What Chinese liquor maker Moutai's slump says about the country's economy

BEIJING — Walk down most streets in China and you'll find a liquor store advertising premium spirits brand Moutai, along with posters of resale prices by vintage year.

It's a testament to how intertwined the red-and-white-labeled bottles have been with China's economy in recent decades. The 53% alcohol content "baijiu" was long a staple at government and business dinners for toasts and sealing deals, so much so that Moutai's stock became a market bellwether.

But the spirits company is now struggling, as China's business world adapts to the tech-heavy artificial intelligence era.

Kweichow Moutai's half-year report this month showed a rare drop in net profit, down by 1.95% to 44.5 billion yuan ($6.6 billion). It was the first decline for the first six months of a year since 2014, and only the second such drop based on data going back to 2002, according to Wind Information data.

The latest results followed a decline of 4.5% in net profit for all of 2025 — the first annual decline on record, data showed.

It's all related to changes in the economic environment, said Ye Yuhua, fund manager at Ba Luo Fund. That's according to a CNBC translation of Mandarin.

China's economy in the second quarter expanded at its weakest pace since the fourth quarter of 2022, with urban fixed-asset investment, including real estate development and infrastructure projects, declining 5.7% in the first six months from a year earlier.

When the real estate sector thrived, there were naturally more scenarios involving premium baijiu consumption, Ye said. Now with the economic shift to high-end tech, he noted the people involved with this emerging industry aren't as inclined to drink baijiu.