In parts of China’s wine country, growers are ripping out vines they no longer expect to harvest. Hundreds of kilometres away, in industrial cities better known for beer, breweries are shutting down with little public notice. For an industry long built on growth, the signs are unusually stark.
Official data show that China’s production of baijiu, wine and beer all fell in 2025, with wine and spirits recording double-digit declines. What began as a slowdown in drinking is now showing up in hard, physical ways: fewer vines in the ground, fewer tanks in operation, and fewer factories running at capacity. As demand weakens and distributors work through excess stock, producers across China’s drinks industry are cutting output—and in some cases dismantling capacity altogether.
Wine and spirits: when demand weakens, the cuts move upstream
According to data released by China’s National Bureau of Statistics on Jan. 22, baijiu output fell 12.1% year on year in 2025 to 3.55 million kilolitres. Wine production dropped even more sharply, down 17.1% to just 97,000 kilolitres.
The parallel decline in wine and baijiu reflects a prolonged squeeze on demand rather than a one-off shock. China’s economic recovery has been uneven, and the social occasions that underpin consumption of both categories—business entertainment, corporate banquets and high-end gifting—have all become less frequent.
That slowdown has been compounded by tighter enforcement of alcohol restrictions in parts of the country since mid-2024. While intended to curb excess, the measures have also weighed on official and semi-official consumption, accelerating destocking across distribution channels. As inventories piled up, producers were left with little choice but to scale back production.
For wine producers, the adjustment has begun to reshape vineyards as well as balance sheets. Several leading domestic wineries have publicly revised their capacity plans. China’s major producer Changyu reported wine output of 20,525 tonnes in its 2025 interim results, down nearly 14% from a year earlier.
Another listed winery, Weilong Wine, has gone further. Often described as China’s biggest wine producer, it disclosed that it had written off 600 mu (about 40 hectares) of vineyards from a 1,000-mu site in Shandong, retaining the remainder primarily for tourism. The move is expected to result in an about 11.2 million yuan (US$1.55 million) in asset loss.
The company said the decision reflected a reassessment of future supply and demand. Its existing base-wine capacity in Australia, Gansu and Xinjiang, it said, would be sufficient to meet production and sales needs for the next four to five years.
Beer: closures at the top, growth at the margins
Beer has fared better than wine and spirits, but only just. China’s beer output fell 1.1% in 2025 to 35.36 million kilolitres, a modest decline that masks deeper structural change.
The relative stability is the result of two opposing forces. Large industrial brewers are continuing to cut capacity, while smaller craft producers are expanding—softening, but not reversing, the overall decline.
For China’s biggest beer groups, slowing volume growth and margin pressure have prompted years of consolidation. Between 2016 and 2024, Snow Beer reduced the number of its mainland breweries from 98 to 62, closing 36 plants. The process continued in 2025, with the shutdown of facilities in Anhui and Binzhou. Tsingtao Brewery also quietly closed its Mishan plant, acquired earlier as part of its expansion drive.
These closures reflect a more cautious strategy among major brewers, focused on efficiency rather than scale in a market that no longer guarantees growth.
At the same time, China’s craft beer segment has been moving in the opposite direction. As large retailers such as Alibaba’s Freshippo and Pangdonglai introduce private-label and customised craft beers—and report solid sales—craft producers are finding wider access to mainstream channels.
In China, craft beer typically refers to beers with higher original wort concentrations and more complex flavour profiles. According to China Insights Consultancy, the retail value of China’s craft beer market rose from 12.5 billion yuan in 2019 to 63.2 billion yuan (US$9.10 billion) in 2024, a compound annual growth rate of 38.4%. The firm expects the market to continue growing at an annual rate of about 23.6% through 2029, reaching roughly 182 billion yuan.
Even so, craft beer remains a small part of the overall market. Penetration is estimated at just over 6%, far from enough to offset the production cuts taking place among industrial brewers. For now, its growth cushions the decline, but does not reverse it.
A structural adjustment, not a short pause
Taken together, the data point to a deeper adjustment under way in China’s drinks industry. After years of expansion driven by urbanisation, rising incomes and social consumption, producers are now confronting a more constrained environment—one shaped by weaker demand, tighter regulation and more cautious distributors.
The result is not just slower growth, but a visible retreat from capacity built for a different era. Vines are being pulled out. Breweries are being closed. And production plans are being reset with a longer view in mind.
Whether the industry stabilises at a lower level or finds a new growth engine will depend on how consumption patterns evolve in the years ahead. For now, the message from the production line is clear: China’s drinks industry is no longer expanding—it is retrenching.
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