Two of China’s publicly traded drinks retailers, VATS Liquor and Liquor Easy, reported first-half losses as weaker spending and falling prices for major spirits brands put pressure on sales, prompting efforts to cut costs and reduce inventory.
Revenue fell 17.72% at VATS Liquor and 28.11% at Liquor Easy in the first six months of 2026. Their results underscore the difficulties facing China’s drinks retail chains, where investments in on-demand delivery have yet to reverse declining overall sales.
The causes of the losses differed. VATS Liquor attributed its loss mainly to back taxes and late-payment surcharges, and remained profitable after excluding nonrecurring items. Liquor Easy linked its revenue decline primarily to adjustments to its store network, while reporting substantial cuts in selling expenses.
Industry specialists interviewed by Vino Joy News said the pressure extends beyond the two companies. Consumers are trading down, business entertaining is slowing, and retailers are struggling to make money from brands that once supported higher spending.
Tax charges push VATS Liquor into loss
VATS Liquor, China’s only A-share-listed specialist drinks distributor, reported revenue of RMB 3.249 billion (US$455 million) for the first half, down 17.72% from a year earlier. Its net loss attributable to shareholders was RMB 73.45 million (US$10.28 million).
The company distributes major baijiu brands alongside wines including Lafite and Penfolds.
In its interim report, VATS Liquor said the loss arose mainly from back taxes and late-payment surcharges paid by two wholly owned subsidiaries, Huazhi Jingpin and Tibet Zhongtang, following internal tax reviews. All amounts had been paid by the end of the reporting period, and the matter did not involve administrative penalties.
Excluding nonrecurring items, net profit attributable to shareholders was RMB 39.15 million (US$5.48 million).
Underlying sales nevertheless weakened. The company cited economic conditions, policy changes and declining baijiu demand.
Baijiu revenue fell 18.74% to RMB 2.951 billion (US$413 million), accounting for about 91% of total sales. Revenue from the rest of the business — primarily wine, alongside imported spirits and other activities — declined by a more modest 6.07% to approximately RMB 298 million (US$41.72 million).
Liquor Easy cuts costs as sales fall
Liquor Easy, which trades on China’s National Equities Exchange and Quotations, or New Third Board, reported revenue of RMB 430 million (US$60.2 million), down 28.11%. Its net loss attributable to shareholders was RMB 33.26 million (US$4.66 million).
The company attributed the revenue decline mainly to changes to its store network. Lower staffing and rental costs, combined with reduced spending on third-party delivery, helped bring selling expenses down 37.18%.
Founded in 2010, Liquor Easy sells baijiu, wine, imported spirits, beer and huangjiu, or Chinese yellow wine. It combines physical stores, an online platform and a call centre with a 20-minute delivery service.
At the end of 2025, it had 228 stores, including 192 directly operated locations.
The company’s interim report highlighted its geographic concentration in markets including Henan, Beijing and Xi’an, warning that slower-than-expected expansion elsewhere could limit growth. It also flagged the management demands of its directly operated network and the risk of inventory write-downs if market prices continue to fall.
Consumers trade down
Feng Lihua, a drinks marketing specialist and former drinks retail executive, said lower-priced categories such as beer and fruit wine were proving more resilient, while major spirits brands faced sharp price pressure.
“The market is still weak. Beer and fruit wines, which involve lower spending per purchase, are relatively popular. Prices for major brands are falling to new lows,” Feng said.
“Wuliangye is selling for 700 to 800 yuan — something unimaginable a few years ago. One Xijiu product is already selling at half price. Prices are unprecedentedly low.”
Retailers are responding by developing their own products and trying to reduce distribution costs, he said.
“Every retailer is developing its own products to reduce supply chain costs and push prices for end customers very low.”
Guo Fusheng, a drinks marketing specialist who operates the on-demand retailer I Love My Wine in Tianjin, said the weakness extended to sales volumes.
“Overall, lower-end drinks priced below 100 yuan are growing, but major brands are seeing very steep declines,” he said.
Business entertaining, traditionally an important source of demand for premium baijiu, is also becoming more restrained.
“Even business banquets now use products costing only 100 to 200 yuan. The trading down is severe,” Guo said. “Many businesses are struggling, owners are short of money, and there are fewer business banquets.”
Guo described conditions in 2026 as worse than in 2025, saying pessimism among business owners was reinforcing caution over spending.
Fast delivery cannot resolve every problem
The pressure comes despite the rapid expansion of on-demand drinks retail, which has drawn established chains into competition with delivery-focused operators.
VATS Liquor said it was continuing to connect stores to major on-demand platforms, offering delivery in as little as 15 minutes. Liquor Easy already operates an integrated online and offline delivery model.
Neither company’s overall results, however, indicate that faster delivery has been enough to offset the sales decline. The figures also do not establish how their on-demand operations performed separately.
Guo said product selection was a key distinction between traditional chains and newer competitors.
“VATS Liquor is fundamentally still a distributor of major liquor brands. Liquor Easy’s product mix also centres on major brands,” he said. “They are unlike Waima, which has trendy drinks, craft beer, fruit wines and products it has developed itself.”
Feng pointed to differences in franchise management. Older retailers such as VATS Liquor and 1919 had expanded through franchising while retaining relatively limited control over franchisees, he said, potentially making consistent execution more difficult.
“Waima also uses franchises, but it has a strict management system,” Feng said. “It can also draw on very strong online capabilities that other brands do not have.”
Guo argued that Waima benefited from its relationship with Meituan, describing the platform as “both referee and player.” In his assessment, that relationship gave Waima an advantage as smaller on-demand drinks operators struggled to achieve profitability.
For other chains, he said, the problem was increasingly difficult to resolve: major brands offered little profit, while their own-label and exclusive products were hard to sell.
Retailers prioritise cash
With demand weak, retailers are focusing on costs and the cash tied up in stock.
VATS Liquor reduced inventory to approximately RMB 1.633 billion (US$229 million) at the end of June, from RMB 2.383 billion (US$334 million) six months earlier — a decline of about 31.5%.
The company attributed a sharp increase in operating cash flow mainly to “adjustments to operating strategy and intensified efforts to reduce inventory.”
The reduction points to a focus on selling existing stock and releasing working capital as revenue declines.
At Liquor Easy, store-network adjustments and lower staffing, rental and delivery expenses similarly reflect efforts to bring costs down. Its reported figures do not specify here how many stores closed or how much headcount fell during the period.
Guo said closures and cost-cutting had become common across drinks retail, mirroring adjustments at broader retail chains such as Yonghui and China Resources Vanguard.
“There is no money to be made in drinks retail right now, and merchants need to protect themselves,” he said. “Closing stores, cutting staff and converting assets into cash are important ways to do that.”
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