---
title: "The Rise and Fall of Brands Behind the Baijiu Tycoon"
description: "Today, Zhenjiu Lidu became the first baijiu stock on the Hong Kong Stock Exchange, making Wu Xiangdong, known as the 'Godfather of Baijiu', the new richest person in the industry with a net worth of 30 billion yuan. The baijiu industry has created many wealthy individuals, most of whom started through mixed-ownership reforms and management buyouts, a model that has faced controversies over the years."
author: "杨伟"
publisher: "New Distribution"
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published: "2023-05-23"
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# The Rise and Fall of Brands Behind the Baijiu Tycoon

> Today, Zhenjiu Lidu became the first baijiu stock on the Hong Kong Stock Exchange, making Wu Xiangdong, known as the 'Godfather of Baijiu', the new richest person in the industry with a net worth of 30 billion yuan. The baijiu industry has created many wealthy individuals, most of whom started through mixed-ownership reforms and management buyouts, a model that has faced controversies over the years.

Yang Wei Today, Zhenjiu Lidu officially listed on the main board of the Hong Kong Stock Exchange, becoming the first baijiu stock in Hong Kong. In 2003, Wu Xiangdong, the 'Godfather of Baijiu', acquired Hunan baijiu brands Xiangjiao and Kaikouxiao. Six years later, he acquired Guizhou's Zhenjiu and Jiangxi's Lidu, forming China's fourth-largest private baijiu group, Zhenjiu Lidu Group. Although the company emphasizes its focus on the sub-premium and above baijiu market, and its brands are mostly high-end, Zhenjiu Lidu's gross margin is only 55%, lower than the industry average of over 80%. Moreover, the company spends heavily on selling. In 2020, 2021, and the first three quarters of 2022, sales and marketing expenses were 403 million yuan, 1.021 billion yuan, and 983 million yuan, respectively, with the ratio to revenue rising from 16.8% to 23.1%. This rare low gross margin, high expense ratio model in the baijiu industry has affected Zhenjiu Lidu's performance. Last year, the company's revenue was 5.856 billion yuan, with a significant slowdown in growth, and net profit was 1.030 billion yuan, a slight decline. The core brand Zhenjiu, which had seen a surge in performance due to the sauce-flavor baijiu craze, performed weakly, with sales volume declining 12.9% in 2022, and despite price increases, revenue growth slowed to 9.6%. However, these issues did not affect the company's listing process. Zhenjiu Lidu disclosed its prospectus in mid-January, passed the hearing at the end of March, and listed at the end of April, taking only about 100 days, far shorter than the average 9-month listing cycle in Hong Kong. It raised over HK$5 billion, becoming the largest IPO on the Hong Kong Stock Exchange this year. With the successful listing of Zhenjiu Lidu, its actual controller Wu Xiangdong's wealth has soared. Previously, KKR, the 'leveraged buyout king', invested in Zhenjiu Lidu in two tranches. Based on the 2022 investment consideration, Zhenjiu Lidu's valuation was nearly US$5 billion, and Wu Xiangdong's indirect stake was valued at over US$4 billion. Now, with the successful listing, at the issue price of HK$10.82 per share, Wu Xiangdong's stake is worth around HK$25 billion. If the company breaks the Hong Kong IPO curse and follows the A-share baijiu market trend, this number will only be the beginning. Moreover, this is not all of Wu Xiangdong's baijiu empire. Twenty years ago, he founded the Jinliufu brand and achieved success through heavy marketing and strong channels. He then replicated this high-profile model to other baijiu brands, acquiring Yushuqian, Jinyuanchun, Yanfeng, Wubi, Linshui, Xiangshan, and Taibai. In addition, recognizing the value of channels, he founded Huazhi Liquor Store in 2005. With both products and channels strong, the two sectors complement each other. In 2019, Huazhi Liquor Store listed on the ChiNext, becoming the first liquor distribution stock. Despite a 45.77% decline in performance in 2022 and a drop in market value, Wu Xiangdong's stake is still worth around 8 billion yuan. Relying solely on Zhenjiu Lidu and Huazhi Liquor Store, Wu Xiangdong's net worth has reached 30 billion yuan, making him the richest person in China's baijiu industry. The Wealth Creation Myth Twenty years ago, people would not have believed that the baijiu industry could create a richest person. At that time, the frequent names on the rich list were mostly from finance, real estate, resources, or even retail, which people look down on now. Figures like Guo Guangchang, Huang Guangyu, Wang Jianlin, and Xu Jiayin took turns at the top. Internet tycoons collectively entered the scene only in recent years. The wave of asset securitization has created a series of listed baijiu companies. Through repeated price increases and overt and covert