Conversation with Jing井坊 General Manager Hu Tingzhou: The inflection point in the baijiu industry won't be far away, the key lies in three things

Ask AI · Hu Tingzhou’s Fast-Moving Consumer Goods Experience How Does It Influence Shuijingfang’s Strategy?

Three Key Events Determine When the Turning Point Will Come

One year after launching new tactics around branding, products, and channels, Shuijingfang General Manager Hu Tingzhou publicly reviews the “progress bar” of the strategy for the first time. In his view, although the industry is still feeling the effects of adjustments, some key changes have already occurred.

When Hu Tingzhou took over Shuijingfang, the Baijiu industry had entered a turbulent “deep water” zone. Reflecting on the past year, he confided to Xiaoshidai that he faced unforeseen challenges. In terms of the company’s quarterly performance, there is still room for improvement, but in terms of strategy implementation and key initiatives, the overall pace remains aligned with the original plan.

Recently, Hu Tingzhou had his first exclusive interview with Xiaoshidai since taking office, discussing the five-year strategic progress and review, the boundaries between FMCG and Baijiu, Diageo’s support, and more. Let’s listen to his latest insights.

Strategic Structural Adjustments

As one of the “Six Flowers of Sichuan Liquor,” Shuijingfang is a representative player in the mid-to-high-end strong aroma Baijiu segment. In the race for rich aroma Baijiu with scarce resources like old fermentation pits, the company’s “Shuijing Street Distillery Ruins” Museum showcases 600 years of brewing craftsmanship. Known as “China’s No.1 Baijiu Distillery,” and still active today, this living heritage has become Shuijingfang’s most distinctive brand symbol.

For a long time, the company focused on a single brand, with core flagship products including “Shuijingfang Zhen Niang No. 8” and “Shuijingfang Jing Tai Classic.” In the first three quarters of 2025, overall gross profit margins fluctuated but remained at a relatively high level.

Like many competitors, Shuijingfang has faced headwinds in recent years. With a significant reduction in business banquets and the pressure of social inventory and price inversion, brands in the 300–800 yuan mid-to-high-end range have experienced stronger impacts. In contrast, high-end Baijiu has maintained resilience due to its collectible value.

In assessing the company’s situation, Hu Tingzhou identified two main challenges:

First, the difficulty of executing a single-brand coverage across the entire price spectrum. Previously, the company relied on the “Shuijingfang” single brand to span from 300 to 1380 yuan. “A single brand finds it hard to effectively serve both the high-end and mass markets at the same time,” he said.

Second, the restructuring of the Baijiu purchase decision chain. Hu Tingzhou explained that in business banquets, the buyers and drinkers are often separate, with limited decision-making power for consumers. But as Baijiu consumption shifts toward social gatherings with friends and family, decision-making returns to the drinkers, and companies need to establish deeper emotional connections directly with consumers.

Based on these challenges, last year Shuijingfang clarified its strategic focus on branding, products, and channels. In branding, the company adopted a dual-brand strategy: “Shuijingfang” targets the mid-to-high-end 300–500 yuan segment, while the independently operated “First Workshop” brand focuses on the high-end above 800 yuan, emphasizing high-quality base liquor and craftsmanship to strengthen product value.

Hu Tingzhou explained that, given the current more rational consumer environment, the long-term trend of Baijiu’s high-endization remains unchanged. The reason is that consumption in this category has an “upgrade inertia”: as personal purchasing power increases, consumers tend to gradually shift toward more expensive, higher-quality products, and once accustomed to the taste, it’s hard to downgrade.

“Our high-end volume is still far below leading competitors. The most important thing is to steadily cultivate consumers, persist long-term, and gradually increase repurchase rates among high-end Shuijingfang drinkers,” Hu said. “Our goal is not to become a top-tier high-end Baijiu brand overnight, but to steadily achieve a breakthrough in brand high-endization.”

Additionally, to address the issue of similar bottle appearances causing pricing confusion, Shuijingfang has renamed product lines to Shuijingfang Zhen Niang No. 8, Shuijingfang 18, and Shuijingfang 28 (not yet launched), to enhance consumer recognition of different core products.

On the channel front, during industry difficulties, Shuijingfang increased support for terminal stores, strictly controlled inventory within reasonable levels, and ensured fair profits for distributors and outlets.

