Summary of Key Points
The domestic liquor market was generally weak in the first half of the year, but the segment of younger-oriented beverages continued to grow. Bai Run Co., Ltd., a leader in pre-mixed cocktails, achieved excellent results against the trend (with both revenue and profit increasing, outperforming most liquor and wine companies). However, unlike liquor companies that have attracted young consumers by reducing alcohol content or using smaller bottle sizes, Bai Run has invested heavily in whiskey (a stronger alcoholic beverage category). The market is watching with mixed feelings: some are optimistic about the potential for domestic whiskey and Bai Run's ability to succeed, while others are concerned about the challenges of developing this new category, such as supply-demand imbalance and high time costs.
I. Bai Run Co., Ltd.'s Performance: Growth Against the Trend, Outperforming Liquor and Wine Competitors
Bai Run’s performance in the first half of the year was quite impressive: total revenue amounted to 1.66 billion yuan (a year-on-year increase of 11.3%), and net profit after deducting costs and taxes was 480 million yuan (a year-on-year increase of 23.1%). The growth rate in revenue and profit was even higher in the second quarter than in the first quarter. The core pre-mixed cocktail business generated 1.43 billion yuan in revenue, a growth of 10.2%.
Management attributes the success to three main factors: product innovation (such as introducing new flavors), tapping into new consumption scenarios (like camping and small gatherings), and integrating online and offline sales channels (e.g., live streaming for sales and convenient store distribution). In contrast, many liquor and wine companies had mediocre performance in the first half of the year, making Bai Run a standout.
II. Trend Towards Younger-Oriented Beverages: Lower-Alcohol Content and Diversity Becoming the Mainstream
Young people’s preferences for alcohol have changed; they prefer beverages with lower alcohol content and greater variety. A report by里斯咨询 (Lisi Consulting) shows that only 11.2% of young people prefer spirits with an alcohol content of over 30%.
To attract younger consumers, liquor companies are lowering the alcohol content of their products to below 30% and releasing them in smaller bottle sizes (e.g., 100ml bottles), while also improving packaging to make them more fashionable. However, Bai Run is taking a different approach by focusing on whiskey.
III. Bai Run’s “Reverse Strategy”: Heavy Investment in Whiskey as a Second Growth Driver
Bai Run’s investment in whiskey is substantial:
- In June this year, it plans to raise 1.31 billion yuan, of which 1.14 billion yuan will be used to expand its whiskey aging facilities.
- It has already made two additional capital raises in 2020 and 2021, investing a total of 2.14 billion yuan in the whiskey business.
- Its Laizhou distillery currently holds more than 600,000 barrels of whiskey, and it plans to use its existing pre-mixed cocktail distribution channels (such as convenience stores and e-commerce) to sell whiskey.
It’s worth noting that Bai Run’s annual net profit for 2025 is only 640 million yuan, so the 1.31 billion yuan in this fundraising round is nearly twice its annual net profit from last year, demonstrating its commitment to making whiskey a second growth engine alongside pre-mixed cocktails.
IV. Market Reaction: Mixed Views on Bai Run’s Strategy
There are two main perspectives within the industry regarding Bai Run’s whiskey strategy:
Optimists (Yin Kai, founder of Chao Yin Hui):
- The diversification of domestic beverages is a major trend. Although the whiskey market has cooled down, China’s large size means there is room for several domestic whiskey brands.
- Bai Run’s existing pre-mixed cocktail distribution network can be leveraged, and its strong financial capability provides the necessary cash flow to support initial investment in the whiskey business.
Cautions (Cai Xuefei, from Zhi Qu Consulting):
- China does not have a tradition of drinking whiskey, so cultivating consumer habits will take time and money.
- There are already 55 domestic whiskey producers, and the market may see an oversupply in the future.
- High-quality whiskey takes 5–10 years to develop, making it a high-risk investment with slow returns.
V. Current State of the Whiskey Market: Cooling Interest, but Clear Trend Towards Premiumization
The domestic whiskey market exhibits the following trends:
1. Divergent import data: Import volumes decreased by 9.2% in the first half of the year, indicating overall weaker demand, but import values increased by 15.7%, suggesting a shift towards more expensive premium whiskies.
2. Increasing Number of Domestic Producers: The number of domestic whiskey manufacturers will reach 55 by 2025, leading to intensified competition.
This market sentiment reflects the cautious approach towards Bai Run’s whiskey strategy: while there are opportunities, the challenges are significant.
In summary, Bai Run is trying to expand into the whiskey market amid the growth of younger-oriented beverages. Whether this strategy will be successful depends on its ability to withstand the long-term cultivation period and stand out among numerous domestic whiskey brands.