---
title: "Will the 'Price Inversion Wave' in Baijiu Recede, Starting in 2023?"
description: "How to maintain price rigidity for leading products and uphold brand image is the core challenge for liquor enterprises in 2023. In 2022, 'price inversion' became a frequent term in the baijiu industry. After the Spring Festival peak season, a brief 'good start' seemed to signal recovery, but high inventory remains a problem for distributors, and price inversion persists. Yunjiu Toutiao surveyed multiple markets to understand the latest conditions."
author: "云酒"
publisher: "New Distribution"
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published: "2023-03-26"
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# Will the 'Price Inversion Wave' in Baijiu Recede, Starting in 2023?

> How to maintain price rigidity for leading products and uphold brand image is the core challenge for liquor enterprises in 2023. In 2022, 'price inversion' became a frequent term in the baijiu industry. After the Spring Festival peak season, a brief 'good start' seemed to signal recovery, but high inventory remains a problem for distributors, and price inversion persists. Yunjiu Toutiao surveyed multiple markets to understand the latest conditions.

**By** | Yunjiu Toutiao Business Center

How to maintain price rigidity for leading products and uphold brand image is the core challenge for liquor enterprises in 2023.

In 2022, "price inversion" became a recurring buzzword in the baijiu industry. Just after the Spring Festival peak season in 2023, a brief "good start" seemed to fire the "first shot" for the industry's recovery, but the high inventory accumulated in recent years remains an unresolved issue for distributors, and price inversion persists. To this end, Yunjiu Toutiao conducted surveys in multiple markets and learned some of the latest market conditions.

**Market Recovery, but Price Inversion Remains Obvious**

From terminal price inversion to channel price inversion, and ultimately to ex-factory price inversion, **the price inversion wave across the baijiu industry reached its peak at the end of 2022.** For this reason, the "good start" in 2023 exceeded the expectations of many distributors.

"Since January this year, the wholesale market for liquor has performed well, with strong willingness among offline sales channels to stock up on famous brands. Online retail sales are also recovering rapidly, with daily shipment volumes significantly higher than the same period last year," said Chengdu liquor merchant Li Zhi (pseudonym).

"But it is undeniable that **most consumers are trading down in price for baijiu, with mass-market liquor being the most sought-after during the Spring Festival.** " Li Zhi noted this as the biggest characteristic of baijiu sales during this year's Spring Festival peak season.

Many distributors still emphasize that sales during the Spring Festival peak have not yet returned to pre-pandemic levels, but demand has clearly increased, and channel players are actively selling off inventory to realize cash and reduce stock.

**Price inversion is also a common phenomenon in the baijiu wholesale market during the Spring Festival.** Hefei tobacco and liquor store owner Li Yu agreed, citing a first-tier brand's large single product in the thousand-yuan price band as an example: the wholesale price was previously around 1,360 yuan, now down to 1,130 yuan, and in some liquor stores, the selling price has fallen below 1,000 yuan.

From the terminal perspective, the recovery of famous liquors, especially high-end ones, is not yet optimistic. The wholesale prices of core products from most listed baijiu companies are still lower than six months ago, with severe price inversion. By price band, the high-end band around 1,000 yuan has become the concentrated area where official guidance prices and actual transaction prices diverge. Mid-range liquor also has high overall inventory and significant promotional efforts, with many products effectively reducing prices through gifts.

**Two Phenomena Directly Hit the Terminal "Inversion Wave"**

Against the backdrop of normalized price inversion at offline terminals, Yunjiu Toutiao also discovered two phenomena.

**First, price inversion on e-commerce platforms is drawing more attention from manufacturers.** At the end of last year, Luzhou Laojiao E-commerce Co., Ltd. announced a suspension of cooperation with JD.com due to JD's "multiple low-price sales of (Luzhou Laojiao) 52-degree Guojiao 1573 series products." According to consumers, around Double 11, after stacking various discounts, the final price on JD.com was as low as 908 yuan, nearly approaching the wholesale price. Currently, JD's price of 887 yuan is 13 yuan lower than the wholesale price.