According to a research report by Huachuang Securities released in January, in the second half of last year, Shuijingfang continued cautious operations. During Mid-Autumn Festival and National Day, no inventory pressure was placed on channels, keeping stock levels manageable. Feedback indicates that the core product “Zhen Niang No. 8” remains at a reasonable inventory level, and banquet scenes perform well due to cost-performance advantages, laying a solid foundation for steady recovery.

Organizational “Sprint Capability”

Due to industry cycles and proactive strategic adjustments, Shuijingfang’s 2025 earnings forecast shows a projected revenue decline of 42% year-over-year to 3.038 billion yuan, and net profit attributable to the parent down 71% to 392 million yuan.

Hu Tingzhou candidly said, “If the numbers are bad, they are bad.” In the overall industry adjustment, Shuijingfang’s performance also faces severe challenges. The company’s strategic plan is set for 3–5 years, with brand and product strategies at about 35–40% progress, and channel strategy at around 30%, slightly behind expectations. “It’s like encountering roadblocks while running, needing time to find detours, but overall, the channel strategy remains aligned with the core direction.”

He also acknowledged room for improvement in execution but emphasized that the core strategic direction remains clear and firm. Reflecting on recent efforts, the company prioritized stabilizing partner operations during complex external conditions, which somewhat slowed long-term deployment.

At the same time, in high-endization, due to product structure, the current proportion of mid-to-high-end products is high, reflecting a rational resource allocation based on operational realities. But in the long run, high-endization remains a clear strategic goal, and the company is increasing investment to improve efficiency. Moreover, operational systems are being optimized and upgraded to support higher-quality future growth.

“2025 performance is affected by macroeconomic and policy changes, which were unforeseen. I think the key is whether we can stick to our long-term mission during tough times, and learn from FMCG industry best practices in system building to ensure the right development direction,” he said.

Hu also applies a “race” logic to integrating FMCG methodologies into Baijiu. Over the past 20+ years, he has worked at major FMCG companies like Procter & Gamble, Kodak, Pepsi, and Hainan Jinhou, and during his tenure at Yuyuan Shares, he indirectly engaged with Baijiu.

“FMCG is like connecting many 100-meter sprints—you must win each one to ultimately succeed. It requires teams to respond quickly, with strong execution and planning. Baijiu, on the other hand, is a marathon—pacing matters. You shouldn’t sprint at the start; you need room to adjust, which tests patience and perseverance,” Hu explained.

He believes that meticulous planning, speed and execution, and consumer engagement are lessons Baijiu can learn from FMCG. At the same time, Baijiu must uphold long-termism—brand building, product deepening, and base liquor quality require time. “No short-term gains.”

Based on this “race” logic, Hu has systematically adjusted team management, focusing on “strict assessment, strong support, and clear talent profiles.”

Specifically, to improve execution, Shuijingfang has implemented strict performance evaluations since last year, emphasizing results, and increased resource support for teams. In the face of deep industry adjustments, the company is also clarifying future talent profiles, including skills in digital analysis, AI tools, and channel empowerment.

“Traditional Baijiu development is like a marathon—long-term focus. But future Baijiu industry development will demand higher short-term operational capabilities, including timely planning, standardized execution, meticulous cost management, and focused scene creation,” Hu said. “The core of team building is cultivating a versatile team that can uphold long-term strategies while also executing short-term market responses.”

He also predicts that future talent capabilities in Baijiu will evolve and integrate, but not solely through FMCG + Baijiu hybrid experience. Major liquor companies are actively developing talent pipelines, and training methods will adapt to industry shifts.

Three Events Decide the Turning Point

After years of industry turbulence, all parties are awaiting signs of recovery.

Regarding the trend during this year’s Spring Festival peak, Hu Tingzhou revealed that the market shows a “differentiated improvement” with positive signals but no full recovery yet. Notably, the boom in catering and cultural tourism in third- and fourth-tier cities has directly boosted Baijiu consumption. In terms of scenes, business banquets have somewhat recovered but are still below pre-pandemic levels.

As for the most watched question—“When will the turning point arrive?”—Hu said he prefers not to specify exact dates, but investment banks generally expect the industry to reach a turning point around 2026 or early 2027.

“The turning point is a result of industry development, not something to pursue actively,” Hu believes. Instead of passively waiting, companies should focus on three core tasks: first, establish deep connections between brands and consumers in new scenes; second, innovate and differentiate products to suit various consumption scenarios and groups; third, balance old and new channels, motivating channel partners’ enthusiasm.

