Wuliangye’s Regrets: How China’s Former Liquor King Lost Its Crown and Its Struggle to Adapt

In the competitive world of Chinese baijiu, few stories are as compelling as that of Wuliangye—once the undisputed king of liquor, now perpetually in the shadow of its rival, Kweichow Moutai. The tale of Wuliangye’s regrets is not just about lost market share; it’s about strategic missteps, shifting consumer preferences, and the difficult balance between tradition and innovation. This article explores the key moments where Wuliangye faltered, the rise of Moutai, and how the company is now betting on low-alcohol, youth-oriented products to reclaim its stature. From Industry Leader to Second Best Wuliangye was not always playing catch-up. In the late 1990s and early 2000s, it dominated the Chinese liquor market. In 1998, Wuliangye’s revenue and net profit were both more than four times that of Kweichow Moutai. The company’s strong distribution network and brand recognition made it the top choice for consumers and investors alike. However, the landscape began to shift when Moutai, after its listing in 2001, started a series of strategic price hikes. Over 18 years, Moutai increased its ex-factory price 10 times, from RMB 185 to RMB 969. This created an aura of exclusivity and investment value around Moutai, something Wuliangye failed to replicate. By 2005, while Wuliangye’s overall scale was still larger, Moutai’s net profit had surged ahead. Investors like Lin Yuan (林园), known as the ‘folk stock god,’ noticed this trend early and shifted their investments to Moutai, recognizing its superior profitability and growth potential. The Tipping Point: 2013 and Beyond The year 2013 was a watershed moment for the Chinese liquor industry. An anti-extravagance campaign hit high-end liquor sales hard, but Moutai weathered the storm better than its rivals. It was in this period that Moutai officially overtook Wuliangye in market value and revenue, seizing the top spot for good. Wuliangye’s regrets became more pronounced as Moutai’s brand power grew. The latter’s success wasn’t just about pricing; it was about building a brand synonymous with luxury, scarcity, and cultural prestige. Moutai also expanded into series wines and direct sales, creating new growth engines that Wuliangye struggled to match. Missed Opportunities in Market Segmentation While Moutai solidified its high-end dominance, the liquor market’s growth began shifting to other segments. The mid-to-high-end (次高端) and mass-market liquor segments saw significant expansion, driven by changing consumption patterns and economic factors. Companies like Shanxi Fenjiu (山西汾酒) capitalized on this trend. With the backing of strategic investor China Resources, Fenjiu aggressively expanded nationally and climbed to the third position in the industry rankings. Wuliangye, despite having a multi-tier product portfolio including Wuliang Chun, Wuliang Chun, and Jianzhuang, failed to make significant inroads in these segments. The Flavor Revolution: Rise of Sauce-Aroma Baijiu Another critical factor in Wuliangye’s regrets was the industry-wide shift toward sauce-aroma baijiu, led by Moutai. This flavor profile gained popularity for its rich, complex taste and aging potential. As consumers developed a preference for sauce-aroma liquors, Wuliangye’s signature strong-aroma baijiu lost ground. The rise of sauce-aroma baijiu wasn’t just a trend; it represented a broader change in consumer tastes that Wuliangye was slow to address. While Moutai and other sauce-aroma producers expanded their market share, Wuliangye’s core product line faced increasing pressure. The Low-Alcohol Gambit: Betting on the Future In recent years, the Chinese liquor market has entered a phase of slower growth. The once booming ‘squeeze growth’ and ‘structural prosperity’ have faded, pushing companies to seek new avenues for expansion. Low-alcohol liquors have emerged as one of the few promising trends. Wuliangye is not alone in this pursuit. Luzhou Laojiao, another strong-aroma baijiu giant, has emphasized its early move into low-alcohol products, with its sub-40-degree liquors generating over RMB 20 billion in sales in 2024. Similarly, Gujing Gongjiu recently launched a 26-degree version of its flagship product, Yuanjiang · Mild Gu 20. However, Wuliangye has taken a more aggressive approach. In 2024, it introduced Wuliangye · Love at First Sight, a 29-degree liquor targeting younger consumers. The product features a