Moutai's "Wine Residue Turns into Gold": The Ambitions and Anxieties of a Trillion-Dollar Giant Entering the Pet Industry

(The author of this article is E-commerce Online, published with permission from Titanium Media)

Article | E-commerce Online

The pet industry welcomes a “heavyweight player” with a trillion-dollar market value.

Recently, the Moutai Group’s subsidiary, Moutai Circular Economy Investment Company, announced its entry into the insect protein pet food sector. It is reported that the pilot project (medium-scale testing) based on high-quality liquor lees for black soldier fly insect conversion officially started trial operations on March 12.

According to Moutai Circular Economy Investment Company’s plan, this pilot project is positioned as a key measure to implement the strategic deployment of the “14th Five-Year Plan” and to incubate future industries. Company Chairman Xie Jun stated, “The project will advance the industrial chain layout simultaneously, expedite the technical validation, brand establishment, marketing layout, and other work for insect protein pet food, striving for the official market launch of products within the year.”

Moutai liquor, produced in Maotai Town, Guizhou, is known for its unique sauce-flavor profile, with a history tracing back to the Han Dynasty, boasting over two thousand years of brewing tradition, and is hailed as the “national liquor.” As the largest revenue-generating enterprise in China’s liquor industry, Guizhou Moutai accounts for 38.6% of the total revenue of 20 listed liquor companies, earning it the title of “liquid gold.”

When “sauce-flavor technology” began to enter the pet sector, playful comments like “My dog got to eat ‘Moutai’ before me” sparked heated discussions on social media, with many pet owners looking forward to the unique flavor of “sauce-flavored insect food.”

However, as more “giants” begin to crowd into the pet industry, the competition in business is bound to become more intense. For the entire liquor industry, as leading companies actively seek new growth curves, what reason do other players have to remain confined to their boundaries?

A Two-Way Journey

“We’re winning big.”

In the comments section of topics related to “Moutai entering the pet market,” many netizens expressed that this move not only aligns with the trend of sustainable consumption but also allows pets to enjoy “sauce-flavored food,” making it a win-win situation.

According to official disclosures from Moutai Circular Economy Investment Company, the project utilizes black soldier fly biological conversion technology to transform the nutritional substances in high-quality liquor lees into high-protein insects, simultaneously producing insect frass as organic fertilizer raw material.

The technical route of the project is also very clear—after pretreatment, the liquor lees serve as feed for black soldier fly larvae; larvae feeding on the lees accumulate proteins and antimicrobial peptides; ultimately, through further processing, the insect larvae are converted into the core protein raw material for pet food.

Currently, the project processes 5 tons of high-quality liquor lees daily, producing 0.9 tons of fresh black soldier fly larvae and 2 tons of insect frass organic fertilizer raw material, achieving a closed-loop industrial chain of “brewing by-products—insect protein (pet food)—organic fertilizer.”

On the other hand, the application of black soldier flies in the pet food sector is particularly noteworthy.

Adding black soldier flies to dog food can significantly enhance skin barrier functions and help lower cholesterol in older dogs, with low allergenicity making it suitable for developing low-allergen dog food; adding an appropriate amount of black soldier flies to cat food can promote weight gain in kittens, improve immune indicators, and enhance antioxidant capabilities, with a 20% full-fat insect powder addition also able to regulate the intestinal microbiota structure in adult cats, promoting beneficial metabolism.

In August 2025, the Ministry of Agriculture and Rural Affairs officially included black soldier flies in the “Feed Ingredient Directory,” clearly proposing the implementation of grain-saving actions in animal husbandry, supporting the feed utilization of insect protein resources, paving the way for its compliance and large-scale application.

Moutai’s step forward may seem unexpected, but it is, in fact, rational.

Liquor companies possess stable, low-cost organic by-products like liquor lees, while black soldier fly insect protein requires organic waste as breeding material. Additionally, the brand operation, channel resources, and quality control capabilities of liquor companies can be directly reused in the pet food sector, quickly capturing the high-end market.

Compared to emerging brands, Moutai has a natural brand premium ability and supply chain barriers. Once the technology is successfully implemented, the stability and economies of scale of its raw material supply may reveal significant advantages.

An Unmissable Trend

The high growth of the pet sector makes it impossible for any consumer giant to ignore.

The “2026 China Pet Industry White Paper” indicates that by 2025, the number of urban dogs and cats in China will reach 126 million, with the consumer market size reaching 312.6 billion yuan. The report predicts that by 2028, the consumption scale of China’s pet industry will reach 405 billion yuan.

