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JOURNEY · DETAIL
Luzhou Laojiao: Starting from the 1573 Ming Dynasty Pit Cellars and the Journey of Guojiao 1573 to Premium Luzhou-flavor Origins
Founded: Guo Huaiyu (Founding of Brewing Techniques in the Yuan Dynasty) · Luzhou Laojiao Co., Ltd.
JOURNEY
Key Fields
FIELD STAMPSIndustryFood & Drink
RegionChina
ScaleGiant
ChannelOther
Origin
Located in Luzhou, Sichuan, Luzhou Laojiao's brewing tradition traces back to the mellow starter yeast created by Guo Huaiyu in the Yuan Dynasty. In the first year of the Wanli era in the Ming Dynasty (1573), Shu Chengzong constructed the pit cellars, leaving behind the Guojiao 1573 national treasure pit cellars that remain in continuous use today. In the 1950s, through public-private partnerships, a state-owned distillery was established. Leveraging resources from centuries-old continuous pit cellars, it became the setter of technological standards for Luzhou-flavor baijiu. In the inaugural national baijiu tasting competition of 1952, it was named one of the 'Four Great National Liquors' and remains the only Luzhou-flavor baijiu to have continuously won the title across all five consecutive national evaluations.
Milestones
1573
Origin PMF
In the first year of the Wanli era of the Ming Dynasty (1573), Shu Chengzong constructed winemaking pit cellars in Luzhou, which later became the Guojiao 1573 national treasure pit cellars. The microbial communities enriched in the cellar mud became the core source of the flavor profile of Luzhou-flavor baijiu. This batch of restored pit cellars has been in continuous operation for over 450 years. Designated as a Major National Historical and Cultural Site in 1996, they form the physical foundation of Luzhou Laojiao's entire high-end narrative.
1952
Establishment of Prestige Growth
At the first National Baijiu Tasting Evaluation in 1952, Luzhou Laojiao Tequ was recognized as one of China's Four Great National Liquors, and it was selected in all five subsequent evaluations—making it the only Luzhou-flavor baijiu to consecutively win the title five times. During this period, Luzhou Laojiao extensively exported blending and pit mud cultivation techniques to the entire industry, earning the titles 'Originator of Luzhou-Flavor' and 'the Whampoa Military Academy of the Baijiu Industry.' In the 1980s, its production volume briefly ranked first among national baijiu makers. This phase spanned from 1952 to 1989.
1988
Strategic Misstep in Mass Market Strategy Failure
When the government lifted price controls on famous liquors in 1988, Moutai and Wuliangye decisively raised prices to target the high-end market. In contrast, Luzhou Laojiao adopted a 'famous liquor turning mass liquor' strategy, drastically cutting prices to capture the mass market. This severely diluted its brand value and caused it to fall out of the top tier of the industry. By the mid-1990s, its revenue and profits were significantly surpassed by Wuliangye. Management later repeatedly reflected on this strategic miscalculation as the 'lost golden decade.' This phase lasted from 1988 to 1998.
1994
Going Public Turning Point
In May 1994, Luzhou Laojiao went public on the Shenzhen Stock Exchange, becoming the first listed baijiu enterprise on the SZSE—predating both Wuliangye and Kweichow Moutai. However, capital operations in its early post-listing period were lackluster, causing it to miss the window of opportunity to leverage capital markets for large-scale expansion. Its market capitalization lingered for a long time, inversely highlighting Wuliangye's aggressive multi-brand expansion during the same period.
2001
Restart of Premiumization Inflection Point
Around 2001, the company launched the Guojiao 1573 brand, building its narrative directly on the Guojiao 1573 national treasure pit cellars and benchmarking its pricing against Wuliangye and Moutai to enter the high-end market. At the time, outsiders widely questioned how a declining veteran famous liquor could command high prices. However, management withstood the pressure, insisting on high-proof and high-end positioning only, and Guojiao 1573 gradually became the company's profit cow.
2012
Severe Blow from Industry Adjustment Failure
At the end of 2012, government policies restricting official consumption, coupled with the plasticizer incident, triggered a deep industry adjustment. Due to aggressive early channel loading, Guojiao 1573 suffered from high channel inventory and severe wholesale price inversion. In 2014, the company's revenue plummeted from 11.56 billion RMB in 2012 to 5.35 billion RMB, and net profit was slashed repeatedly from 4.4 billion RMB down to 8.8 billion RMB. It was forced to heavily buy back channel inventory and rebuild its pricing system. This phase lasted from 2012 to 2014.
2015
Management Renewal Turning Point
In 2015, Liu Miao took office as chairman and Lin Feng as general manager. The new leadership implemented a brand slimming strategy, cutting thousands of development barcodes and OEM products, and focusing on five core single products: Guojiao 1573, Jiaoling, Tequ, Touqu, and Erqu. At the same time, they established a dedicated Guojiao brand operating company to directly control terminals. That same year, Guojiao 1573 achieved a recovery in sales growth, laying the organizational foundation for the company's return to the 10-billion-RMB club.
2017
Return to High Growth Growth
Guojiao 1573 expanded significantly in the 1,000 RMB price bracket. In 2017, the company's revenue returned above 10 billion RMB, reaching 10.39 billion RMB. By 2023, revenue hit 30.233 billion RMB and net profit reached 13.246 billion RMB. The scale of the single product Guojiao 1573 surpassed 20 billion RMB, elevating it into the top three high-end baijiu brands in China. The company's gross profit margin has consistently remained above 85%, and its net profit margin exceeds 40%, making it one of the most profitable enterprises in the baijiu industry. This phase spanned from 2017 to 2023.
