Bernstein: Kweichow Moutai returns to growth in the third quarter as direct sales accelerate, while channel destocking continues to weigh on margins

Why did revenue miss expectations despite returning to growth?

In the third quarter of 2026, Kweichow Moutai’s total revenue was 40.267 billion yuan, up 3.1% year over year, but below Bernstein’s forecast of 42.58 billion yuan and the market consensus of 41.084 billion yuan. The firm believes destocking in the premium liquor distribution channel took longer than expected, weighing on overall performance.
Earnings per share for the quarter were 15.96 yuan, up 4% year over year, below Bernstein’s forecast of 16.94 yuan but above the market consensus of 15.74 yuan.

Third-quarter sales on the iMoutai platform grew 847% year over year, lifting direct sales to 54% of liquor revenue, up 14 percentage points year over year.
Overall revenue from Feitian Moutai grew just 1% year over year: a 40% increase in direct-sales revenue was largely offset by a 22% decline in distributor revenue. Bernstein attributed the latter to premium-product destocking and adjustments to Feitian’s distribution channels.
The channel mix still offers potential benefits: the ex-factory price of standard Feitian is approximately 20% higher in the direct-sales channel. Bernstein expects the increased direct-sales share and the effects of ex-factory price increases in March 2026 and July to become more fully apparent once distributors’ premium inventories stabilize.

The third-quarter gross margin was 87.8%, down 1.7 percentage points year over year. Bernstein believes the effects of changes in the product mix and destocking outweighed the benefits of an improved Feitian channel mix.
Revenue from series liquors rose 22% year over year, but the firm believes this was mainly driven by a low base following a 34% decline in the same period a year earlier. It expects growth in series liquors to slow as the prior-year comparison base improves in the fourth quarter.
Higher selling expenses from the new premium consignment model further squeezed profits: selling expenses rose 33.3% year over year in the quarter, and the operating margin fell to 78.0%, down 2 percentage points year over year.

Bernstein cut its forecast for year-over-year total revenue growth in the fourth quarter of 2026 to 10% and slightly raised its full-year growth forecast for 2027 to 12%.
The firm lowered its earnings-per-share forecasts for 2026 and 2027 from 70.62 yuan and 79.18 yuan to 67.73 yuan and 76.30 yuan, respectively, and expects earnings per share to grow 12.7% year over year in 2027.
Bernstein maintained its “Outperform” rating and cut its target price from 2015 yuan to 2000 yuan; its target valuation multiple remained unchanged, while the valuation reference period was rolled forward by one quarter.