Focusing on the insect pet food sector, its explosive potential should not be underestimated. According to the latest research report released by market research firm Persistence Market Research, the global insect pet food market is expected to reach $1.4 billion by 2026 and is projected to reach $2.5 billion by 2033, with a compound annual growth rate of 8.6% from 2026 to 2033.

In fact, Moutai is not the first “pioneer” among liquor companies.

In October 2025, Sichuan Tuopai Biotechnology Co., Ltd. reached a strategic cooperation with pet brand Youyu to jointly launch the nation’s first “liquor lees black soldier fly insect protein product line,” introducing the “Extreme Clean Insect Diet” series of pet food cultivated with quality liquor lees as the core raw material, commercializing sales.

This product features a formula of 70% chicken + 10%-30% black soldier fly, emphasizing the “extreme clean and low allergen” concept, and has passed the EU GMP+FSA certification, confirming the commercial potential of the “brewing—liquor lees—insect protein—pet food” closed-loop.

More importantly, pet food has a very high repurchase rate and user stickiness, with the core consumer group being the younger generation, which is exactly the territory that traditional liquor companies like Moutai hope to reach but find difficult to penetrate in their brand rejuvenation strategy.

However, even with products already on the market, the concept of “insect protein” remains an emerging one in the domestic market, with some pet owners still harboring psychological barriers towards “insect protein.” Furthermore, Moutai is currently only in the pilot phase; to truly succeed in pet food, it needs to address the palatability issues of different dog and cat breeds regarding insect food.

For a long time, the domestic pet food market has been dominated by international brands, while domestic brands are mostly concentrated in the mid to low-end, lacking players with brand power and supply chain advantages in the high-end market. With the entry of leading liquor companies like Moutai and Tuopai, they may leverage their quality control capabilities, financial strength, and industrial chain integration to break this pattern.

In the future, to stand out in the pet food market, higher specialization and refined operational capabilities will be essential.

The Unresolved “Anxiety” of the Liquor Industry

Behind the giants venturing into the pet food business is not only the booming pet economy but also a reflection of the “anxiety” within the entire liquor industry.

In recent years, the liquor industry has been experiencing an unprecedented adjustment period. The younger generation’s estrangement from liquor culture has led to the gradual decline of the “liquor boom.” Data from the National Bureau of Statistics shows that the total liquor production in 2025 was 3.549 million kiloliters, a year-on-year decline of 12.1%, continuing a trend of “nine consecutive declines.”

High inventory, price inversions, and sluggish sales have become common challenges in the industry, with most small and medium-sized liquor companies facing dual pressures of tight cash flow and declining revenue.

In this context, cross-industry ventures have become a standard move for liquor companies to save themselves.

Looking back over the past few years, cross-industry examples in the liquor circle have emerged one after another: Moutai first collaborated with Luckin Coffee to launch the “sauce-flavored latte,” then rolled out Moutai ice cream and liquor-filled chocolates; Wuliangye also did not fall behind, selling not only ice cream but also entering cosmetics and tea; Luzhou Laojiao even launched perfume products.

These actions may seem dazzling, but they are logically consistent: rather than competing in a stagnant market, it is better to seize opportunities in a growing market.

However, most cross-industry efforts often end in failure, becoming mere “marketing gimmicks.” In contrast, the move to enter the insect protein pet food sector appears more pragmatic. The project relies on its own production by-products for industrial chain extension, falling within the category of a circular economy, which holds greater industrial synergy value than simple brand authorization and private labeling.

But can this truly alleviate the systemic pressure within the liquor industry? The answer is probably negative.

The fundamental issue in the liquor industry lies in the reversal of supply and demand relationships and the shrinking of consumption scenarios. While the pet economy is indeed booming, its scale is still minuscule compared to the trillion-level liquor market.

Alcohol remains a necessity for Chinese consumers, required for celebrations, weddings, and funerals, but consumer habits have undergone significant changes. How to focus on the consumption habits of young people and adapt accordingly is a key issue that the industry must address to break through its bottlenecks.

Moutai is still the same Moutai, but as it begins to explore how to feed other people’s pets, the industry may need to ponder: to whom should we raise our next glass of liquor? After all, even Moutai is beginning to seek new paths for the “post-liquor era,” perhaps it’s time to reconsider the bubbles in this glass of liquor.

From “liquid gold” to “insect protein,” the new story of the liquor industry will eventually be gradually written between adherence to tradition and innovation.