“The speed at which the Baijiu industry advances these three areas will directly determine when the turning point occurs. I believe, with the Chinese spirit of perseverance, the arrival of the turning point won’t be too far off,” Hu said.

Despite recent industry softness, Hu told Xiaoshidai that Diageo, the company’s major shareholder, adheres to a long-term investment philosophy, focusing on sustainable strategic development and business model rationality rather than short-term performance fluctuations. “As the world’s largest spirits company, Diageo respects the development characteristics of Baijiu and grants the company full autonomy—this is a very valuable support,” he emphasized.

Meanwhile, Diageo is empowering Shuijingfang in multiple ways, including leveraging its global R&D capabilities to improve quality and supporting international expansion. Hu disclosed that with Diageo’s distribution network, Shuijingfang has achieved good brand penetration in Southeast Asia and global duty-free stores, laying a foundation for internationalization.

Xiaoshidai learned that Shuijingfang is currently in the exploratory stage of overseas expansion.

On one hand, facing high tariffs and taxes on foreign spirits, which raise Baijiu’s overseas prices and hinder market growth, Shuijingfang seeks localized cooperation solutions. On the other hand, it plans to develop products tailored to overseas consumption habits and scenes, exploring solutions suitable for international consumers.

Three Major Structural Changes in the Industry

Looking ahead five years, Hu predicts three major structural shifts in Baijiu:

First, the reconstruction of consumption scenes. The share of personal drinking, family gatherings, and social meetups will rise rapidly, becoming core consumption scenarios. “Business banquets may decline temporarily, while self-drinking scenes will grow. This will push producers to adopt new channel strategies, such as emphasizing instant retail, as younger consumers prefer to buy through these channels,” Hu explained.

Second, a transformation in operational models. The importance of new channels will increase, and traditional channels will see upgraded empowerment methods. Overall, operational approaches will be adjusted around scenes and consumer needs.

“Channels like O2O, instant retail, and online are mainly driven by young consumers, who are an expanding market for Baijiu. Traditional channels like tobacco and liquor stores tend to have an older customer base with fixed habits,” Hu said. As these younger consumers reach drinking age and their purchasing habits differ from traditional groups, this has led to impressive growth in new channels.

According to Shuijingfang’s 2025 third-quarter report, in the first nine months, revenue from new channels reached 562 million yuan, a 71.24% increase year-over-year, accounting for 25% of total revenue.

Third, upgrading product solutions. Baijiu will shift from traditional aroma-type segmentation to segmentation based on consumption scenes and habits. Product portfolios will better match different drinking needs, such as products for young people to mix cocktails or enjoy small sips.

Hu revealed that inspired by the rise of small bottles in Western spirits at convenience stores, Shuijingfang is considering launching small-sized products. “Young consumers have social and entertainment drinking needs but limited budgets. Small bottles meet their instant consumption needs at convenience stores and similar channels. This trend applies to Baijiu as well—we will develop products tailored for this scene.”

From these insights, seizing the new generation of Baijiu consumers is a key anchor for Shuijingfang’s adaptation to change.

“I don’t believe young consumers will reject Baijiu in the future. Research shows that as consumers age, they develop a sense of ‘life’s sediment,’ and in scenes like gatherings with friends and family, Baijiu consumption will gradually increase with age,” Hu said. He believes that when exploring new consumer groups, the core question for Baijiu companies is not whether “young people drink or not,” but why, when they develop Baijiu demand, they choose their preferred brands first.

In Hu’s view, historical cycles have proven that Baijiu is a long-term, thick snow-covered slope. This was a major reason he decided to take the helm at Shuijingfang.

“Although business consumption scenes have decreased and fluctuate, in the long run, Baijiu remains a highly valuable industry. Shuijingfang, with its 600-year heritage, deep roots, and excellent product quality, the key now is to focus on brand, channel, and product strategic deployment, and to ensure the organization efficiently supports these three strategies,” Hu said. “This task is challenging, but my past experience should help, and my capabilities align with the company’s needs.”

He added that in the future, Shuijingfang will closely follow industry structural changes, focusing on ‘scene adaptation, consumer connection, and product innovation’ as core areas, becoming a practitioner of scenario-based consumption, brand premiumization, and operational refinement, securing a central position in the new industry landscape.