Luzhou Laojiao Co. Ltd: Navigating a Challenging Spirits Landscape While Maintaining Investor Confidence

Luzhou Laojiao Co. Ltd (SZ:000568) remains a key player in China’s premium‑spirit sector, yet the company is confronting the same headwinds that have beset the broader alcohol market. 2025 has been a year of declining revenue and net profit for the firm, reflecting a wider contraction in the white‑rum industry that has seen top‑tier brands lose market share. Despite these operational pressures, Luzhou Laojiao has taken concrete steps to safeguard shareholder value and to protect consumers against counterfeit products.

1. Earnings and Cash‑Dividend Policy

The company disclosed a 3‑year dividend plan on April 28, 2025. According to the plan, the total cash dividend per year will be at least 65 % of the net profit attributable to listed company shareholders for 2024, 70 % for 2025, and 75 % for 2026, with a minimum of RMB 8.5 billion (including tax) each year. In theory, two cash‑dividend events are allowed annually, a strategy that signals the firm’s confidence in its cash‑flow generation even as sales volumes dip.

The latest quarterly earnings confirm the firm’s resilience. In the third quarter, Luzhou Laojiao reported revenue of RMB 6.674 billion and net profit of RMB 3.099 billion, a 12.8 % increase year‑on‑year. Cumulatively for the first nine months of 2025, revenue reached RMB 23.127 billion and net profit, after one‑off items, amounted to RMB 10.742 billion. These figures, while robust relative to the industry, represent a decline from the previous year’s performance and illustrate the impact of falling demand for high‑end spirits.

2. Industry‑Wide Downturn

A November 5 report highlighted that the third‑quarter results for several mid‑ and high‑tier spirit brands, including Luzhou Laojiao’s flagship “Guojia 1573”, saw a 10.2 % drop in sales. The decline aligns with a broader trend in the industry, where overall production fell 9.9 % in the first nine months of 2025. Analysts attribute the slowdown to a combination of sluggish domestic consumption, pricing pressures, and inventory glut.

The industry’s distress is further underscored by a November 7 analysis of the third‑quarter financial reports across the sector. It described the market as transitioning from an era of expansion to one of survival, with distribution channels under heavy strain. Luzhou Laojiao’s own performance, while deteriorating relative to 2024, remains comparatively better than many peers that have experienced steeper profit collapses.

3. Counterfeiting Concerns and E‑commerce Presence

Consumer protection has become a pressing issue as counterfeit liquor incidents have attracted media attention. In early November, an investor raised concerns about counterfeit products appearing on short‑video platforms and suggested the company tighten anti‑counterfeiting measures. Luzhou Laojiao’s response was twofold:

  1. Enhanced Anti‑counterfeiting Packaging – The company pledged to introduce new packaging features that make forgery more difficult.
  2. Official Distribution Channels – Luzhou Laojiao confirmed that it operates flagship stores on major e‑commerce platforms such as JD.com, Tmall, Douyin, and Pinduoduo, giving consumers a reliable source for authentic products.

This dual strategy not only protects brand integrity but also supports sales through digital channels, which have become increasingly important in a post‑pandemic retail environment.

4. Market Position and Financial Profile

Luzhou Laojiao’s market value stands at approximately CNY 194 billion, with a price‑earnings ratio of 15.34. Its share price closed at CNY 131.90 on November 5, 2025, trading near the 52‑week low of CNY 106.75 but well below the 52‑week high of CNY 13,690. The firm’s long history—listed on the Shenzhen Stock Exchange since 1994—provides a solid foundation for navigating cyclical industry downturns.

The company’s business scope extends beyond spirits. It also manufactures glassware, manages hospitality assets, and invests in real estate. These diversified revenue streams help cushion the impact of a weakened liquor market.

5. Outlook

The trajectory for Luzhou Laojiao in the near term hinges on two factors:

  • Consumer Demand Recovery – A rebound in domestic consumption, especially in the high‑end segment, would lift revenue and profit margins.
  • Execution of the Dividend Plan – Maintaining the announced dividend ratios will reinforce investor confidence and potentially support the share price.

Meanwhile, the firm’s proactive stance against counterfeiting and its robust e‑commerce footprint position it well to capture market share from competitors less aggressive in these areas. As the industry continues to adjust, Luzhou Laojiao’s blend of heritage, diversification, and shareholder commitment will be critical to sustaining its market leadership.