On August 29, Luzhou Laojiao Co.,Ltd. released its semi-annual report, achieving operating revenue of 164.54 billion yuan and net profit attributable to shareholders of 76.63 billion yuan in the first half of the year. The company maintained steady performance despite the liquor industry's deep adjustment period.

Consumer demand remained weak in the first half, with the liquor industry continuing its adjustment phase and brand differentiation intensifying. According to research from Founder Securities, premium liquor brands outperformed sub-premium brands, which in turn outperformed regional liquor companies. Premium liquor companies with strong brand influence and channel control demonstrated greater resilience.

As one of the top three premium liquor companies, Luzhou Laojiao Co.,Ltd. strengthened market cultivation during the industry adjustment period and achieved multiple operational highlights through continuous product innovation.

**Low-Alcohol Guojiao Penetrates Young Consumer Market, Becomes 10-Billion Yuan Flagship Product**

In recent years, the liquor industry has generally shown characteristics of "volume decline with quality improvement," but certain segments still possess development potential, with low-alcohol liquor being one of them.

Low-alcohol liquor primarily refers to spirits with alcohol content below 40 degrees. According to the "2025 China Liquor Mid-term Research Report" published by the China Alcoholic Drinks Association, consumption patterns in the liquor industry are quietly changing with the rise of younger consumer groups. "Youthful transformation" has become a development trend in the liquor industry, with white-collar workers and workplace newcomers born between 1985 and 1994 becoming important breakthrough targets for companies seeking niche markets.

Young consumers' drinking habits carry more "self-gratification" attributes, completely different from traditional business settings' "drinking culture." From a market perspective, the low-alcohol liquor market offers enormous potential. For instance, in 2023, a yellow wine company launched a sparkling yellow wine product that subsequently became popular in live streaming sales, and in 2025, it drove consecutive stock price increases.

For liquor companies, low-alcohol and youth-oriented products can bring new incremental growth while helping reach younger consumer demographics.

Among leading liquor companies, Luzhou Laojiao Co.,Ltd. possesses extensive experience in low-alcohol products and maintains strong technical advantages. In 1989, Luzhou Laojiao's 38-degree Tequ was recognized as a "National Famous Liquor," and the company led the development of national standards for "Low-Alcohol Strong Aroma Liquor," establishing technical guidelines for liquor alcohol reduction.

The barriers for low-alcohol liquor extend beyond technology to encompass companies' market understanding and consumer habit mastery. The 38-degree Guojiao 1573 offers broader consumer appeal and banquet scene compatibility, achieving consumer base expansion.

According to public information, Guojiao 1573 series achieved total sales exceeding 20 billion yuan in 2024, with 38-degree Guojiao 1573 accounting for approximately 50% of sales. This calculation suggests 38-degree Guojiao 1573 sales approached 10 billion yuan, making it the first low-alcohol premium liquor flagship product to reach the 10-billion yuan scale.

According to research from Guosen Securities, low-alcohol Guojiao demonstrates outstanding quality and primarily sells in North China markets that prefer low-alcohol liquor. The product has experienced rapid volume growth in recent years, establishing significant brand influence in gift-giving and business scenarios in Hebei and Shandong provinces.

Low-alcohol products helped Luzhou Laojiao Co.,Ltd. successfully penetrate family consumption and light social scenarios while expanding online channels including Tmall and Douyin, enhancing brand recognition among young consumer groups through new channels.

More importantly, leveraging the successful experience of 38-degree Guojiao 1573, Luzhou Laojiao Co.,Ltd. can successfully develop additional low-alcohol products. In July this year, management revealed they had developed 28-degree Guojiao 1573, which will be launched at an appropriate time. During September's analyst meeting, Luzhou Laojiao Co.,Ltd. further disclosed plans to continue advancing 38-degree product development and promote innovative consumption methods including chilled drinking and mixing. Additionally, the company's innovative segments including fruit wine, pre-mixed cocktails, and health liquor showed rapid profitability improvements.

From a medium to long-term perspective, low-alcohol product growth deserves anticipation.

**Building Competitive Advantages Through Brand Strength and Channel Expansion During Industry Adjustment**

With the arrival of a new adjustment cycle in the liquor industry, industry consolidation is intensifying, and market concentration is rapidly increasing.

According to public information, leading liquor companies have grown significantly faster than industry averages over the past decade. In 2024, six leading liquor companies including Luzhou Laojiao Co.,Ltd. accounted for 86% of total industry profits, an increase of over 30 percentage points from ten years ago. Future market share is expected to further concentrate among leading companies and core brands.

China's premium liquor market has established a "one leader, two strong" pattern, with Moutai dominating while Wuliangye and Guojiao 1573 follow closely behind.

Premium liquor competitive advantages primarily stem from brand power. China's three major premium liquor brands all possess unique historical foundations that other liquor companies find difficult to replicate.

Luzhou Laojiao Co.,Ltd. owns over 90% of the industry's century-old fermentation cellars, 16 Ming and Qing dynasty ancient brewing workshops, and three natural wine storage caves. Century-old fermentation cellars in continuous use primarily produce Guojiao series products. The company's 1573 National Treasure Cellar Complex and traditional brewing techniques are called "Living Dual National Treasures," forming the company's brand and product competitive moat.

In Brand Finance's "Global Brand Value 500" ranking by the renowned independent third-party brand valuation and strategic consulting firm, Luzhou Laojiao Co.,Ltd. ranked third globally among spirits brands in 2024 with a brand value of $8.2 billion.

For premium liquor, brand power determines product pricing power. Companies with strong brands naturally possess advantages in consumer recognition and reputation effects, while also enjoying unique advantages in new product promotion.

During the industry adjustment period, Luzhou Laojiao Co.,Ltd. also strengthened market cultivation and channel transformation. Rising brand awareness among new-generation consumers created excellent opportunities for branded liquor channel expansion. The company systematically advanced consumer cultivation in sub-county markets while building integrated online-offline marketing networks through self-developed e-commerce platforms and deeper cooperation with mainstream e-commerce and instant retail platforms, strengthening direct reach capabilities to terminals and consumers.

Channel expansion, new retail development, and brand enhancement mutually reinforce each other, creating powerful competitive advantages. Predictably, Luzhou Laojiao Co.,Ltd. will unleash tremendous growth potential through continuous innovation breakthroughs.