---
title: "Inventory Devaluation Drags Distributors into Trouble"
description: "A leading liquor distribution company reported asset impairment provisions of about 329 million yuan for the first three quarters of 2025, with inventory devaluation provisions of 325 million yuan, highlighting the severe impact of falling liquor prices on distributor profits. Industry surveys show that distributor inventory turnover days have risen to over half a year, with average inventory devaluation exceeding 20%, forcing many to choose between selling at a loss or holding onto depleting stock."
author: "打造酒业第一媒体"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-11-13"
categories: "Dealer Operations"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/Jw5R-QOS7WvjhEzvfxpLQA"
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citation: "打造酒业第一媒体. “Inventory Devaluation Drags Distributors into Trouble.” New Distribution, 2025-11-13. https://xinjignxiao.com/en/articles/inventory-devaluation-drags-distributors-into-trouble-ebcd783d/"
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---

# Inventory Devaluation Drags Distributors into Trouble

> A leading liquor distribution company reported asset impairment provisions of about 329 million yuan for the first three quarters of 2025, with inventory devaluation provisions of 325 million yuan, highlighting the severe impact of falling liquor prices on distributor profits. Industry surveys show that distributor inventory turnover days have risen to over half a year, with average inventory devaluation exceeding 20%, forcing many to choose between selling at a loss or holding onto depleting stock.

