“Amid China's macroeconomic and consumption headwinds, our baijiu coverage trailed the broader market in 2024, falling 19% on average, compared with a 13% rise in the Shanghai Composite Index,” writes Song in a Jan 14 note.
This Lunar New Year, Chinese baijiu sales remain sluggish, and Morningstar Equity Research analyst Jennifer Song believes “cyclical weakness” in demand for Chinese liquor will persist into 1Q2025 despite China’s recent stimulus measures.
While Song expects this will dampen both baijiu demand and the sector's profitability, she urges investors to “stay selective” on premium brands.