speculation, they have demonstrated astonishing profitability, with gross margins often above 80% and net margins above 50%. The industry leader, Kweichow Moutai, had revenue of 124.1 billion yuan in 2022, up 16.87% year-on-year, and net profit attributable to shareholders of 62.716 billion yuan, up 19.55%; gross margin was 92.00%, and net margin was 50.54%. The 'drinking' market boom was intense, with the stock king Kweichow Moutai reaching a peak market value of 3.22 trillion yuan. There were also Wuliangye at 1.36 trillion yuan at its peak, Luzhou Laojiao at 470 billion yuan, Shanxi Fenjiu at 460 billion yuan, and Yanghe at 400 billion yuan. Even the bottom-ranked baijiu stocks had market values in the tens of billions, which is unimaginable in other industries. The leading companies are all state-controlled, but that does not prevent market participants from sharing in the capital feast. The story of Lin Jinfeng has long circulated in the industry. This Chaoshan native living in Shenzhen has an exceptionally keen business sense. In 2003, he invested all his savings of 12 million yuan in Kweichow Moutai, and exited in 2015, holding for 12 years and gaining 1.143 billion yuan, a return of 95 times. Based on this, Lin Jinfeng acquired Hui liquor Group and became a major backer of Shangkun Real Estate, with investments spanning baijiu, real estate, finance, home retail, and other fields. 'Folk stock god' Lin Yuan also multiplied his wealth through Kweichow Moutai. At a public event in 2021, he claimed to hold 2% of Kweichow Moutai, worth over 55 billion yuan at the time. Such stories are too numerous in the baijiu capital circle. Buffett, Peter Lynch, and others spent their lives summarizing investment philosophies; 'China's Buffett' Lin Jinfeng, Lin Yuan, Dan Bin, and others almost only need to do one thing well: heavily invest in baijiu and embrace Kweichow Moutai. Of course, the greatest wealth creation in baijiu originated from mixed-ownership reform. Previously, the mainstream baijiu companies in the Chinese market were mostly state-owned. After the new century, some of the less dominant brands attempted to activate enterprise development through mixed-ownership reform, such as Jiannanchun, Langjiu, and Yanghe. Other small and medium-sized distilleries were acquired by industrial capital and re-operated, such as Wu Xiangdong's baijiu empire, and later the Zongyi, Fosun, and China Resources systems. Subsequently, they rose in the fully competitive baijiu industry with institutional vitality, competed for listings, and their leaders made it onto various rich lists. The Wheel of Fortune Turns In the baijiu industry, the first person to be called the richest was probably Qiao Tianming of Jiannanchun. In the early days, there was a saying 'Mao Wu Jian' in the baijiu industry, showing Jiannanchun's status. As one of the 'Six Golden Flowers of Sichuan Liquor', its influence was second only to Wuliangye. In 2003, Jiannanchun underwent mixed-ownership reform, and Qiao Tianming gained control from Mianyang state-owned assets. Twenty years later, in March 2023, a court judgment revealed the dark side of Jiannanchun's reform. Qiao Tianming bribed relevant personnel with 380,000 yuan, and conspired with others to forge financial documents, concealing 264 million yuan of state-owned assets, which were attributed to the reformed Jiannanchun. Sentenced for multiple crimes, Qiao Tianming received a five-year prison term in the first instance, and the first-generation baijiu tycoon collapsed. Even setting aside these 'original sins', Jiannanchun today is not what it used to be. Now people debate whether it is 'Mao Wu Yang' or 'Mao Wu Lu', and 'Mao Wu Jian' has become a thing of the past. Jiannanchun claims in elevator ads to be 'top three in Chinese famous liquor sales', but in small print below, it notes that this refers only to the single product Shuijingjian. This borderline advertisement was later deemed false advertising by relevant authorities. How large is Jiannanchun? According to the 'Sichuan Enterprise Development Report (2021)', the company's revenue that year was 11.181 billion yuan. It may be difficult to rank in the top ten in baijiu now. Before Wu Xiangdong, the nominal baijiu richest person came from Langjiu. According to the '2023 Global Rich List' released last month, Langjiu's leader Wang Junlin ranked 251st with wealth of 61.5 billion yuan, first in the baijiu industry. Like Jiannanchun, Langjiu also underwent mixed-ownership reform, changing from state-owned in Gulin, Luzhou, Sichuan, to Wang Junlin. There is nothing new under the sun. Due to unspeakable matters in the reform, Wang Junlin was also taken for 'tea' for over 500 days. In recent years, Langjiu has been striving to become the second sauce-flavor baijiu stock. Although its revenue exceeded 15 billion yuan in 2021, it has not been able to list. Besides reasons like the A-share market's