China’s biggest listed liquor distributor, VATS Liquor, saw RMB 325 million (US$ 45 million) wiped off the value of its baijiu and wine inventories — a 114-fold surge in impairment losses that pushed the company into the red and laid bare the deepening crisis in China’s premium-alcohol market.
The write-down, detailed in its latest financial filing, underscores the mounting strain in China’s premium-liquor trade, where price cuts and weak demand have forced distributors to liquidate stock at steep losses. VATS Liquor’s third-quarter revenue tumbled 35.7 percent year on year to RMB 1.21 billion (US$ 169 million), while it posted a quarterly net loss of RMB 254.9 million (US$ 35.4 million).
Once celebrated as “China’s No. 1 Liquor Distributor,” the company blamed the downturn on “changes in the economic environment and weaker consumption.” But industry insiders told Vino Joy News the losses were driven by a sweeping inventory-clearance campaign to offload slow-moving and overpriced baijiu.
VATS Liquor remained profitable in the first half of the year despite falling sales, but its third-quarter slump dragged year-to-date results into negative territory. For the first nine months of 2025, revenue dropped 34.1 percent to RMB 5.16 billion (US$ 717 million), with a cumulative net loss of RMB 198.7 million (US$ 27.6 million).
The Beijing-headquartered company is one of China’s largest liquor retailers and distributors, selling leading domestic spirits such as Moutai and Wuliangye while also representing international wine brands including Penfolds and Domaines Barons de Rothschild (DBR Lafite). It works with Master of Wine Alun Griffiths to curate more than 500 wines tailored to Chinese consumers and operates a nationwide omnichannel network spanning retail stores, supermarkets, group sales and e-commerce. It’s also one of China’s Top 100 Wine Importers.
Fire-Sale Discounts and Price Inversions
A company insider, who requested anonymity, told us in an interview that VATS Liquor had been selling high-priced inventory at deep discounts to recover cash. “We’ve been cutting prices on many slow-moving baijiu products — some by half,” the person said. “They were bought at peak prices, so selling them cheaply inevitably means a loss on the books.”
Distributors in Guangdong confirmed that VATS Liquor’s online prices for certain baijiu labels fell below their own purchase cost, stirring frustration within its dealer network.
Across China, liquor demand remains sluggish and inventories are high. Prices for flagship brands such as Wuliangye have slipped below official guide levels on platforms like Taobao and Meituan as distributors dump stock to free up capital. Imported wines have also been hit, with many premium labels seeing double-digit price declines.
Massive Write-Down Highlights Market Pain
VATS Liquor’s report shows the extent of the strain: asset-impairment losses of RMB 325 million (US$ 45 million) wiped out the book value of unsold baijiu and wine and erased quarterly profits.
“The market is extremely weak. Even top brands like Moutai are falling in price,” the insider said. “The good news is our cash flow has improved after clearing inventory. Right now, survival is the top priority.”
Despite the losses, VATS Liquor continues to expand its franchise network, with new outlets opening across China — a sign that retailers still recognise the brand’s influence in the liquor trade.
Analysts say the company’s massive write-down highlights deeper distress across China’s premium-liquor sector, where price inversions, sluggish consumption and policy headwinds are forcing distributors to choose between short-term survival and long-term profitability.
