China’s e-commerce giants are charging headlong into the booming instant retail sector, but the battle for market share is coming at a steep cost. 

Meituan, the country’s largest instant retail platform, released its most troubling quarterly earnings since going public: revenue is still rising, yet profits have been wiped out by a subsidy-fuelled price war. Behind its RMB 95.5 billion (US$13.45 billion) in revenue stands a staggering loss of RMB 18.6 billion (US$2.62 billion). A six-month fight among major platforms — turbocharged by aggressive discounts — is reshaping China’s retail cost structure and dragging offline alcohol retailers, including wine merchants, into unprecedented pricing pressure.

Meituan’s Q3 2025 results show revenue rising 2% year-on-year to RMB 95.5 billion, but net profit swinging from a RMB 12.865 billion (US$1.81 billion) gain last year to a record quarterly loss. According to the financial report, the widening deficit is driven primarily by intensifying competition in the food-delivery business. Selling and marketing expenses soared 90.9% to RMB 34.3 billion (US$4.83 billion), jumping from 19.2% to 35.9% of revenue. The spike reflects expanded promotional campaigns, advertising, and user incentives needed to defend market position.

On the earnings call, Meituan CEO Wang Xing did not mince words about the drag created by the delivery war. “As we reiterated in the past two quarters, the food-delivery price war is a low-quality, low-price form of ‘involution’ competition, and we firmly oppose it. The results of the last six months clearly show that price wars do not create value for the industry and are unsustainable,” he said.

As we reiterated in the past two quarters, the food-delivery price war is a low-quality, low-price form of ‘involution’ competition, and we firmly oppose it. The results of the last six months clearly show that price wars do not create value for the industry and are unsustainable.

CEO of Meituan, Wang Xing

A Price War Reaches Boiling Point

In 2025, instant retail has become one of China’s most strategically important retail battlegrounds. Alibaba and JD.com have doubled down on the sector, taking on Meituan with massive subsidies and aggressive price-cutting. JD formally entered food delivery in February before launching its “100-billion-yuan subsidy” campaign in April. Alibaba rebranded Ele.me as Taobao Flash Delivery on April 30, then announced a RMB 50 billion (US$7.04 billion) subsidy plan in July. By the third quarter, the competition had reached fever pitch.

Media estimates suggest that in Q2 and Q3 alone, the combined profits of Meituan, JD, and Alibaba fell by nearly RMB 80 billion (US$11.27 billion) compared with the previous year. Meituan swung to deep losses, Alibaba’s operating profit plunged 85%, and JD’s net profit attributable to shareholders dropped 55%.

Ripple Effects on the Alcohol Industry

The alcohol industry — especially wine — has become one of the hottest categories in instant retail, drawing a surge of new merchants. Meituan even launched its own vertical alcohol-delivery brand, Waima Alcohol Delivery, signalling the channel’s strategic importance.

But the intensifying price war of 2025 is rapidly squeezing margins. Several merchants report that profitability has become increasingly elusive. In previous reporting by Vino Joy News, a wine retailer in East China noted that Meituan’s vouchers are co-funded by participating stores, meaning merchants must shoulder part of the subsidy. For some wines, the promotional prices have fallen to near–wholesale levels. Consumers benefit, but retailers face a stark dilemma: “Without discounting, there’s no business; with discounting, there’s no profit.”

Instant retail’s operating model — consumers ordering online and couriers delivering in around 30 minutes — carries significantly higher costs than traditional 1–3 day e-commerce. Yet best-selling wines such as Knock Knock and Franzia often appear even cheaper on instant retail platforms. Knock Knock, which typically sells for RMB 28–30 (US$3.90–4.20) in supermarkets or on traditional e-commerce sites, can drop below RMB 25 (US$3.50) after vouchers on Meituan. The result is shrinking distributor margins and destabilized long-term brand pricing.

Wang Yutian, Marketing Director and Head of O2O Instant Retail at Torre Oria, parent company of Knock Knock, admits the situation is challenging. “This is indeed a major issue right now. Prices are being pushed down largely by platform-led voucher campaigns. For brands like ours that entered instant retail early, we often have no choice but to follow the platform’s pace,” he said.

He noted that today’s price competition is far more intense than earlier battles between offline retailers or across online and offline channels. “On the surface, it looks like sales are rising, but revenue is not. Many stores caught in this cycle are essentially selling at a loss just to stay visible,” he said.

Still, Torre Oria plans to maintain an active presence in instant retail. “Instant retail can quickly boost sales, clear inventory, and attract new customers. In the long run, it is a critical entry point for capturing growth in immediate-consumption scenarios,” Wang said.

Wang expects platform subsidies to continue in the short term. For alcohol distributors seeking a sustainable path forward, he recommends focusing on product differentiation, private-traffic channels, and diversified consumption scenarios — areas where businesses can exercise more control even amid an unpredictable price war.