aversion to liquor, various issues and flaws left over from Langjiu's restructuring are also important reasons why it has not gained regulatory approval. Therefore, the 61.5 billion yuan net worth of the Wang Junlin family is actually a vague concept, far less real than Wu Xiangdong's 30 billion yuan. It may be hard to believe that Anhui is a place that has truly produced baijiu tycoons. Kouzijiao's actual controllers Liu Ansheng and Xu Jin, and Yingjia Gongjiu's actual controller Ni Yongpei—these two liquor companies also transformed from state-owned to private through mixed-ownership reform. Kouzijiao's MBO was widely questioned in the early years, but ultimately landed smoothly, with outcomes vastly different from Jiannanchun and Langjiu, for unknown reasons. In 2015, among the 'Four Golden Flowers of Anhui Liquor', Yingjia Gongjiu and Kouzijiao listed together, and Liu Ansheng, Xu Jin, and Ni Yongpei saw their wealth soar. Although they have to respectfully call Liang Jinhui, the head of Gucheng Gongjiu, 'big brother', in terms of wealth, state-owned enterprise leaders cannot compare with actual controllers of listed companies. In previous years, Kouzijiao's high-end strategy stood out, with higher market value, and Liu Ansheng and Xu Jin held concentrated stakes, making them wealthier. In recent years, Yingjia Gongjiu's business has improved substantially, its stock price has risen several steps, and its latest market value far exceeds Kouzijiao. Coupled with continuous share reductions by Liu Ansheng, Xu Jin, and others, their wealth has long been surpassed by Ni Yongpei. In the '2023 Hurun Global Rich List', Ni Yongpei's net worth has reached 19 billion yuan. Before Zhenjiu Lidu's listing, this was the real baijiu tycoon. New Possibilities for Wealth Creation Besides the above-mentioned prominent figures, the baijiu industry also hides a group of low-key but wealthy tycoons. The recognized invisible rich in baijiu is Wu Shaoxun, the boss of Jingpai. Many people only know 'Jingjiu is good, but don't be greedy'. In fact, Jingpai's baijiu brand Maopu has captured a considerable market share in the central region. At least in Hubei, it used to be a three-way rivalry among Zhijiang, Baiyunbian, and Daohuaxiang, but now Maopu stands out. How large is Jingpai? As a non-listed company, the specific data is unknown to the outside world. The 'Jingpai Co., Ltd. 2017 Social Responsibility Report' disclosed that the company achieved revenue of 10.49 billion yuan and paid taxes of 2.58 billion yuan that year. Some information shows that its revenue exceeded 15 billion yuan in 2019. Last year, Jingpai spent 956 million yuan to acquire land in the prime Wuchang Riverside Business District in Wuhan, a core central city, to build its second headquarters, envying many baijiu peers. Moreover, this liquor giant is 99% owned by Wu Shaoxun, with the remaining 1% held by his family members. In addition to health liquor and baijiu, the Wu Shaoxun family has expanded its industrial map in recent years, directly or through Jingpai's Zhenghan Investment, involving resources, medicine, chemicals, finance, real estate, and other industries. Because it has no listed companies, the Jingpai system is elusive, and the market lacks awareness of its actual scale. The '2023 Hurun Global Rich List' estimates Wu Shaoxun's net worth at 20 billion yuan, which is likely a significant underestimate. Another low-key invisible rich in baijiu, also from Hubei, is Cai Hongzhu of Daohuaxiang Group. Daohuaxiang's influence in the baijiu circle has waned, but it has risen quietly through a development path similar to Jingpai: using baijiu as a cash cow to accumulate huge wealth and expand local assets. Currently, Daohuaxiang Group's business involves baijiu, logistics, and tourism, and it has been selected as one of China's top 500 enterprises for many consecutive years, ranking 379th in 2022. The regional characteristics of the baijiu industry are also evident outside baijiu: Sichuan liquor reform is in crisis, Anhui is rich in liquor tycoons, and Hubei people make money quietly. Whether it is Wu Xiangdong, Wang Junlin, Ni Yongpei, or Wu Shaoxun, Cai Hongzhu, they are all wealth myths created by the previous generation of baijiu brands. How will the wealth creation story be written in the future baijiu industry? Of course, it will be the new forces in baijiu that embrace young consumers and adapt to future consumption trends, such as Jiangxiaobai and Guangliang. Their current scale is not large, and their profitability at this stage may be average, but their valuation logic based on growth may be more than just baijiu. When baijiu sales begin to decline, when beer only has disguised price increases, and when yellow wine and red wine become increasingly marginalized, the liquor market needs new stories that can hit future investors.


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