### **Source** | Wine Industry (jiuyejia360) **Author** | Crafting the No.1 Wine Media
On October 30, a leading liquor distribution company released its Q3 report alongside an announcement on asset impairment provisions for the first three quarters of 2025. The announcement stated that as of September 30, the company had made total asset impairment provisions of approximately 329 million yuan, including 325 million yuan for inventory devaluation. In the subsequent investor communication summary, it directly stated that due to the continuous decline in the price system of famous liquors, the third quarter alone saw inventory devaluation provisions of 269 million yuan, significantly impacting current profits.
This announcement also exposed the harsh reality that under the backdrop of falling prices for mainstream liquor products, distributor profits are being rapidly eroded by inventory devaluation.
Recent research by the author across liquor merchants in Shandong, Henan, Guangdong, Beijing, Jiangxi, and other regions revealed that the above company's experience is not unique. Since Q3 this year, liquor merchants' inventory turnover days have generally risen to over half a year, with some exceeding one year. More critically, nearly 90% of distributors' profits have been eroded by price declines. Meanwhile, the risk of inventory devaluation for most liquor merchants continues to intensify, with average inventory devaluation exceeding 20%. Amid shrinking profits and rising inventory, distributor anxiety is spreading.
**Inventory Devaluation Is Dragging Distributors into Trouble**
According to the "2024 Mid-Year Research Report on China's Baijiu Market" released by the China Alcoholic Drinks Association, in the first half of 2024, the price inversion rates for baijiu in the 800-1500 yuan, 500-800 yuan, and 300-500 yuan price bands were as high as 32%, 29%, and 22%, respectively. Under price inversion, liquor merchants face multiple pressures such as inventory backlog and profit compression.
In Q3, this situation did not ease. A research report by Shenwan Hongyuan pointed out that during this year's Mid-Autumn Festival and National Day holidays, overall demand for baijiu fell by 20% to 30% year-on-year, inventory increased by 10% to 20% quarter-on-quarter, and wholesale prices declined across the board. This downward trend directly compressed the profit margins of distribution companies.
With factory prices unchanged or slightly reduced, while market prices continue to fall, distributors' previously accumulated inventory and newly stocked products are experiencing significant devaluation.
"In recent years, I've never seen such a large-scale collapse in famous liquor prices."
Guangdong distributor Cheng Xi (pseudonym) voiced the confusion of many peers. Distributors now face a dilemma: "To protect capital, you can't hold onto inventory, but selling at a loss means losses; if you hold on, your funds are tied up."
She admitted that achieving the same performance as the same period last year would be an ideal goal, but it is likely unattainable.
The author learned that the impact of inventory devaluation is evident in many regions.
Henan liquor merchant Chen Feng (pseudonym) revealed: "Inventory devaluation is very severe; since the single quarter, the devaluation rate has exceeded 30%." Shandong liquor merchant Li Qing (pseudonym) confirmed this, saying: "Since Q3, very few distributors have been able to make a profit. Industry-wide inventory devaluation is typically 20%-30%, completely eroding distributor profits. Everyone is gritting their teeth to hold on."
Another Guangdong liquor merchant, Lin Yu (pseudonym), focused his anxiety on liquidity: "The pressure of inventory devaluation is too great; it directly eats into our working capital." In his view, tight liquidity has become the biggest difficulty and risk for liquor merchants. "To survive, many peers have no choice but to sell at low prices; it's a helpless move."
Jiangxi liquor merchant Li Fei (pseudonym) expressed his feelings more directly: "The pressure is so high that there's almost no profit to be made. The dual decline in price and volume, I feel, will continue for some time." To seek a breakthrough, he has fully shifted to developing new products, but has fallen into a new dilemma: "The inventory cycle for new products is long, and operational pressure hasn't eased at all."
In fact, whether it's the collapse of the price system or the significant devaluation of inventory, it signals that the liquor distribution sector is undergoing a deep adjustment, and the survival challenges for distributors persist.
**Under Inventory Devaluation Pressure: Distributors' Difficult Choice: 'Sell or Not to Sell?'**
With the fluctuating prices of famous liquors, the entire industry is caught in the dilemma of whether to sell off inventory. In a previous article titled "The Volume-Price Dilemma for Baijiu Distributors: Control Supply to Support Prices, or Ship Goods to 'Replenish Cash'? | Market Observation," the author mentioned that since 2025, under the overall industry pressure, some leading liquor companies have begun requiring core distributors to control supply and support prices together with the distilleries. However, facing realities such as persistent price inversion for major products, difficult terminal sales, and dual pressure on profits and cash flow, many distributors are caught in the decision of whether to sell off inventory.
According to observations by new marketing expert Jia Fuchun, in the face of price declines, agents for famous liquors, burdened by distillery task pressures, must continue to pay for and stock up, falling into the dilemma of "not willing to give up past returns and thus not wanting to quit, but continuing to operate means bearing the pressure of stockpiling"—the "do or don't" dilemma. Non-famous liquor agents, on the other hand, focus on destocking, alleviating pressure by selling off inventory and converting it to cash.
Cheng Xi's judgment on the current distributor dilemma is: "Selling early means losing less; selling later means losing more." "The core issue for distributors in Q3 this year is not inventory backlog itself, but operating without profit or even at a loss—even if inventory can be sold, it must be discounted to realize cash, leading to unsatisfactory turnover and profits."
Yang Jingui, General Manager of Beijing Taihe Jinzun Culture Co., Ltd. and Shandong Youmeng Culture Co., Ltd., told the author that the root of this dilemma is not the baijiu industry cycle, but China's overall economic cycle. In his view, the core strategy for distributors is "hibernation" survival—that is, guarding cash flow, not making new investments, possibly selling inventory at a slight loss, and conserving resources to weather the current phase, avoiding being eliminated due to funding issues before the economy recovers.
In this regard, Zhang Xiaoli, founder of Hehe Consensus Consulting, also mentioned to the author that after recent communications with multiple liquor merchants, she found that current factory prices are hard to lower, yet the market cannot accept the terminal red-line prices set by manufacturers, leading to continuous profit compression. Distributors with adequate financial strength can only wait and stock up, while those without may need to sell off inventory.
Zhang Xiaoli said: "I believe the key to breaking the deadlock lies in liquor merchants and manufacturers joining forces to secure policy support focused on real consumer sales, rather than simply seeking rebates. This is also the direction manufacturers are willing to invest in. Specifically, it means jointly developing actionable real sales plans with manufacturers, allowing them to see a clear sales path. Additionally, manufacturers need to establish a new profit distribution system that helps distributors reduce losses, achieve inventory turnover, and stimulate sales through policies, forming a virtuous cycle."


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## Citation metadata

- Publisher: New Distribution
- Author: 打造酒业第一媒体
- Published: 2025-11-13
- Canonical: https://xinjignxiao.com/en/articles/inventory-devaluation-drags-distributors-into-trouble-ebcd783d/
- Original source: https://mp.weixin.qq.com/s/Jw5R-QOS7WvjhEzvfxpLQA

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