Yellow Rice Wine’s “Lease a Ship to Sail Out to the Sea”: A Gamble or a Breakthrough?
Hello everyone, I’m your financial journalist. Today, we’re talking about a somewhat “old-fashioned” yet suddenly “hot” category in the wine industry—yellow rice wine.
Recently, there’s been a rather interesting phenomenon in the capital markets: the leading yellow rice wine company, Huijishan, has seen its stock price soar to a limit up, and another giant, Guyue Longshan, has also seen a price increase. But the story behind this is even more intriguing than the stock price fluctuations. In simple terms, it’s about the major distributors of茅台 and Wuliangye suddenly “switching sides” and starting to aggressively sign deals for yellow rice wine.
It’s like an old man who’s always sold breakfast at the entrance of a residential complex being approached by a group of wealthy individuals in luxury cars, who say, “Sir, your breakfast is great; we want to sell it all over the country.”
Is this the rise of yellow rice wine on a par with the soaring success of茅台, or is it just a game of stockpiling goods to boost performance? Let’s break down this news and explain it in plain language.
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1. The Phenomenon: Why Have the Major Baijiu (Chinese Liquor) Companies Suddenly Taken a Interest in Yellow Rice Wine?
First, we need to understand the background. In the past, what was the status of yellow rice wine? To many people from other regions, it was just a cooking ingredient or a “medicinal wine” consumed by the elderly in Jiangsu, Zhejiang, and Shanghai during winter. It was largely confined to these three provinces, and outside of this area, hardly anyone drank it.
But this year (2026), the situation has changed. The news mentions that Huijishan and Guyue Longshan, the two leading yellow rice wine companies, have been very active in the past few months, and the companies they’ve signed deals with are quite impressive:
- Huijishan has partnered with companies like Maowu Jian Trade (major distributors of茅台 and Wuliangye) in Henan, Baishan Fangda in Northeast China, Guangxing Hu in Guangdong, and the Sugar Industry Tobacco and Alcohol Group in Beijing, essentially bringing in local market leaders from several major regions across the country.
- Guyue Longshan has also made moves, partnering with the Sugar Industry Tobacco and Alcohol Group in Beijing, Yueqiang in Guangdong, and the leading agricultural supplies company in Chongqing.
Why these Baijiu distributors? Because they possess two valuable assets: high-end distribution channels and experience in managing products with high margins.
How did these Baijiu distributors sell their products before? They relied on high-end restaurants, group buying circles, and elegant displays. Now, they’re applying the same strategies to yellow rice wine. For example, Huijishan’s premium series “Lanting” and Guyue Longshan’s new product “Hupo Guang” aim to use the Baijiu distributors’ networks to move yellow rice wine from the kitchen to the living room and private dining rooms.
In plain terms: It’s too difficult for yellow rice wine companies to expand nationwide on their own; so they’re choosing to work with experienced distributors who already have a nationwide presence and can sell high-priced products.
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2. The Strategy: Cutting Ties with Old Markets While Competing for New Ones
This channel transformation is more than just adding new partners; it’s a drastic reshuffle.
Looking at the financial reports, you’ll notice a counterintuitive trend:
- Huijishan has seen a decrease of 114 distributors in the first half of the year, with 97 fewer in their home province of Zhejiang and 33 fewer in Jiangsu, but 93 more in other provinces.
- Guyue Longshan also has 26 fewer distributors.
What does this indicate? Both companies are taking the same approach: cutting unprofitable operations and expanding outside their home markets.
1. Eliminating inefficient operations: The yellow rice wine market in Jiangsu, Zhejiang, and Shanghai is saturated, with many small distributors struggling to sell products or only selling low-end cooking ingredients, resulting in thin profits. It’s better to cut these unprofitable ties and focus resources elsewhere.
2. Betting big on other regions: Although the market size outside these provinces is smaller, the growth potential is faster. By partnering with Baijiu distributors, they can quickly establish a presence in regions like Northeast China, South China, and Southwest China.