Although price inversion on e-commerce platforms has attracted high attention from famous liquor companies, the "price war" on e-commerce platforms continues. Around the Spring Festival, the final transaction prices of many famous liquors on JD.com were even lower than current wholesale prices. For example, in 2022, the wholesale price of bulk Feitian Moutai was 2,730 yuan, while the lowest transaction price on JD.com was 2,648 yuan. The same phenomenon occurred with Guojiao 1573: its wholesale price was 900 yuan, but the transaction price on "JD International Self-operated Liquor Cross-border Store" was 887 yuan.

Notably, in live-streaming rooms on some short-video platforms, some baijiu prices are even lower than on e-commerce platforms. "This year, the promotional intensity for baijiu is indeed greater than in previous years. We sell some liquors at a slight markup over the purchase price," said Jia Hangran, head of Yiwu Chenghong Liquor Wholesale Department. "Besides competing for market share, the bigger reason is to reduce inventory. Last year's accumulated inventory was too high; we must cut inventory to recover funds."

It is clear that price inversion of famous liquors on e-commerce platforms has, to some extent, affected their ability to maintain price systems. In this regard, an industry insider said that e-commerce platforms mainly win through "price wars," but due to the special nature of the baijiu industry, such marketing strategies that severely impact pricing are absolutely not allowed. Once low-price strategies are allowed to develop, they will affect the interests of offline distributors and brand power.

**Second, some sauce-flavor baijiu brands are on the brink of price system collapse.** When it comes to sauce-flavor liquor prices, distributors can be said to be "suffering unspeakably." "Many of the products we distribute have price inversion, especially many second- and third-tier sauce-flavor brands," one distributor said bluntly. The inversion is mainly due to the upstream manufacturers' pricing systems, which generally "open high and go low." Manufacturers provide distributors with fee subsidies based on ex-factory prices, and many distributors exploit these fees, passing some subsidies to downstream channels or even consumers, leading to inversion. This was already common in the sauce-flavor market in the first half of 2022.

Even the Spring Festival "good start" in 2023 cannot "stop" the trend toward rationality in sauce-flavor liquor development. "Most of the risks are borne by sauce-flavor distributors. Calling them 'leek distributors' is appropriate, I think," joked a Fujian sauce-flavor distributor. He also emphasized that product profit is no longer the core issue for sauce-flavor distributors; the massive inventory is what needs to be addressed most urgently.

Some distributors even said that based on current channel inventory levels, it may not be until after 2025 that many sauce-flavor products can gradually "stand up" from their "lying flat" state.

**When Will Price Inversion Stop?**

Behind price inversion lies increased inventory pressure on distributors. The "2022 Liquor Merchant Status and Development Report" shows that from January to June 2022, 80% of baijiu distributors had severe inventory backlog; among them, **about 39.7% had inventory for more than 5 months, and 33.6% had inventory for 3-5 months.** In addition, the price inversion of many second- and third-tier brands is ultimately due to incomplete market demand recovery.

For famous liquors, the main task for most companies now is to stabilize prices and digest the momentum from previous price increases. Especially for regional liquor companies expanding nationally, how to maintain price rigidity for leading products to uphold the high-end brand image is the core challenge for these companies in 2023.

For second- and third-tier sauce-flavor brands, the focus should be on consolidating brand power and ensuring quality. **After the sauce-flavor track enters a cooling-off period, elimination will be the norm. The underlying logic to prevent price inversion is to stabilize the basic market and maintain continuous brand influence growth.**

But it is certain that the concentrated "inversion wave" seen in the second half of 2022 is highly unlikely to recur in 2023, and the baijiu industry as a whole is moving toward recovery. Some industry insiders believe that in 2023, the baijiu industry is transitioning from the "strong expectations, weak recovery" phase at the start of the year to a "strong recovery" phase during the Spring Festival. Channel inventory is expected to clear faster, and distributors' cash flow is also expected to improve.

Looking at the entire baijiu industry, complete digestion of high inventory may take some time, but price inversion will gradually improve. Over the three years of the pandemic, although most baijiu companies maintained growth, the high inventory in distributor channels has become a concern for the industry. An industry analyst said that the "price inversion" phenomenon may take about two years to fully subside. However, the overall baijiu industry is still developing favorably, and by the latest this year's second half, the baijiu market will see a comprehensive recovery.

What do you think about the "price inversion wave" in the baijiu industry? Leave a comment below to share your thoughts!


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