Kweichow Moutai, China’s flagship baijiu producer, saw its first annual profit decline as consumer spending cooled. Net earnings slipped 4.5% to 82.32 billion yuan ($12.07 billion), while revenue fell 1.2% to 168.84 billion yuan, missing both market forecasts and the company’s own guidance.

The dip reflects a shift among younger buyers who favor lighter spirits, while older businessmen still view baijiu as a premium gift. Moutai’s strategy of holding prices steady has curbed growth, tightening margins in a market that has long prized the spirit’s cultural cachet. Analysts note that the company’s brand loyalty may cushion future swings, but price rigidity could limit upside.

Investors had expected a modest rebound, but the results underline a broader slowdown in China’s luxury consumption. With no earnings forecast released for 2026, analysts will watch how the company balances price protection against the need for volume growth.

The first quarterly decline signals a turning point for Moutai, whose shares have long been a barometer for China’s premium spirits sector. The drop will likely prompt a reassessment of pricing strategies and could pressure competitors to innovate or diversify their product lines.