To put it another way: It’s like a local milk tea shop that realizes the local market isn’t growing and closes its less profitable stores, using the savings to open flagship stores in top-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen.
This strategy is aggressive but also risky. If they can’t establish a foothold in other regions and lose their local market, they’ll end up with nothing.
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3. Concerns: Can Growth Bought with Money Be Sustained?
Although the stock prices have risen and the deals are booming, industry experts like Xiao Zhuqing have raised concerns about two major risks:
Risk 1: Growth Driven by Excessive Spending
Huijishan’s sales expense ratio in the first half of the year was as high as 27.7%. This means that for every 100 yuan in sales, 27.7 yuan was spent on marketing, displays, and tastings. In other words, the sales increase isn’t due to the quality of the wine; it’s because the company is spending money to attract customers and highlight the product. If the company runs out of money or stops spending, sales will plummet. This kind of growth is “puffy” and not sustainable.
Risk 2: The Trap of Stockpiling Goods
The Baijiu industry has a history of “peaking with recruitment and declining with stockpiling.” The large number of deals signed by the Baijiu distributors could lead to a surplus of yellow rice wine in warehouses. If consumers don’t buy it, the products will accumulate in the channels, and distributors may have to sell them at low prices, causing the price structure to collapse and damaging the brand’s reputation.
In plain terms: If the distributors can’t sell the products, they might ask the manufacturers to take them back or reduce prices, which could further damage the stock price and brand image.
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4. The Core Challenge: How Can Yellow Rice Wine Break Out of Its Current Limits?
Why couldn’t yellow rice wine expand beyond Jiangsu, Zhejiang, and Shanghai in the past? There were several barriers that hadn’t been overcome. Can the arrival of Baijiu distributors help?
1. Consumer Perceptions: Yellow rice wine is still often seen as a cooking ingredient or an inexpensive drink. Companies like Huijishan and Guyue Longshan are trying to change this perception by promoting their products as high-end options, but it’s difficult to change people’s habits.
2. Lack of Clear Drinking Scenarios: There aren’t established scenarios for drinking yellow rice wine. While Baijiu is commonly used for business dinners and gifts, beer is popular for late-night snacks and barbecues. Yellow rice wine doesn’t have a clear place in these contexts.
3. Profitability for Distributors: The low unit price and thin margins of yellow rice wine mean distributors don’t make much profit. Companies like Huijishan and Guyue Longshan need to attract distributors with the higher margins of their premium products, but if these products don’t sell well, the distributors may lose interest.
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5. Summary and Outlook: Can Yellow Rice Wine Achieve Great Success?
Returning to the title question: Can yellow rice wine achieve the same level of success as茅台?
My opinion is: In the short term, there’s a lot of excitement, but in the long run, it’ll depend on the actual results.
- Short-term Benefits: The entry of Baijiu distributors has brought more attention and exposure to yellow rice wine, which is good for the companies’ reputations.
- Long-term Challenges: The quality and cultural appeal of yellow rice wine need to improve to support its premium positioning. Chinese consumers are shifting towards lower-alcohol and healthier drinking habits, which presents an opportunity. However, yellow rice wine must break away from its “old-fashioned” image and become a fashionable drink.
- Channel Stability: If the partnership is just about stockpiling goods without actual sales, it won’t be sustainable.
Advice for Everyone:
- For Investors: Pay attention to the quarterly financial reports, especially the sales expense ratio, the proportion of revenue from other regions, and channel inventory levels. If the expense ratio remains high and revenue growth slows, be cautious.
- For Consumers: Give the new premium yellow rice wines a try. You might find they’re stylish and delicious, but don’t expect them to replace Baijiu as the dominant drink. They’re more likely to become a complementary or casual drink.
In conclusion: Yellow rice wine’s “lease of a ship to sail out to the sea” is a significant move, but the market and distribution challenges are significant. Whether it succeeds depends on whether yellow rice wine has the necessary qualities to attract and retain customers.
This gamble has just begun.