2024
Re-evaluation of the Cycle Inflection Point
In 2024, the company's revenue was approximately 31.18 billion RMB, a year-on-year increase of 3.2%, with a net profit of around 13.47 billion RMB, showing a marked slowdown in growth speed. Starting in 2025, the industry entered a destocking cycle, and the company proactively controlled volume and supported prices to digest channel inventory, trading short-term performance pressure for wholesale price stability. Management made it clear that Guojiao 1573 would firmly hold its ground in the 1,000 RMB price bracket without engaging in price wars. 2026 became a critical year to test the resilience of its distribution channels. This phase extends from 2024 to 2026.
Turning Points
- Opting for price cuts to pursue a mass-market route when price controls were lifted in 1988 turned a winning hand into a brand decline, marking the costliest strategic misstep in the company's history.
- Launching Guojiao 1573 in 2001 and steadfastly committing exclusively to the high-end segment, converting the historical assets of Ming Dynasty pit cellars into pricing power.
- Cutting thousands of development barcodes after Liu Miao and Lin Feng took office in 2015 to focus on five core single products, sacrificing short-term pain for brand focus.
- The lessons learned from the channel collapse in 2014 forced the company to establish a dedicated brand operating company model, shifting from reliance on mega-distributors to direct terminal control.
- Proactively controlling volume and supporting prices after 2024, willing to sacrifice short-term financial reporting to safeguard the wholesale pricing system in the 1,000 RMB price bracket.
Failures & Pitfalls
- The 1988 strategy of turning famous liquor into mass liquor diluted brand value, causing it to drop from the industry forefront to being comprehensively surpassed by Wuliangye and Moutai, missing the golden decade of premiumization.
- Aggressive channel loading from 2012 to 2014 led to high channel inventory and wholesale price inversion for Guojiao 1573, causing revenue to plummet from 11.56 billion RMB to 5.35 billion RMB in 2014, with net profit shrinking to 8.8 billion RMB.
- Despite going public earlier than Moutai and Wuliangye, the company long failed to utilize capital tools effectively, leading to a persistent disconnection between its market capitalization and industry status from the 1990s through the 2000s.
- During the diversification period, massive OEM and development products proliferated, with barcodes numbering in the thousands at peak, severely overdrawing the reputation of the core Laojiao brand until swift action was taken to clean them up in 2015.
关键成功要素
- Core assets are irreplaceable: The Guojiao 1573 national treasure pit cellars have been in continuous use for over 450 years, and their living heritage attribute grants the brand a temporal barrier that peers cannot replicate.
- Premiumization requires tolerating short-term sacrifices; Guojiao 1573 took nearly twenty years to firmly anchor itself in the 1,000 RMB price bracket amidst skepticism.
- Brand focus is more valuable than brand expansion; cutting thousands of barcodes in 2015 instead unlocked growth momentum.
- Channel inventory is a matter of life and death for baijiu enterprises; the collapse in 2014 proved that loading-driven growth will eventually backlash.
- Controlling volume, supporting prices, and maintaining the wholesale pricing system are fundamental skills for navigating industry cycles, not optional extras.
Lessons
- Possessing scarce historical assets does not equal holding market position; Luzhou Laojiao held national treasure pit cellars yet languished for over a decade due to pricing errors. Resources must be paired with the right pricing strategy to be monetized.
- Trading price cuts for scale is often irreversible damage for high-end consumer brands; once brand momentum drops, repair costs far outweigh the initial concessions.
- Growth generated by stuffing distribution channels will be repaid twofold during industry downturns; actual terminal sales are the sole indicator of health.
- Organizational renewal is often a prerequisite for strategic course correction; the 2015 turnaround began with management replacement rather than product changes.
- Maintaining restraint at the peak of a cycle and daring to invest at the trough matter more for a baijiu company's long-term ranking than pro-cyclical expansion.
Core Data
- 2023 Revenue：30.233 billion RMB (public source basis, independent verification unverified)
- 2023 Net Profit：13.246 billion RMB (public source basis, independent verification unverified)
- 2024 Revenue：Approx. 31.18 billion RMB (public source basis, independent verification unverified)
- 2024 Net Profit：Approx. 13.47 billion RMB (public source basis, independent verification unverified)
- 2014 Trough Revenue：5.35 billion RMB (public source basis, independent verification unverified)
- Gross Profit Margin：Over 85% (public source basis, independent verification unverified)
- National Treasure Pit Cellars History：Over 450 years of continuous use (public source basis, independent verification unverified)
- Market Capitalization：Approx. 125.7 billion RMB (June 2026) (public source basis, independent verification unverified)
Competitors / Peers
In the 1,000 RMB high-end price bracket, Guojiao 1573's core competitors are Wuliangye's 8th Generation Pu Wu and downstream series products from Kweichow Moutai. Wuliangye's 2023 revenue of approximately 83.2 billion RMB is roughly 2.7 times the scale of Luzhou Laojiao, while Moutai occupies an absolute leadership position with over 140 billion RMB in revenue. Same-tier competition also includes Yanghe's Dream Blue M9, Fenjiu's Blue and White 30 Revitalization Edition, and Xijiu's Junpin. Among them, Fenjiu has seen ferocious growth in recent years, squeezing the Luzhou-flavor camp through a differentiated light-aroma route. As the industry as a whole enters a zero-sum game, Guojiao 1573's share battle will remain a head-to-head wrestling match with Wuliangye for the long term.