The tavern cools down, and the liquor shop becomes popular; well-known liquor companies are also entering the market.

"The story of ‘Fast Coffee’ impacting ‘Slow Coffee’ seems to be playing out again in the alcohol industry.

During the 2026 Chengdu Spring Food and Beverage Fair, various drinking shops were extremely popular, while the originally highly anticipated small taverns faced development pressures.

Industry insiders believe that drinking shops have tapped into the trend of ‘mild intoxication for self-pleasure,’ but whether they will experience ‘explosive growth’ or be just a ‘bubble’ remains to be seen.

Growing Pains for Small Taverns

‘This month, we’ve already closed down.’ A Helen’s franchisee in Shanxi told reporters that two years ago, he was optimistic about small taverns and joined a Helen’s small tavern franchise. The initial investment was substantial, but due to issues like management and customer flow, the store’s operations were not ideal, and it has not turned a profit in two years, forcing him to close to cut losses.

Reporters have seen on some social media platforms that such cases are not isolated over the past year.

Unknowingly, the once-hot small tavern trend has continued to cool down. Helen’s (09869.HK) financial reports show that the company achieved revenue of 540 million yuan last year, a 28.3% decrease year-on-year. Although net profit attributable to shareholders was 33.95 million yuan, turning a profit, Helen’s has experienced four consecutive years of revenue decline, significantly down from 1.84 billion yuan in 2021.

In 2021, Helen’s became the first small tavern listed on the Hong Kong Stock Exchange. Its unique ‘Third Space + Low-Cost Alcohol’ model attracted market attention, with the stock price soaring to 25.75 HKD on the listing day. Today, during trading, Helen’s stock price is only 0.9 HKD.

After the pandemic, Helen’s business plummeted. Starting in 2022, its revenue declined for four consecutive years, with the number of self-operated stores dropping sharply from 854 in 2022 to 108 as of March 2026.

Beginning in 2023, Helen’s started promoting a light-asset franchise model, but the situation has not improved. As of March 19, 2026, Helen’s has 578 stores, of which 429 are partner taverns, an increase of 23 from the end of 2024. However, their contribution to the company’s revenue is relatively limited, with franchise business revenue in 2025 at 180 million yuan, a 5.8% decrease year-on-year.

Regarding the reasons for the performance decline, Helen’s management stated that it was mainly due to market fluctuations leading to a decline in same-store sales, and the reduction in directly operated stores resulted in lower direct business income. In 2025, Helen’s direct store revenue was about 360 million yuan, down 36.2% year-on-year, with overall same-store sales decreasing by 18.4%.

Wen Zhihong, general manager of Honghe Consulting, told Yicai that on one hand, Helen’s performance is related to changes in the current consumer environment, as consumers are becoming more rational, and non-essential, low-cost consumption faces significant pressure. On the other hand, Helen’s benefited from the first wave of the rise of affordable small taverns but has not developed a very distinctive store type or model, making it challenging in market competition.

Rapid Rise of Drinking Shops

Compared to Helen’s sluggishness, starting in 2023, drinking shops represented by Tang Sanliang and Zebra Knight began to emerge, with increasing popularity. During this year’s Chengdu Spring Food and Beverage Fair, many well-known liquor companies also entered the scene, such as Gujinggong Liquor showcasing Gujing Light Nourishment Society drinking shops, and Luzhou Liquor Investment Group announcing Sichuan Liquor E-Store. Previously, brands like Kouzi Jiao and Luzhou Laojiao Health Liquor also launched drinking shops.

Reporters noticed that drinking shops differ from the previous ‘Third Space’ model of bars, mainly selling by the cup and focusing on takeout, with most starting sales measured in milliliters. The product range is quite diverse, including loose liquor, sake, fruit wine, rice wine, as well as freshly made new drinks and craft beers, often at competitive prices. For example, craft white beer at drinking shops often costs around 9.9 yuan per cup (500 ml), while loose liquor ranges from 1.5 yuan/50 ml to 50 yuan/50 ml.

Operating costs for drinking shops are also lower. Reporters learned that the initial investment for a small tavern of about 200 square meters often exceeds 1 million yuan, while a drinking shop can be set up for between 100k and 300k yuan.

Ouyang Qianli, a researcher in the alcohol industry, said that early drinking shops were mostly community casual bars, such as ‘Bailaoquan,’ but influenced by economic fluctuations, industry adjustments, and capital enthusiasm, drinking shops have become a new business format, shifting toward slow living, mild intoxication for self-enjoyment, and small gatherings with friends.

According to Xiao Bo, founder of Qu Tun Tun Drinking Shops, because of their two-way sales and high cost-performance ratio, drinking shops attract some needs from supermarkets and tobacco shops; at the same time, fashionable drinks like fresh rice wine and craft beer attract young customers, creating new consumption growth. Overall, the products, packaging, pricing, and delivery of drinking shops are less like traditional liquor stores and more ‘milk tea-like.’

Reporters have observed that the relationship between drinking shops and small taverns seems to be copying the impact of ‘Fast Coffee’ on ‘Third Space’ coffee shops. Drinking shops are moving toward ‘space-less’ models, with small stores and low costs; simultaneously, they are ‘milk-tea-ifying’ alcohol drinks, lowering the threshold for alcohol consumption, and competing for consumers through cost-effectiveness and convenience.

Wen Zhihong told reporters that although Helen’s small taverns also emphasize affordability, the ‘Third Space’ model still incurs higher costs than drinking shops. Moreover, with small store models and takeout platforms, drinking shops have advantages in consumer reach and delivery, providing a fresh and more cost-effective experience. Additionally, their small store size makes it easier to penetrate transportation hubs and popular commercial areas, leaving room for future growth.

It is worth noting that drinking shops are still in a wild growth stage. It is understood that in the Chengdu market alone, over the past two years, there have been dozens of brands with hundreds of drinking shops, but the market is currently quite fragmented, and there are no dominant brands.

According to Cai Xuefei, general manager of Zhiqu Consulting, drinking shops have hit the pain points of the current liquor industry: providing a sales outlet for high inventory levels and capturing the needs of young people for ‘mild intoxication for self-pleasure’ and family drinking with high cost-performance. However, compared to milk tea and coffee, issues such as excessive SKUs, lack of experience, absence of social scene value, and supply chain capabilities still need to be addressed. The future remains to be further observed.

(This article is from Yicai)