wars, especially for consumer goods like wine,” Sun said. In many cases, online products are being sold to offline retailers via B2B channels, while platforms themselves are buying discounted parallel imports or clearance stock from offline merchants, driving down average transaction prices.
This has led to frustration among traditional offline distributors, who feel undercut by online sellers. In 2023 and 2024, several Chinese e-commerce giants launched deep discount campaigns targeting wine, pushing online prices below those found in brick-and-mortar channels. Much of the low-cost stock originated from parallel imports or excess inventory liquidated by offline vendors.
“We’ve Grown Increasingly Distant from Our Consumers”
Sun admitted that a core internal issue was the company’s failure to truly connect with consumers.
“We’re growing more and more distant from our consumers,” he said. “We haven’t created products that genuinely meet their needs, or consumption scenarios they enjoy, or delivered emotional value that resonates with them.”
“We’re growing more and more distant from our consumers,” he said. “We haven’t created products that genuinely meet their needs, or consumption scenarios they enjoy, or delivered emotional value that resonates with them.”
Reflecting on the year, Sun offered two blunt takeaways: “First, our efforts to grow couldn’t overcome the market’s downward inertia—we lost that tug-of-war. Second, our execution lacked effectiveness and precision.”
One industry insider, speaking to us on condition of anonymity, observed that Changyu’s recent push into high-end wines has yet to break through in China’s elite dining scene. “On a Chinese banquet table, bringing out Moutai, Penfolds, or Lafite instantly signals prestige. But if you present a bottle of Changyu Longyu, you usually have to explain it,” the analyst said.
Among younger drinkers, imported brands like Yellow Tail and Knock Knock are more familiar and widely accepted. Changyu’s efforts in this segment have yet to gain traction. Meanwhile, once-popular mid-range products like Changyu’s Cabernet Gernischt label, Noble Dragon, have lost relevance at events like weddings, squeezed by stronger foreign competition and price-value concerns.
Outlook Slashed
In response to the uncertain market outlook, Changyu has slashed its 2025 revenue target. The company now aims to generate no less than RMB 3.4 billion (US$ 473 million), down 27.66% from its unmet 2024 goal of RMB 4.7 billion (US$ 654 million).
“This revised target reflects our operational reality given current industry conditions. It’s not conservative—it’s realistic,” Sun said. “But I must be candid: our profit performance this year may still look quite poor.”
His warning is backed by Q1 2025 results. The company posted revenue of RMB 811 million (US$ 113 million), essentially flat year-on-year (+0.01%), and net profit of RMB 159 million (US$ 22.1 million), up just 0.21%. While the figures show modest stability compared to the steep declines in Q1 2024 (-28.34% revenue, -42.57% profit), they offer little momentum. With RMB 3.277 billion in full-year revenue in 2024, achieving this year’s target would require a 3.75% increase—challenging in a climate of consumer caution.
Looking ahead, Changyu plans to sharpen its focus on priority markets, ramp up marketing efforts, invest in consumer education, and accelerate innovation. “We will continue to drive a ‘palate revolution’ while expanding cooperation with emerging retail chains,” Sun said.
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