modern, gradient blue crystal bottle and endorsements from popular celebrities like G.E.M. (邓紫棋). Challenges in Low-Alcohol Adoption Despite the hype, low-alcohol liquors face significant hurdles. Traditionalists like Ding Yuanhuai (丁远怀), General Manager of Guizhou Fishing Terrace State Guest Liquor and President of the Guizhou Baijiu Enterprise Chamber of Commerce, openly criticize excessive dilution, arguing that high water content can compromise quality over time. Moreover, low-alcohol products often require a shift in distribution and marketing strategies. Traditional baijiu sales rely on aging and collectibility, whereas low-alcohol liquors are positioned as fast-moving consumer goods. This transition poses challenges for established players like Wuliangye. Financial Performance and Market Position Wuliangye’s recent financial results highlight its struggles. In the first half of 2025, the company reported revenue of RMB 52.771 billion and net profit of RMB 19.492 billion, with year-on-year growth of just 4.19% and 2.28%, respectively. These figures pale in comparison to Moutai’s consistent double-digit growth. Yet, Wuliangye remains a giant. With annual revenue nearing RMB 90 billion and a market cap of around RMB 500 billion, it is still the second-largest player in the industry. The gap between Wuliangye and its closest followers, Shanxi Fenjiu and Luzhou Laojiao, remains substantial, giving it a buffer but also a sense of complacency. The Path Forward: Innovation or Irrelevance? Wuliangye’s regrets are a mix of past missteps and present challenges. The company lost its top position to Moutai, missed key trends in market segmentation, and now faces a generational shift in consumer preferences. Its bet on low-alcohol, youth-oriented products like Love at First Sight is a bold move, but one fraught with uncertainty. The broader question for Wuliangye—and the baijiu industry as a whole—is whether younger consumers will embrace traditional liquors, even in a diluted form. While many industry insiders believe that age will naturally drive consumers toward baijiu, Wuliangye is not waiting to find out. However, with Love at First Sight priced at RMB 399 for a 500ml bottle, it remains to be seen whether young consumers will embrace such a premium product. The company’s ability to balance innovation with affordability will be critical to its success. Lessons from Rivals and the Road Ahead Wuliangye can learn from both Moutai and rising stars like Shanxi Fenjiu. Moutai’s success lies in its unwavering focus on brand elevation and scarcity, while Fenjiu’s growth is driven by strategic partnerships and aggressive expansion into new markets. For Wuliangye, the path forward may require a dual strategy: strengthening its high-end offerings while aggressively pursuing innovation in low-alcohol and ready-to-drink segments. The company must also rethink its distribution model, embracing direct-to-consumer channels to better engage with younger audiences. Wuliangye’s regrets are a reminder that in the fast-moving consumer goods industry, past success is no guarantee of future relevance. The company’s ability to adapt, innovate, and connect with a new generation of consumers will determine whether it can close the gap with Moutai or risk being left further behind. As the baijiu market continues to evolve, Wuliangye must confront its regrets head-on. The company’s bet on low-alcohol liquors is a step in the right direction, but it will take more than one product to reclaim its former glory. For now, the industry watches closely to see if Wuliangye can turn its regrets into opportunities. Key Takeaways: – Wuliangye lost its top position to Moutai due to strategic missteps and Moutai’s effective brand building. – The company missed key growth opportunities in the mid-to-high-end and mass-market segments. – Low-alcohol liquors represent a new growth avenue, but face challenges in consumer adoption and traditional distribution models. – Wuliangye’s recent financial performance highlights the need for innovation and agility. – The company’s future success depends on balancing tradition with modernization and engaging younger consumers. For those interested in the dynamics of the Chinese liquor industry, Wuliangye’s story offers valuable lessons in adaptability, brand management, and strategic foresight. As the market continues to change, keeping an eye on Wuliangye’s next moves will be essential for investors and industry observers alike.