image credit: Bamboo Works
Key Takeaways:
ZJLD's revenue fell 60% in the second half of last year, as sales of its core Zhen Jiu spirits brand tumbled 72% year-on-year in the six-month period
The company and its peers are being hit by an anti-corruption crackdown on lavish government banquets where their traditional baijiu spirits are often served
Is the party over for makers of traditional baijiu spirits?
It certainly looked that way, based on the latest annual results from ZJLD Group Inc. (6979.HK), the first and only maker of traditional Chinese spirits whose shares are available to foreign investors after its Hong Kong listing in 2023. The company's revenue tanked by nearly half last year, with the declines accelerating in the second half of the year, according to its 2025 financial report released on Wednesday.
ZJLD started to bleed cash as its situation deteriorated, becoming cashflow negative for the year. That bled through to the company's bottom line, as ZJLD fell into the red in the second half of 2025.
The culprit behind the rapid decline was China's ongoing anti-corruption campaign, which included "certain anti-graft policies (launched) in the second quarter of 2025," according to ZJLD's report. While it didn't get more specific, the latest campaign most likely refers to policies designed to clamp down on big banquets by state-owned enterprises and government bodies where expensive baijiu is often consumed in big volumes.
As the campaign took hold, ZJLD's core product, Zhen Jiu, was hit especially hard, which we'll describe in more detail shortly. Despite the many challenges it faces, the company is taking steps to try and find new customers in China's younger generation that typically eschews traditional liquors. It's also adjusting to the new reality by taking steps to sell down its growing inventory.
The result of all that is that ZJLD managed to maintain its gross margin last year, which looks positive when you consider all the challenges it faces.
Investors initially responded to ZJLD's woes by selling down its shares, which dropped 2.7% on Thursday after the ...
