The prices of baijiu have seen a consecutive three-day rise, attracting increased attention from those considering trends for the fourth quarter and into next year. This phenomenon aligns with the typical pattern of market behavior: crowds flock in when prices rise, but show little interest when prices fall. A classmate of mine works as an accountant for a distributor of <600519>, Kweichow Moutai Co., Ltd., which is a relatively small player among distributors. This distributor not only handles Moutai but also sells <000858>, Wuliangye Yibin Co., Ltd. From a performance perspective, the distributor makes significantly more from Moutai than from Wuliangye. When I inquired why they also handle Wuliangye, her response was that some long-time customers tend to buy Wuliangye alongside their Moutai purchases. If they did not sell Wuliangye, that revenue would inevitably go to competitors, potentially even moving their Moutai purchases elsewhere. So, following the principle of keeping profits within their own operations, the owner decided to sell both brands—focusing on Moutai primarily, and Wuliangye as a secondary option. When the market for Moutai is strong, the distributor profits handsomely, while downturns yield minimal losses; during good times with Wuliangye, they enjoy smaller profits, but in tough times, they at least break even or incur slight losses.

This situation illustrates that while individual distributor experiences may not be representative, they can reflect broader issues. In the current market adjustment, Wuliangye does not seem to have gained any advantage, especially since it has recently lagged behind <600519>, Luzhou Laojiao. Last month, the Moutai distributor recorded solid sales performance, with revenues exceeding 5 million, which is not particularly large for a distributor. However, they provided over 7 million as payment to Moutai. As my classmate pointed out, Moutai has a strong grip on its distributors' cash flows. From my perspective, Moutai enjoys a robust competitive edge, insisting on prepayment before delivery. Even if distributors feel discontented, they are reluctant to abandon such lucrative business opportunities. In contrast, while Wuliangye does not exert as tight a control over its distributors, this particular distributor had contemplated closing their Wuliangye shop amid the industry's general lack of profitability this year. This notion has been voiced by my classmate since the beginning of the year but has yet to materialize as the shop remains operational. Why? On one hand, despite not turning a profit this year, they have avoided losses, maintaining basic balance thanks to Wuliangye's subsidies. The recent Mid-Autumn and National Day periods have also rekindled hope for the distributor. On the other hand, closing a shop is easier than reopening; withdrawing from the market makes it considerably harder to re-enter when conditions improve, incurring additional time and financial costs.

From this viewpoint, Wuliangye, too, possesses its own competitive advantages. Although not as formidable as Moutai's moat, it is likely more substantial than those seen with Luzhou Laojiao or Shanxi Fenjiu. After much consideration, the owner has not abandoned their qualifications and shows no inclination to join Luzhou Laojiao or Shanxi Fenjiu. Today's discussion has primarily focused on micro-level details, with little speculative talk about the fourth quarter or next year. Any discussion about future trends tends to be unfounded, as those involved often lack perspective and should wait patiently for data. My overarching view remains unchanged: the short-term landscape is still marked by valuation recovery. A PE ratio below 15 is indeed rare in the current A-share market, compounded by stable sales figures. Alcohol consumption will not see a drastic decline; even amidst fluctuations, adjustments are typically much smoother. I believe patience will reward those who hold their positions through 2030 with a chance to alter their fortunes.