Jiugui Liquor cuts 40% of dealers in H1, with Pangdonglai contributing nearly 20% of revenue

Management claims shipment halt policy "achieved expected results," but wholesale prices remain stagnant

On the afternoon of September 18, at Jiugui Liquor's (000799.SZ) 2026 semi-annual earnings briefing, Zou Fei, Deputy General Manager in charge of sales, responded to investor inquiries about the effectiveness of halting shipments and propping up prices for Neican liquor, stating: "The relevant policies have achieved the expected results."

However, management's notion of "expectations" appears out of sync with terminal market prices.

The operation launched on July 15—raising prices by 30 yuan per bottle and suspending shipments for one month—has left the wholesale price of Neican liquor stuck at 565 yuan, unchanged throughout the shipment suspension period.

Key Investor Concerns

Nearly a month after the release of its interim report, investors repeatedly pressed management on three key issues:

• Price stability
• Dealer rationalization
• Reliance on major clients

Financial Performance

In the first half of the year, the company reported:

| Metric | Value | YoY Change | |--------|-------|------------| | Revenue | 530 million yuan | -5.58% | | Net profit attributable to shareholders | 12.32 million yuan | +37.57% | | Non-GAAP net profit attributable to shareholders | 11.35 million yuan | +34.83% |

After consecutive declines in revenue, Jiugui Liquor's profits turned positive ahead of its top line, which remains in a bottoming-out phase.

Protect Prices or Protect Sales Volume?

Product Segment Performance

By product segment, the high-end Neican series generated revenue of 84.165 million yuan in the first half, down 24.14% year-on-year. According to estimates from Sinolink Securities:

• Sales volume for the Neican series declined slightly by 1% in the first half
• Average price per ton dropped sharply by 23% year-on-year
• This indicates a clear strategy of trading price for volume in the premium segment

Price Repair Measures

To repair the pricing structure, on July 15, Neican Liquor Sales Company:

1. Raised the strategic price of its 52% ABV, 500ml Neican liquor (including the 2021 edition and the Jiachen edition) by 30 yuan per bottle
2. Maintained the annual rebate policy of 20 yuan per bottle
3. Implemented volume control measures by completely suspending external shipments of this product for one month

However, according to data from "Today's Liquor Price," the wholesale price remained steady at 565 yuan during and after the shipment suspension. The quote on September 18 was flat compared to August levels and still far below the official retail guidance price of 1,499 yuan.

Management's Response

When asked about the effectiveness of these measures, Zou Fei cited three initiatives:

• Volume controls and shipment suspensions
• Strengthening management of dealers' product flows by establishing regional alliances in key provincial markets to jointly maintain the pricing system and channel profits
• Launching new group-purchase-oriented products such as Neican Batik to enhance brand value

Regarding the question of whether to prioritize price stability or sales volume, he stated: "We aim to expand sales scale while stabilizing market prices."

Mass-Market Segment Decline

Beyond Neican, the mass-market segment is also losing momentum:

| Segment | Revenue (first half) | YoY Change | |---------|---------------------|------------| | Xiangquan series (mass market) | 24.0373 million yuan | -23.7% | | Other series | — | -35.57% |

The only segment showing positive growth was the sub-premium Jiugui series, which generated 336 million yuan in revenue in the first half, up 16.04% year-on-year, accounting for 63.42% of total revenue and becoming the company's largest source of income.

Renewed Partnership with Pang Dong Lai

Channel strategy was the most heavily scrutinized topic at this earnings briefing.

Growth in the sub-premium Jiugui liquor segment was primarily driven by supermarket chain Pang Dong Lai, with whom the company collaborated last year to develop "Jiugui Liquor · Free Love." According to the annual report, Pang Dong Lai has become Jiugui Liquor's largest customer, generating 196 million yuan in sales in 2025, representing 17.66% of total sales.

Addressing Market Concerns

Addressing market concerns about "becoming an OEM factory," "diluting brand value," and "disrupting traditional channels," Cheng Jun, Party Secretary and General Manager of Jiugui Liquor, responded that the partnership with Pang Dong Lai represents the company's expansion into new channels, achieving "visible and commendable results," without impacting traditional channels or brand value.

Continued Channel Expansion

Board Secretary Tang Zhenyu revealed that the company recently partnered with Pang Dong Lai to launch a 750ml Xiangquan product priced at 65 yuan, sold exclusively in Pang Dong Lai supermarkets. He noted that it belongs to a different price tier than "Free Love" and will not affect the latter's sales.

Product Comparison:

| Product | Price | Volume | Positioning | Distribution | |---------|-------|--------|-------------|--------------| | Free Love | 200 yuan | 550ml | Gifting | Pang Dong Lai + Yonghui Superstores (Pang-style renovation) | | Xiangquan | 65 yuan | 750ml | Personal consumption | Pang Dong Lai supermarkets only |

Channel Restructuring

Jiugui Liquor's current channel layout has shifted from broad coverage to a focused, selective approach.

Dealer Network Reduction

In the first half:

• Number of dealers decreased by a net 447 to 662
• Roughly 40% of the network eliminated in one go
• Pace significantly faster than the net reduction of 227 dealers seen throughout 2025

Revenue Concentration

• Revenue from the top five dealers reached 268 million yuan
• Accounting for 50.51% of total sales
• A substantial increase from 32.63% in the same period last year

Investor Concerns

Investors directly questioned the risks associated with channel concentration:

• Are there exclusivity clauses or long-term agreements locking in partnerships with the top five customers?
• Will the next step be deepening ties with major clients or rebuilding the small and medium-sized dealer network that was cut?

Management's Response

Cheng Jun responded that the company will continue to deepen strategic cooperation with major clients while selectively partnering with well-resourced customers based on regional market conditions to refine its dealer system.

He attributed the significant decline in dealers to:

• Some smaller distributors exiting due to market conditions
• The company's proactive optimization and adjustment of its sales team

He stated that this would "not impact overall company sales."

Photo by Sun Wanqiu | Photo by Zuo Yu

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